by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
We have a love-hate relationship with philanthropy, which starts with questions of fairness and has been magnified for the past hundred years by the income tax. One manifestation is the continuing debate over donor-advised funds from community foundations and Donors Trust to the National Christian Foundation and those managed by Schwab and Fidelity. Another is the concern over large private foundations and the effect giving has on democracy.
A recent New Yorker piece on philanthropy echoes the concerns of Robert Reich and David Callahan that philanthropists have too much power. There is the inevitable swipe at John Locke Foundation co-founder Art Pope, this time paired with a paragraph about Tim Gill, “the megadonor behind the L.G.B.T.Q.-rights movement.” Most notable, however, is essayist Elizabeth Kolbert’s conclusion:
the more government spending gets squeezed, the more important nongovernmental spending will become. When congressional Republicans passed their so-called tax-reform bill, they preserved the deduction for charitable contributions even as they capped the deduction for state and local tax payments. Thus, a hundred-million-dollar gift to Harvard will still be fully deductible, while, in many parts of the country, the property taxes paid to support local public schools will not be. It is possible that in the not too distant future philanthropic giving will outstrip federal outlays on non-defense discretionary programs, like education and the arts. This would represent, Callahan notes, a “striking milestone.”
This paragraph raises a number of issues on the proper role of the federal government in the arts and local communities, the proper balance of funding for schools, the size of mandatory government funding on human service entitlements, the effect of taxes on giving, and the best way to raise money for government. Observers of America from Alexis de Tocqueville to Richard Cornuelle have seen the voluntary spirit as a good thing. Our mission at the John Locke Foundation includes a better balance between government and the “private institutions of faith, family, community, and enterprise.”
Ultimately, it comes down to the same conflict of visions that defines so many arguments on the way we make decisions and who is left in charge. Is money filtered through government agencies and directed through political channels a better indication of the values of the community than money given directly by members of the community to organizations in the community?