Doing the Gifting My Way

December 23, 2015

We in America give a lot to charity — more than $358 billion last year, nearly three-quarters of it from individuals. This, of course, includes very large donations from very wealthy people, mostly to large nonprofits that will put their names on what they fund.

They presumably don’t wait till December. But a lot of us apparently do — or at least, make our final donations then. If past is prologue, charities will receive nearly a third of our donation dollars this month.

Over the last month or so, I’ve noticed a spate of articles on how to give — most quite similar. But the recent stream also includes one New York Times column that challenges the advice of the rest and another that seems to point toward a third way.

The main theme of most advice is to give where you’ll get the biggest bang for the buck. We’re enjoined to practice effective altruism — to “think scientifically rather than sentimentally.”

An oft-cited nonprofit — GiveWell — does the number-crunching. So we learn, for example, that less than $3,350 will save the life of a child in some poor part of Africa by supplying the family with an insecticide-treated mosquito netting for his/her bed.

No donation any of us could conceivably make — let alone one so small — will literally save the life of a poor child in America. So do we all just click the Donate button on GiveWell?

A recent column in Parade magazine says not necessarily. What we need to do first is decide what two or three causes we’re most passionate about, then choose our geographic scope.

Then we somehow identify specific organizations that seem to suit. We can consult Charity Navigator, though the column doesn’t mention it. Then comes research — the nonprofits’ revenues and expenses, operations, ratings, etc.

Here too, we’ve got online sources — the financials on GuideStar, for example, and the annual reports some larger nonprofits post, as well as ratings on several sites. But we shouldn’t rely on what we can find on the Web, the Parade columnist says.

We should also talk with a board member and actually visit the services site or volunteer there. Alternatively, we should see what causes a business leader or foundation we admire supports and do the same.

Note that we’re still in the effective altruism mode — merely relying in part on the “homework” of other practitioners.

Professor Jamil Saki, author of one of the New York Times columns I mentioned, argues that “dismissing sentiment” from our giving choices is wrong-headed. “Emotion — especially empathy — adds a powerful, positive spark to philanthropy” because the good feelings we get when we donate can prompt us to give again.

And we’ll even feel less stress and anxiety in our daily lives. Studies cited for both prongs of what he calls the “feel-good school of philanthropy.”

We do, however, he adds, have to “turn our sympathy to those most in need,” rather than rely on our feelings for those who “look like us or whose sufferings are well-publicized.”

Something in both approaches troubles me. On the one hand, we surely want to know how much of our money would go to salaries for top-level officers and for further fundraising. And we want to give to nonprofits that have an impact.

Yet measuring results, if feasible, is costly — far costlier than recording activities, e.g., number of grocery bags distributed, number of poor youth trained for jobs. So the bang-for-the-buck focus will tend to favor large, amply-funded organizations.

Similarly, we do want to avoid basing our donations on heart-tugging ads (also costly) or how readily we identify with the prospective beneficiaries. (There but for the grace, etc.) But deciding who’s most in need seems to assume that suffering is somehow measurable.

And not only that. It seems to assume that we should aim only to relieve the immediate causes of suffering — hunger, for example, or homelessness. Yet these causes have causes rooted in the operations of our private markets and public policies.

And public policies can uproot them — or at the very least, offset their impacts. The President of the Ford Foundation seems ready to move his very large source of funding for human needs in this direction.

“‘Giving back,'” he says, “is necessary, but not sufficient. We should seek to bring about lasting, systemic change.” He’s clearly speaking here to very wealthy people and their foundations.

What he has in mind for them isn’t altogether clear, beyond “listening to those most affected by injustice,” seeing “through a diversity of viewpoints” and learning from past successes and failures — much of this apparently through high-power data analyses and other uses of technology.

We thus seem to have a new phase of effective altruism in the making — one that would seek to “disrupt the drivers of inequality” so as to help birth “a world that makes philanthropy unnecessary.”

This is all well beyond such extra income as I have to “leverage” social change — not to mention the resources need to figure out how, according to the envisioned model.

Yet I welcomed his column because it opens a space in the advice-giving realm for donations to charitable organizations that focus on policy-relevant research, analysis and advocacy.

Or at least, that’s how I choose to view it because the alternatives effectively ignore the role such organizations can play in alleviating suffering. A handful dominate my end-of-year giving list.

