Home / Blog / Article




December 27 2019

Charitable Giving in the U.S.

by Beverly Hallberg

On our last episode of the year, we close with the topic of private giving. Americans are very generous, donating $428 billion in 2018 alone, but policy changes may have a widespread impact in the coming months. Patrice Onwuka joins us to talk about the threat of government officials and activists who want to control how we give, what we give to, and how much is available to give. // Patrice Onwuka, is a senior policy analyst at Independent Women’s Forum. She has worked in the advocacy and communications fields for more than a decade. Prior to joining IWF, Patrice served as national spokeswoman and communications director at Generation Opportunity, and worked at The Philanthropy Roundtable and the Fund for American Studies in policy and media roles. And you probably have seen her on TV because she’s a frequent commentator on Fox News and Fox business.

PODCAST TRANSCRIPT

Beverly: Welcome to She Thinks, a podcast where you're allowed to think for yourself. I'm your host, Beverly Hallberg and on this episode it's fitting that we close 2019 with the topic of private giving since December is the month when people tend to give the most. Americans are extremely generous, giving 428 billion in 2018 alone but policy changes could have widespread impact on something that's been a part of our American fabric. Patrice Onwuka joins us to talk about the threats including government officials and activists who want to control how we spend, what we give to and how much is available for giving.

Before we bring her on a little bit about her. Patrice Onwuka is a senior policy analyst at Independent Women's Forum. She has worked in the advocacy and communications fields for more than a decade. Prior to joining IWF, Patrice served as national spokeswoman and communications director at Generation Opportunity and worked at The Philanthropy Roundtable and the Fund for American Studies in policy and media roles. You've probably seen her on TV because she is a frequent commentator on Fox News and Fox Business. Patrice, thank you so much for joining us today.

Patrice: Thank you Beverly. It's great to be on.

Beverly: The first thing I want to start with is just the fact that Americans are so generous when it comes to private giving. The big question is why do people give in general?

Patrice: Well, people give for a number of reasons. Some people give for religious reasons. For example, they tie then give 10% of their income to their church or to a charity. Some people give because they're just altruistic. And I think that speaks largely to the American fabric, how we as Americans believe in coming together to solve problems in our communities. Even nationally and globally we're not waiting for the government to come in with solutions; we are willing to dig into our pockets, roll up our sleeves and get done whatever needs to be done. I think that can-do spirit that has been there from our founding, is really what makes us so different from a lot of European countries and other countries where they expect government to provide the solutions to tackle the problems and they're willing to pay high tax rates for that. We on the contrary, we believe in that private money going to private organizations that handle the same problems and do so more efficiently, more effectively.

Beverly:  I know there's been a longstanding debate on who gives the most. There's been this thought that liberals give the most because they do want to give through government. But when it comes to private giving, is it really liberals who give the most?

Patrice: It actually is not. Conservative households give 30% more than liberal households and that's even though their incomes tend to be about 6% lower on average. Now, this is not politically driven or ideologically driven; actually it has to do much more with religion. I think religion is one of the biggest or the most significant factors behind giving in this country. You do tend to see conservative household being religious and attending weekly services.

I'll give you an interesting statistic. Those who attend at least two or more services a month tend to give more than those who don't, as much as four times as much as those who don't attend a religious service at all.

So it's that idea that you are tithing, maybe you are just moved religiously or spiritually to give and that outweighs a lot of those who don't attend service. That's where it kind of falls between the conservative versus the liberal. It really does have a lot more to do with if whether you're attending a church service and you're a religious person.

Beverly:  And so then that begs the question, why do people give as much as they do even in reference to other countries. Some would say it's because of policy incentives alone, which we are going to get into the policy of this. But would you say, especially since you're looking at religious institutions, that that's not necessarily because it's a tax write off? Is that just an added benefit to something they already planned to do?

Patrice: It is. For example, the charitable deduction is one of those ways that the government recognizes private giving and encourages it. So you get a deduction on your taxes if you claim the amount of money you've given to charities. What's interesting though is that you have a lot of lower income households who give as a percentage of their income more than middle and upper class households, but they don't necessarily claim the charitable deduction. Maybe they take the standard deduction, which as we know recently was even increased more through tax reform.

So this idea that the charitable giving and the tax incentives are what motivates all givers in this country is very wrong. And so I think, and we'll talk about the tax implications, but when we think about giving, the spirit of giving, it is very much something that's altruistic, that's spiritual, that is just about that individual really wanting to make a difference in their communities and in the lives of other people than it is about the charitable deduction or the tax incentive.

