The Dilemma of Big Dollars October 25, 2007

I like listening to NPR on my way to work...and always pay careful attention to Robert Reich's commentaries. Early in October, he argued that big education and big culture had distorted the real intention of charity. He claimed that only about 10% of charitable deductions serve the poor. [You can read this commentary on his website in a 10/3/07 post titled: Why Charity Doesn't Begin at Home.]

His assertion rests on the notion that big education and big culture are the "charities of choice" for the wealthy to perpetuate their lifestyles. So, in reaction, he asserts there should be a scale such that donations to nonprofits that serve the poor are fully deductible while donations to education and culture should be only 50% deductible. Of course, among the 41 responses (today's count) to Mr. Reich's post, some point out the practical challenges facing implementation of such a plan...who decides and what happens when the national musuem lets in 2,000 poor kids a year or some prestigious university subsizes the tuitions of 50% of their student body?

Last Saturday, the University of Pennsylvania announced their $3.5 Billion campaign, joining Stanford University, currently in the midst of a $4.3 Billion capital campaign. Stanford's campaign ranks as the largest education effort to date according to The Chronicle of Philanthropy. Still, Penn will have to work hard to catch up to Harvard University, now sitting on an endowment in excess of $30 Billion! That Chronicle article also presents a link to a list of all educational institutions with current campaigns at or above $3.0 Billion.

These are only the higher education players...think of the Guggenheim, the Smithsonian or the Met. Suddenly it seems so clear why programs that feed and clothe the poor and tend the lame and sick struggle so hard to make ends meet...while our national and state governments continue to abdicate a commitment to the basic social and economic rights and dignity of our citizens.

Why am I writing this? Simply this: Nonprofits are under more scrutiny that ever. And recent IRS changes will focus exclusively on the little guys, representing a new reporting burden. Seems we are moving in the wrong direction. I don't have a solution (possibly fundraising software), trite or otherwise. But, going forward, I'll be a bit more circumspect about where my own donations go.