I don’t need an online tool or business leader to choose them. And they’d be hard put to document results, i.e., to show that their activities alone achieved policy changes.

I know them because I rely on their analyses and information they share with the like-minded for my blog posts — and the self-education that lies behind and beyond them. So I feel I’m “giving back.”

And I feel good about my philanthropy, if we can call it that, because I witness how they help bend the arc toward justice by working strategically, persistently and collaboratively for policies that will alleviate the hardships of poor people in the U.S. and, in the fullness of time, make them unnecessary.



Free Legal Services a Powerful Tool for Preventing Homelessness

November 19, 2015

This is National Hunger and Homeless Awareness Week. I don’t suppose anyone who lives in a major metro area needs a special week to become aware of homeless people.

Here in the District of Columbia, we see them on the streets every day. And we know (or should) that we see only a relative few of the thousands who don’t have a home of their own.

The District has taken a leaf out of the strategic plan produced by the U.S. Interagency Council on Homelessness — the goal of ending homelessness by 2020.

Or rather, it’s adopted and expanded the goal, since the nationwide plan merely “set[s] a path” for ending homelessness among adults who don’t have children in their care. The District instead aims to have homelessness be “rare, brief, and non-recurring” for all residents.

Though the goal is broader, the meaning of ending homelessness is the same. The plans recognize that some people will, at some point, have no place to live except a shelter. But optimally, they’ll be re-housed swiftly. And a relative few will need re-housing again.

Making homelessness rare and nonrecurring implies prevention. Significantly increasing the stock of housing that’s affordable for low-income residents — especially the very lowest-income — is a big part of that.

But the District has other preventive resources too. Its plan refers to emergency rental assistance, for example — one-time cash equivalent aid for certain types of people who’ve fallen behind on their rent or will if they can’t move to a cheaper place.

Beyond that, its plan focuses on several other groups at especially high risk of immediate homelessness. It envisions “prioritizing housing resources” to individuals whose mental health and/or substance abuse problems put them at greatest risk.

And it refers to plans that will help people who haven’t had to cope with housing before or for quite awhile, i.e., youth who are reaching the maximum age for foster care and people who’ll soon be released from jail, prison or the youth equivalent thereof.

Another form of assistance can prevent homelessness — free legal aid for individuals and families facing eviction or impermissible rent increases that could pave the way.

It also prevents them from having to leave their homes, with no place to go because landlords have so egregiously neglected repairs. And let’s not forget help in securing public benefits that can help pay rent.

The District has an impressive number of nonprofits that low-income residents at risk of homelessness for such reasons can turn to. And private law firms provide substantial pro bono services, both directly to individuals and as partners with nonprofits.

It’s still the case that many low-income residents stand before a judge alone and unprepared. Judges are not only aware of this, but deeply concerned.

Last year, the Chief Judge of the District Court of Appeals testified that he and his colleagues view “the growing number of litigants who are forced to seek justice without benefit of counsel” as “the principal barrier to ensuring equal access to justice.”

This is an old story. And it’s hardly unique to the District. The Legal Services Corporation, which awards grants to nonprofits that provide free legal aid, has lost federal funding — at least in real dollars — since 1981.

And restrictions Congress has imposed on what grantees can do has limited their effectiveness, prompting some nonprofits, including the D.C. Legal Aid Society to forgo the funds.

The recession has shrunk funding for nonprofit legal services too. States cut their share of funding to balance their budgets with shrunken tax revenues.

At the same time, Interest On Lawyer Trust Accounts — another source of funding for free legal services — plummeted as banks cut their interest rates in response to the Federal Reserve’s near-zero lending rate. Doubtful the recovery has spread to IOLTA, since the Fed hasn’t yet changed its policy.

We don’t, so far as I know, have current data on what LCS has termed “the justice gap.” A study it conducted about 10 years ago indicated that fewer than one in five low-income people with legal problems of a non-criminal sort had any assistance from a lawyer.

LCS-funded programs themselves turned away an estimated two-thirds of people who sought help with housing problems — the second most common type of help requested.

A District-specific report issued in 2009 warned of increasing recession-related needs for legal aid, including a rash of foreclosures. At the same time, legal services programs here had lost, on average, 25% of their funding, not counting a recent cut the District had made.

