The same congress that rewarded the mismanagement of the banks and the automotive industry is now targeting private philanthropy thanks to the efforts of Congressman Xavier Becerra (D-CA). Specifically, Rep. Becerra is threatening private foundations’ tax exempt status, which he calls a $32 billion earmark, in the name of providing more diversity in grant making.
I believe that Becerra’s proposal will never become a reality because people are motivated to give to avoid dealing with the government and to provide relief and assistance to the charities of their choice. If Becerra wants to increase diversity in grant making, he can start by leading the charge for more people of color to become involved in charitable giving. There are ways for everyone at all income levels to give back, whether it entails writing checks, donating in-kind gifts, or volunteering time. Sadly, the Latino community does not take advantage of the formal channels set up to give, instead we contribute directly to friends and family in need. In 1999, a report was published showing the underrepresentation of Latino non-profits and foundation board members. Additionally, in Latin America, formal charities, as known here in the US with tax incentives, do not exist.
Last month the Philanthropic Collaborative released a national analysis on foundation giving. It’s findings revealed that:
“Annual national grant-making focused heavily on health (23 percent), education (23 percent), human services (14 percent) and arts and culture (12 percent). But even more startling are the aggregate numbers: Foundation giving increased from $16 billion to $42.9 billion from 1997 through 2007, and last year’s $42.9 billion generated $367.9 billion in direct economic benefits, $512 billion in increased household incomes (with 9.2 million jobs in not-for-profit organizations) and $145 billion in government tax revenues.”
Becerra is arguing that “donor intent” is an excuse for the lack of grants to racial minorities, but having worked in philanthropy, I have found that most donors want to give to where the need is greatest, not factoring in the race or ethnicities of the charity’s beneficiaries. If more Latinos became actively involved in philanthropy, we would be better represented in the distribution of funds, especially if people learned how to contribute restricted gifts and remained engaged with the non-profits beyond opening the checkbook.
Finally, there are multiple giving options that can supplement income and protect assets for heirs, while saving capital gains, estate, and income taxes. The people who are more sophisticated in managing their money will not want to go along with Congressman Becerra’s proposal. They are largely motivated by tax incentives and the ability to decide for themselves where they want their money to go. By redistributing some of this money with taxes, Becerra will take away one of the biggest reasons people open their wallets in the first place. Why further politicize someone’s gift?