Improving the Incentive to Give

So far, relief organizations and others have raised $1.1 billion in voluntary donations. So flush with money were the American Red Cross, the Salvation Army and Safe Horizon that questions have been raised concerning the dispersement of funds. Private database companies are now working with the charities to ensure the victims are properly assisted in the fairest manner possible.

As generous as public agencies have been, no one doubts that a private-sector response was an essential supplement. A new report from the Independent Sector showed that, however impressive, the explosion in giving represents the continuation of a habit of giving that is deeply entrenched in American life.

In 2000, nearly 90 percent of American households donated money to charity. They gave an average of $1,620 or 3.2 percent of their income to 1.23 million charities in the United States. Other contributions take the form of the 3.6 hours that 83.9 million people spent each week in volunteer work (the work equivalent of 9 million full-timers).

Even with the uptick in giving after Sept. 11, it is not enough. Charities report that the recession is increasing the demand for their services just as it is introducing a fall in revenue.

As part of the need to prepare for the future, it would be wise to make giving even easier than it has been in the past, which is precisely what the White House's much-neglected Charitable Choice initiative proposes to do.

In the past, the initiative has been riddled with controversy because of provisions that permit the public sector to subsidize private-sector charities. That aspect of the legislation is far reduced in the newest version of the bill that the White House is backing. Instead, it focuses attention where it should have been all along: making it easier to contribute.

Some of the Independent Sector's analysis bears on the freedom of religious charities to operate and raise money. It turns out that people who attend religious services tend to give more than those who do not ($2,151 each year compared with $964). To neglect this constituency for giving is an enormous error.

What does the new Bush initiative propose? Expanded deductions are the center piece of the legislation. It provides for a more robust charitable deduction for non-itemized filers.

In the first year, it has a high cap of $250 for individuals and $500 for couples, increasing over 10 years to $500 and $1,000, respectively. It permits an individual retirement account (IRA) charitable roll-over for those 70 years and older. It raises the cap on corporate deductions from 10 percent to 25 percent. It permits food donation tax incentives for restaurants and farmers. It proposes to repeal some excise taxes and encourages individual savings accounts for the poor.

It streamlines the process for charities to gain 501(c)3 status and removes the experience criteria for receiving public money, which unfairly discriminates against start-ups. And for religious institutions that receive public money, it safeguards their right to the display of religious symbols.

Fortunately, public monies are not the focus of the legislation; the right and freedom to give to charity is. The tax relief provided is $13 billion, but over time it would net more than that to private charities, who take on so much of the responsibility of caring for those in need.

It is not a perfect bill (I see real dangers for religious charities in accepting public money), but the new proposals address the loudest criticisms of the last efforts by the Bush administration. In any case, the demands on private charity have vastly increased since Sept. 11, both in immediate needs and in preparing for the future.

When all this was announced in mid-October, it was widely reported that the new bill is a “scale-backed” version of the old faith-based initiative introduced earlier in the year. More accurately, the new proposal simply eliminates the most contentious and least necessary parts of the old bill. The new bill deserves bipartisan support. The need has never been more urgent.

In times when even the need to respond to terrorism and human suffering encounters a political thicket, charitable choice is surely something that should now inspire widespread support. Americans are generous people. Given the right institutional incentives, they can be even more so.

(Father Sirico is president of the Acton Institute. This article is a product of the Acton Institute —, 161 Ottawa NW, Suite 301, Grand Rapids, MI 49503 — and is reprinted with permission.)

Subscribe to CE
(It's free)

Go to Catholic Exchange homepage