LCS funding is up in the air. The Senate Appropriations Committee has approved a $10 million increase — hardly enough to restore prior cuts. The full House has voted to slash the Corporation’s funding by $75 million.

The outcome will have an impact on the Neighborhood Legal Services Program — one of the District’s major sources of free legal assistance in housing cases. Local funding for District programs has inched up over the last five years. But it’s still only about $5 million — not all of it, for good and proper reasons, for services that can prevent homelessness.

One understands why strategic plans to end homelessness don’t mention free professional legal services — and thus why they’re not included in related budget proposals.

The collaborating agencies — and in the District’s case, community organizations that have a role in housing placements — don’t want to alienate landlords, since progress toward ending homelessness hinges in part on what they choose to do (and not).

Nor, one supposes, do the agencies cotton to the notion of acknowledging that the nonprofits and pro bono partners that challenge them are preventing — or foreshortening — homelessness.

But we who aren’t so constrained can do so — and advocate for them, as we should even if homelessness were ended.

Nonprofit Housing and Service Providers Face Funding Crisis

July 6, 2015

I’ve often remarked that nonprofits can’t fill safety-net gaps created by cuts in public funding — or even gaps due to current funding levels. Leaders of some of these organizations have publicly — and more persuasively, of course — said the same.

On the other hand, nonprofits do fill gaps that would exist without funding from private, as well as public sources. We individual donors are one of the former. But helpful as our donations are, many nonprofits, large and small, receive significant financial support from foundations.

So you can imagine the shock waves that reverberated through nonprofit communities when they learned that the Fannie Mae and Freddie Mac foundations would cease to exist.

They didn’t abruptly cut off funding. But it’s about to end. Fannie’s already has. Freddie’s schedule calls for last payments some time this year.

Combined funding, though shrunk, was about $50 million in 2011. That’s a lot to make up for from other sources. But if it isn’t, we’ll surely see cutbacks in programs that provide housing and services to low-income residents here in the District, nearby communities and probably elsewhere.

Charitable Giving Phase-Out

How Fannie and Freddie came to withdraw from their roles as major donors is a tad complicated. But I’ll try to briefly tell the story, mainly because it strongly indicates that the funding spigot won’t open again.

Fannie closed out its foundation in an apparent effort to counter accusations that it had used its grants to build support — and lobbying partners — for its business interests.

The CEO said that Fannie itself would pick up the foundation’s charitable function — and spend at least as much. That was in early 2007 — just as the housing bubble began to burst.

Shortly thereafter, both Fannie and Freddie were holding a bunch of bad mortgages and responsible for delivering on promises to investors in securities backed up mortgages — also now bad.

They were, in a manner of speaking, bailed out and control of their affairs turned over to the newly-created Federal Housing Finance Agency. It told them to phase out their charitable giving and set the terms.

Fannie and Freddie in the Washington Metro Area

Up until recently, Fannie and Freddie, through its foundation, were the largest corporate donors to nonprofits in the Washington metro area, according to a report by George Mason University’s Center for Regional Analysis.

They provided support for more than 500 nonprofits during 2007-10 — a total of nearly $100 million. The money supported a wide range of programs and services.

But well over 70% received by the 200 largest nonprofits supported three types of programs and services — homelessness, housing and “human services.”

The first two (obviously related) are hardly surprising. Fannie and Freddie are, after all, in the housing business. And the FHFA directed them to focus their donations accordingly.

However, the corporations donated more to human services than the other two combined. The explanation here perhaps lies in how the analysts decided to classify donations.

What we know is that Fannie and Freddie have provided crucial support for services that can prevent homelessness and, in various ways, help families who’ve become homeless achieve enough economic security to become stably housed.

What’s at Stake

The funding figures I’ve cited understate the impacts of lost Fannie and Freddie funding because the corporations donated much larger amounts before the bailout. Even the recent figures, however, suggest a potential crisis in the making.

Nonprofits in the Washington metro area have reportedly lost — or will soon lose — nearly half their private sector-funding.

The loss will be greater — about 60% — for their programs and services to prevent homelessness and to provide both shelter and housing with supportive services for people who were homeless.

The crisis isn’t ultimately for nonprofits, however, but for the people they serve. It’s also, for this reason, a crisis for state and local governments because nonprofits are deeply woven into our safety net.

