More on Rick Cohen and the charitable deduction fight

6 May 2009

As I reported the other day, Rick Cohen at the Cohen Report took the NGO trade associations to task for their resistance to – and in some cases outright opposition to –  the Obama administration proposal to help pay for expanded health care by capping charitable deductions at 28% for households earning $250,000 and up:

Though the comments CR [Cohen Report] received here for posting have been uniformly supportive of issues raised in the article, I suspect that the majority of readers is staunchly opposed. Or are we wrong? In at least two forums I’ve been in recently, when I raised generic concerns about the shortcomings of foundation grantmaking, the audiences were pretty much in agreement.  But when this issue was broached, one could feel the change in the rooms.  It as pretty remarkable.  I guess I’d be curious regarding follow-ups about:  (1) the extent of pro and con discussion this proposal is getting versus either strident opposition or, as my article described, public reticence in favor of behind-the-scenes opposition; and (2) how people feel about Brooke’s point that for the very wealthy, the tax incentives is really of little consequence. I’d love to hear feedback from CR readers on these issues and more.

Re the first question: no idea. If anyone out there has thoughts/knowledge on this, would be really interesting in hearing about it.

Re the second question: I’m inclined to agree with Brooke, pretty much. My experience working with wealthy donors is that if it factors in at all the tax deduction plays into the amount they’ll donate but not into the more fundamental decision about giving in the first place.

And that’s for the most part the exception, not the rule: what’s much more important is the value of the pile of assets they’re sitting on, and (just as importantly) their perception of relative wealth at the time the gift is made. The tax deductibility – or in this case, a modest reduction in the amount of that deduction – is a second or even third level factor in a philanthropic decision making process.

I’m not sure about this, but I can imagine one big exception to this, which is when a donor is deciding to set up a donor-advised fund at one of the big firms like Fidelity, or at a communitiy foundation. Only because (and please let me know if I’m completely off base here) this seems to me to be a much more transactional relationship, where the calculus of tax benefits could be seen as a much more important factor. . .

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One Response to “More on Rick Cohen and the charitable deduction fight”

  1. Ira Kaminow Says:

    Rick raises very good points. Please see my related articles: “Charities’ response to the Obama tax proposal: “Just say no” is not good enough” and “From academe: cut those tax breaks — except for mine.” in the just-tzedakah.org latest e-newsletter http://just-tzedakah.org/Updates/Update90429.htm


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