Not so long ago, conservative thinkers and Republican leaders were strong champions of private charity. George HW Bush talked about a “thousand points of light”, while his son created a new White House office to engage nonprofits.
But lately the right’s love affair with philanthropy and civil society has fizzled. Donald Trump – whose claims of generous giving were debunked during the campaign – has shown no interest in forging partnerships between government and philanthropy since taking office. He has wooed a parade of business executives and minor celebrities while largely ignoring leaders from the nonprofit world – save for allies on the religious right such as Jerry Falwell Jr.
The administration’s proposed cuts to agencies such as the National Institutes of Health and the National Endowment for the Arts would choke off billions of dollars in grants that flow to universities, hospitals, museums and community development groups.
Now, Republicans in Congress are advancing tax proposals that would lower charitable giving by billions of dollars and deal a major blow to the nonprofit sector.
The Republican’s new cold shoulder toward nonprofits – which employ 10% of the labor force and enrich every corner of American life – isn’t so surprising. It reflects the rising grip of libertarianism within the party, as well as a tribal fixation with cultural enemies.
These trends have marginalized conservatives who actually care about the poor and see local nonprofit organizations and faith-based social service groups as key players in the fight against poverty. While such thinkers have sometimes peddled the fantasy that charity could replace the government safety net, they’ve channeled a genuine belief – one long shared across party lines – in the power of civil society to lift up the downtrodden and improve American life in myriad other ways.
A Trump-dominated Republican party seems to have no such social conscience. And, increasingly, the populist right views the nonprofit world with hostility.
In other countries that have veered into authoritarianism, like Russia, civil society groups have faced outright suppression. Nothing like that is happening in the US yet, but Trumpist culture warriors have cast nonprofits and philanthropists as key villains in a narrative that pits coastal elites against the common (white) man.
Hillary Clinton may have lost the election, but the Clinton Foundation – an organization that mainly works on global health issues – remains at the center of feverish conspiracy theories. And hardly a day goes by without Breitbart running a paranoid story involving Planned Parenthood, the ACLU, or George Soros. Craven university leaders beholden to PC activists are another favorite target of scorn in the conservative media.
Republicans like the Bush family may still regard civil society and the charitable sector as manifesting some of America’s finest values. But the more dominant mood on the right is that these institutions pose a threat to those values.
All of which helps explain Republican party tax proposals that amount to the most sweeping attack on charitable giving and the nonprofit sector in memory.
According to an analysis by the Joint Committee on Taxation provisions of the recently passed House bill – specifically, a doubling of the standard deduction – 31 million taxpayers would no longer be incentivized to make charitable deductions, gutting a tax break that has helped spur giving for 100 years.
Scrapping the estate tax – another feature of the House bill (although not the Senate version) – would lower donations by eliminating a major incentive for the wealthiest Americans to devote large fortunes to philanthropy.
Overall, the proposed changes could lower charitable giving by as much as $13bn a year, according to one estimate – a falloff that would hurt nonprofits even as they’re called on to do more in an era of declining government budgets. The bill would also impose a 1.4% tax on income generated by university endowments, and penalize nonprofit executive salaries over $1m a year – although it says nothing about exponentially higher levels of corporate compensation.
There’s no question that philanthropy deserves new scrutiny. It’s an opaque sector that’s become more dominated by super-wealthy donors who do, in fact, largely live on both coasts and often hold different views from those of most Americans. There is a case for reforms that would bring more transparency to philanthropy, limit politicized giving for policy advocacy, and incentivize more citizens of modest means to make charitable donations to offset the growing clout of mega-givers. Donor-advised funds also need more regulation, to ensure timely payouts to charity by entities which are now attracting billions of dollars in tax-deductible gifts.
But the congressional tax bills include none of these reforms. Lawmakers would leave donor-advised funds untouched and the House bill would increase politicized charitable giving by repealing the Johnson amendment that limits electoral activism by religious organizations. Maybe most troubling, only the wealthy would have any tax incentives to give away money if Congress doubles the standard deduction. There would be a fall-off in giving to nonprofits by the “every man” who Alexis Tocqueville once called the backbone of civil society.
The charitable sector is vital to American life. It needs thoughtful reform, not blunt attacks that will only exacerbate its current problems. And, like other institutions vital to democracy, civil society needs strong champions in both parties. Bipartisan voices in Congress should insist that any changes in tax law serve to strengthen philanthropy and the nonprofit sector.
- David Callahan is the editor of Inside Philanthropy and author of The Givers: Wealth, Power, and Philanthropy in a New Gilded Age