They also operate programs that can reduce needs for safety-net benefits by helping individuals and families overcome barriers to self-sufficiency, e.g., domestic violence trauma, substance abuse, lack of marketable skills.

These improve future prospects for low-income children. Other services do as well — for example, by helping parents learn how to keep them healthy and support their development, manage resources and so, in the best of cases, provide a safe, stable home.

These crucial programs and services won’t all vanish, of course. But loss of so much funding will surely mean fewer people served and/or fewer services — unless other funding sources fill the gap.

Well, we can’t look to this Congress. That’s for sure. Doubtful we can look to state and local governments either, though some may increase funding, as the District already has in several areas.

What Next

The GMU analysts recommend that nonprofits develop plans to reduce expenses and/or combine programs. Whether nonprofits can do either or both without curtailing services remains to be seen.

Even coming up with a plan — especially one that would merge nonprofits — seems a challenge at least some will need expert help with. Help perhaps with profound internal culture changes too.

The analysts also note the need for other corporations to “step up and fill the gap.” Interestingly, no mention of individuals who’ve got lots of money to give away. Nor those of us with the wherewithal to do our bit — or bigger bit — once we understand the need.

We don’t have comparable reports to tell us where and how large the gaps will be outside the Washington metro area, but we can be fairly sure there’ll be some, since total Fannie and Freddie donations have exceeded those to metro-area nonprofits in the past.

In short, we seem to have some handle on funding losses here — and some as-yet unpublished indications of impacts. Doubtful other affected communities have even this much. We’re nowhere near solutions, assuming they can be found.

Yet the needs Fannie and Freddie’s donations helped meet can’t be put on hold. A lot of folks have a lot to do PDQ.




Looking to Low-Income Families for Solutions

January 20, 2015

I first got to know David Henderson when we both wrote from, which then had lively blogs on poverty and homelessness. Before and since, he’s used his formidable technical and analytic skills to help nonprofits collect and use data to measure outcomes.

That, of course, is what donors want. But David’s main concern has been to help his clients maximize their impact on the causes of poverty and its personal harms.

He recently steered his career in a different direction — for reasons that are, at the very least, thought-provoking.

Basically, he’s rejected our predominant social services system because, he says, it is “based on a misguided paradigm … of providing solutions to distressed ‘clients’ in ‘need’ of answers.” This, he adds, “doesn’t only oversimplify the poor, it plainly gets them wrong.”

The organization he’s joined — the Family Independence Initiative — seeks to learn what families do when they, rather than case managers or other social workers have “control over their paths forward.” And it seeks to learn from them “what works — and what doesn’t.”

Quite a role reversal here. Families set their own goals and decide what actions to take. The FII liaisons, as they’re called, just listen and sometimes ask questions to gather stories and deeper understanding.

Deeper understanding — for the families themselves, as well as FII — comes from online journals they add to monthly. They input information on things like income and savings, education and skills, health, housing and, very importantly, leadership and connections.

“Very importantly” because FII seeks to strengthen relationships participants have with friends and relatives. To this end, participants are responsible for forming groups, which in one way or another, provide mutual support, accountability, advice, resources and the like.

Families get paid a modest amount for sharing information via their online journals — some capital they can invest in their further progress, FII’s founder and CEO explains. The organization in turn develops resources to help families achieve what they themselves have chosen as priorities and to meet needs they have identified.

These resources include an online community that enables participants who’ve initiated actions of various sorts to share successes and how they achieved them — and for other participants to seek advice.

FII will also link participants who’ve started — or want to start — small businesses to lenders it’s partnered with. And it provides support for lending circles, i.e., self-formed groups of people who contribute to and can then take interest-free money out of the pot they’ve all created.

The FII approach isn’t altogether novel. As I’ve mentioned before, pilot projects in developing countries have given cash to some very poor people, who, for the most part, used it to improve their lives — sometimes by starting businesses, developing their skills, building savings and the like, sometimes by paying for basic needs like food, clothing and housing.

But, as we can see from the project evaluations — and in at least some cases, the project designs — the cash-givers had preconceived notions of what the poor people should do (and not) with the money. Reported successes clearly reflect their value judgments.

What FII says it’s doing seems quite different. It’s what’s known, David told me, as demand-driven philanthropy, i.e., investments in what families are already doing to improve their lives and communities.

What will come of FII’s approach remains to be seen. What it will learn also, though one thing it clearly has learned is to refrain from helping families avoid seeming mistakes.

What it learns isn’t an end in itself, however. The organization aspires to “transform stereotypes, beliefs, practices, and policies that undermine families’ efforts to get ahead.” Learning, in other words, has to reach deep into the social services system and the minds of decision-makers that shape it.

A tall order for one relatively small nonprofit. And it’s encountered pushback from professionals, as well as cold shoulders from prospective funders.

But the challenge it poses to the prevalent model, the stories it shares and the data David crunches could provide a needed antidote to programs that in principle and/or practice treat low-income people as lesser beings who don’t know what’s best for them — and won’t do it unless their benefits are at stake.

Message to Congress: “We Can’t ‘Food-Bank’ Our Way Out of Hunger

November 25, 2013

Katy Waldman at Slate interviews Debra, a single mother who lives in the District of Columbia. Her 21-year-old daughter is till living with her and unemployed. The conversation centers on the recent cuts in SNAP (food stamp) benefits.

They used to have meat on the weekends — a festive (and healthful) break from the weekday lunchmeats. But “meat is going to be a huge problem now.”

“The good thing” is that a church will give her a turkey for Thanksgiving. She doesn’t know what else she’ll have on the table. Like as not, one infers, it will come from one of the two local food pantries she visits monthly — Bread for the City and Martha’s Table.

I’d been thinking about the churches and other charitable organizations that make Thanksgiving meals possible for low-income families. And about charitable individuals also, since our local grocery store again has collection carts for customers to put non-perishables in.

Free Thanksgiving meals and fixings are an old tradition. But, of course, the risk of hunger — and hunger itself — aren’t just holiday events.

Millions of people, like Debra, now rely on food pantries for something to put on the table, even though they’re enrolled in SNAP.

Food pantries have reported longer lines, increased needs to ration, even needs to turn people away ever since the recession began. It’s a tad early to know how the recent SNAP cuts have further strained their capacity to meet need. But reports have begun trickling in.

For example, a spokesperson for the Capital Area Food Bank, which helps supply well over 500 pantries and other nonprofits, says, “We see more people call into the food bank for assistance, we see more people come into our partner agencies, and they’re requesting more and more food every day.”

And no wonder when, in the District alone, more than 144,000 residents lost a portion of their SNAP benefits, which were only, on average, $1.50 per meal before.

The cuts in the District amount to a total first-year loss of $15 million. This is far more than our local feeding programs can make up for.

Martha’s Table, for example, has an annual food budget of $1 million, its president Patty Stonesifer says in an op-ed jointly written with D.C. Hunger Solutions Director Alexandra Ashbrook.

The SNAP cuts nationwide will total about $11 billion by 2016. That translates into an estimated 10 million lost meals a day for close to three years — at least 250 million by the time you read this.

There’s obviously no way that churches and other charitable organizations could ramp up to supply so many more meals or the equivalent in groceries.

At this point, all the food they provide to hungry people is only about 6% of what federal nutrition programs provide, says Bread for the World President David Beckmann, a leading anti-hunger voice in the faith-based community.

Well, you know where this is going.

Most members of Congress are home now. And most are probably looking forward to a Thanksgiving feast.

When they return, they’ll have just eight scheduled working days to pass a new Farm Bill before they go back home for an extended holiday season.

House Agriculture Committee Chairman Frank Lucas says the negotiators are getting closer to a compromise. “The struggle,” he adds, “is how do you deliver the safety net.” By which he means, how will we provide farm businesses with taxpayer-subsidized protections against losing money.

Most of us, I suppose, thought the real safety net issue was how much more the Farm Bill would cut SNAP.

Negotiators have a real struggle to the bridge the gap between the Senate’s $4 billion cut and House cuts that total $39 billion, plus some unestimated savings achieved by an incentive for states to adopt new work requirements that would shrink their SNAP rolls.

Some Democrats are reportedly leaning toward a $10 billion cut, not counting the potential effects of some policy changes that would be thrown in as sweeteners for House Republicans.

Time was when addressing hunger in America was a bipartisan endeavor, as former Senators Bob Dole and Tom Daschle remind us.

Now the bipartisan deal, should there be one, would, at the very least, make hunger more frequent for people like Debra, who already sometimes skips meals so her daughter can eat.

She’s nevertheless fortunate to live in a community where a large network of faith-based and other nonprofit organizations strive to ensure that low-income — and no-income — people don’t suffer from malnutrition.

That they can do as much as they do is a credit to compassion (in the literal sense) that moves so many well-fed people to donate their services, money and/or in-kind gifts.

But, as Beckmann says, “We can’t ‘food-bank’ our way out of hunger.” Food banks and the programs they help supply have confirmed this in no uncertain terms.

You’d think, by now, Congress would have gotten the message — and had second thoughts about squeezing more money out of SNAP.

Nonprofits Part of the Hunger Solution, But No Substitute for SNAP

September 26, 2013

We’re coming to the end of Hunger Action Month, initiated by Feeding America to build support for ending hunger in our country.

House Republicans celebrated, as I’m sure you know, by voting to deny SNAP (food stamp) benefits to about 3.8 million low-income people.

A few days later and a couple of miles away, the National Cathedral held a hunger forum for its congregants and anyone else who chose to attend or, as I did, watch the live stream on their computer.

One of the speakers, George Jones, spoke briefly about the experience of Bread for the City, where he’s CEO. More people are coming to the organization’s two food pantries, he said. They’re now serving about 5,000 households a month.

We also heard from representatives of smaller, faith-based feeding programs. In the Street Church project, for example, volunteers prepare and serve sandwiches in a downtown park where homeless people gather.

Volunteers in the National Cathedral’s community also prepare sandwiches — these at home — and drop them off, along with fresh fruit for delivery to a mobile soup kitchen operated by Martha’s Table, which also provides bags of groceries to people who’d otherwise go hunger.

Now, we need these projects — and the many others here in the District and in communities nationwide. We would need them even if SNAP benefits were safe, which they aren’t, despite the likelihood that the Senate will reject the harsh, sweeping House cuts.

As I’ve often (too often?) said, SNAP benefits are already too low to cover the monthly costs of reasonably healthful, balanced meals — or in some cases, any meals at all.

We need also to consider that far from everyone eligible for SNAP participates — about one in four, according to the Food Research and Action Center.

Lots of reasons for this, as a FRAC research review indicates. Among them is the very low benefit for a single person — currently no more than about $2.19 per meal. Not worth the hassle, some figure — or the stigma, all too often reinforced by checkers and other customers at the grocery store.

For seniors living alone, as most who received SNAP did, the average benefit in 2011 was even lower — $122 a month or roughly $1.34 per meal. This, as I’ve previously noted, helps explain why a Feeding America survey found that a third of all regular pantry clients were 60 or over.

Consider too that not all low-income people in this country are eligible for SNAP. The same law that ended welfare as we knew it established a five-year waiting period for virtually all adult immigrants who came here through proper legal channels.

No benefits ever, of course, for immigrants without the proper papers, though they and their children have the same needs for food as us born-in-America folks.

Resources aren’t the only issue. Access to full-service grocery stores is also often a problem for low-income people — a combination of distance and the need to rely on public transportation.

There are only two supermarkets in the District’s poorest east-of-the-river area served by one of Bread for the City’s pantries, Jones noted.

Put all these problems together with persistently high unemployment rates — recently 14.9% and 22.4% in the District’s two poorest wards.

Add both under-employment and jobs that don’t pay enough to live on and it’s understandable why nearly one in three District households with children didn’t always have enough money for food, according to FRAC’s latest food hardship report.

So it’s heartening that so many nonprofits step into the breach with free meals and/or food to take home. And heartening to know that so many individuals contribute the funds and voluntary services they depend on.

But, as Jones said of his organization’s pantries, they’re “designed to augment food stamps.”

This is a far cry from Congressman Paul Ryan’s claim that the radical cuts he put into the House budget plan — including $135 billion to SNAP — are needed because “the federal government is encroaching on the institutions of civil society … sapping their energy and assuming their role.”

Feeding America reports that the House SNAP cuts, plus the imminent benefits cut for everyone still eligible would result in the loss of about 3.4 billion meals for low-income people in 2014 alone.

This is more than all the meals that its network of food banks distributed through pantries and soup kitchens in the current year.

Here in the District, the Capital Area Food Bank is part of that network. About 250 nonprofits here rely at least in part on the fresh produce and others foods it distributes.

They include Bread for the City, Martha’s Table and others well known in our local community, as well as many that aren’t — except, of course, to the people they feed and the people who make that possible.

So it’s hardly the case that federal safety net programs like SNAP have sapped the energy our civil society institutions — here or nationwide.

It’s rather that they can’t serve as the hunger safety net for the millions of low-income children, seniors, people with disabilities, workers and those who’d work if a job were available who now rely on SNAP to keep food on the table — at least most of the time.

And they’re the first to say that.

Charitable Deduction a Tough Issue for Tax Reform

July 3, 2013

We’re all for tax reform. We’re all for closing loopholes. That, so far as I can tell, is where the consensus ends.

As you undoubtedly know, Republicans and Democrats sharply divide on what potential revenues gained from loophole-closing and the like should be used for.

Republicans want them used to offset the costs of reducing tax rates, thus making tax reform revenue neutral. In other words, the reform package they have in mind would neither increase the deficit nor raise more revenues.

Democrats, by and large, want a package that would, among other things, raise more revenues from “those who can most afford it,” as Senate Budget Chair Patty Murray puts it.

Trouble is that there’s only so much to be gained from tax code changes narrowly targeted to those “at the top,” whom the President calls on “to do their fair share.”

The largest tax expenditures, i.e., revenues forfeited through deductions, credits and the like, benefit a broad spectrum of middle-class filers, as well as the wealthy.

One of them, though not the largest, is the deduction for charitable donations. Here we’ve got an interesting divide that crosses ideological lines.

President Obama has consistently proposed capping the value of all deductions at 28% of adjusted gross income, though not for all filers.

The latest iteration would apply to households in the top three tax brackets and would include not only itemized deductions, but some earnings (or the equivalent) that are now excluded from taxation, e.g.,  the value of employer-sponsored health insurance.

The revenues gained would partly pay for ending sequestration while still reducing that bugbear, the deficit.

The cap would make the tax code more progressive because deductions are worth more to filers who earn more.

For example, someone in the 15% bracket who claims $10,000 in deductions saves $1,500. Someone in the reinstated 39.6% bracket saves $2,460 more.

But — and for exactly this reason — many nonprofits and the organizations that represent them have raised holy hell every time the cap has been proposed.

It’s those upper-income taxpayers they rely on for a large portion of their funding. Also on us, who effectively subsidize that portion, but without the chance to choose where it goes.

The Congressional Budget Office estimates that the very wealthiest households — the infamous top 1% — will account for 38% of the total value of charitable deductions claimed this year or about $15.2 billion.

No one actually knows how the proposed cap would affect charitable donations, though the experts I’ve read all agree that it would put a damper on them because the deduction provides a financial incentive to give.

The Tax Policy Center estimates that it would reduce individual giving by at least 2.2% and perhaps as much as 4.1%.

This, says the Center for Effective Government, translates into a loss of somewhere between $47 billion and $91 billion over 10 years. A reason it’s campaigning against the cap.

The Center on Budget and Policy Priorities accepts the TPC estimate, but argues that we must also consider increased incentives to give that were created by certain tax provisions in January’s fiscal cliff deal.

These would partly offset the impacts of the cap. So charitable giving would probably drop by 2% or less, it says.

CBPP views the loss as a small price to pay for ending sequestration. Nonprofits that benefit, directly or indirectly, from government grants and contracts will lose far more from further rounds of spending cuts, it says — even as those same cuts increase demands for their services.

The Center for Effective Government isn’t buying this. Nonprofits might suffer as much from reduced charitable giving as from sequestration, it says — some perhaps more.

Besides, its “a false choice” because other tax code changes could more than offset the costs of exempting the charitable deduction from the cap — or even better, converting it to a tax credit, which would make it equally valuable to all taxpayers who donate.

I got started on this issue because nonprofits that depend in part on charitable donations, of course, include those that serve low-income people’s basic needs.

Yet it seems that they’re not the main beneficiaries of taxpayers in the upper income brackets — those who might be inclined to give less if their deductions were capped.

Such organizations could nevertheless lose some funding if Congress caps all deductions. On the other hand, they’ll surely lose funding if it doesn’t replace sequestration with something more sensible.

Doubtful it will do either at this point. But we should expect the tax preference for charitable donations to resurface.

A tough issue, I think. Where do you net out?