Now, that's not to say that taxes don't matter. And so yeah, at this time of year, there's a reason why nonprofits get as much as 30% of their budgets from some charitable giving before December 31st. So it plays a role, but it's not the primary role.

Beverly:  One of the things that I think when we're talking about it from a policy focus it's understandable why this isn't discussed, but when you're talking about it where people are being charitable because of the desire to give and it's to let's say a religious institution, I think people who give and when you give, there's a blessing that you receive [inaudible 00:06:16] of course the verse, "It's better to give than to receive." What do you find is a blessing or a benefit that people receive when they can give of themselves to something else? I think that that's often an important part and something that is taken away when government is the giver to anyone in need.

Patrice: Well, certainly you get to be connected to the problem and the solution. So whether you are giving to a local soup kitchen or a homeless shelter for women, for example, those may be your neighbors. Those may be the moms and dads of kids who go to your children's elementary school. So I think part of the blessing that you're receiving is knowing that you're directly helping people that may be in your communities, that you're directly solving problems.

Also you have greater control over the resources and how they're spent. Unfortunately, when Uncle Sam takes money from our paycheck each week or we send a check in to the IRS at the end of the year, we have no control over how that money is spent. And very often we see federal funds going towards causes that we may be personally, spiritually, economically opposed to. I think there's a little bit of a blessing in controlling where your money gets spent and knowing that it's spent well and with greater accountability than frankly the black hole of government.

Beverly: Also like you were saying, the accountability part is if let's say I am a church or working on behalf of a church, if I know that I have to interact with the people who are giving, there's already that additional accountability built in that you know people are going to be paying attention that know you personally.

One of the things that I've wondered is as government grows and government becomes more responsible for welfare and helping people in the country is there then a tendency for people to give less as their taxes go up.

Patrice: There is, and that is called the crowding out effect. In that sense, people give to charities thinking about the total amount that the organization is receiving, not necessarily about who's giving to it. So if for example, you know that you're a charity of your choice, maybe your church, maybe an animal shelter has just received a new government contract of $10,000, well suddenly you're thinking, "Well I guess they really don't need the money that I usually contribute to that annual $10,000 fundraising event that they put on.

In essence, when government dollars enter private dollars leave. This is actually an economic principle that we see in lots of different areas where government funding crowds out what the private sector is able to do. What's interesting, the National Bureau of Economic Research, they found that for every $1000 that government sends to a nonprofit, donations fall by about $757. So almost 2 out of $3 falls, which means that now the nonprofit is really just kind of replacing most of the dollars that they're getting; they're not necessarily getting that much more.

Patrice: So I think it's incumbent on nonprofit organizations to really weigh whether that government contract is really going to be more important than the private dollars. And in part because when we go through recessions. When there's austerity in terms of our budget and programs get cut, suddenly the contract that you expected and have received every year may not be there the next year, and that means you've got to hustle to try to get those private dollars back and they just may not return.

Beverly: What do you think is the right balance of government giving versus private giving? Do you think our current setup, and if you could explain a little bit more about where our policy is currently on this, do you think that we're on a good path? Are we too government heavy? And if so, how do we navigate this?

Patrice: Well, that's a really interesting question, Beverly, because I think it depends on the industries that you look at. Let's talk about what private giving has delivered to us. Well, it's delivered medical breakthroughs like polio vaccines, penicillin. It's delivered to us the idea of white lines on the highway separating lanes so that people know which direction to drive in. There's some really remarkable inventions, discoveries. Even just the spread of information. Educating slaves post civil war, that was done by private giving, not by government dictate from Washington.

Suddenly now we're at a place where ... in education, in medicine, even humanitarian aid we see a lot of role for government. I think that there could be a good partnership between government and private giving in that private given will fund those ideas that are new, innovative but risky. But then all of a sudden you test it, it works. Those private dollars have proven that this is a great idea and now it can be scaled.

Patrice: So that's I think the area where government can step in and say, "Wow, this type of educational model works on a small scale in this city and it was funded by this foundation. Well, since it works here, let's try it in five different cities across the state. Let's try this in five different states. Let's make this nationwide and use some of the federal dollars that are already allocated in education for something that has been proven to work."

So there can be that private public partnership and that's actually what I'm talking about here. But what I worry about is, yes, sometimes when government comes in and it's particularly organizations start to depend more and more on those government contracts and on the government money that they leave less room for the private charity for the fundraising from individual donors and that really exposes them if per chance government decides to pull back on a contract or cuts budgets.

Beverly: Let's talk about different policy changes that government activists or government officials want to change. What are some of the threats to private giving? Are we expecting any battles in this area in 2020?

Patrice: We absolutely are. I think there are two key areas to be looking out for. There is the tax policy side and there's the donor privacy side, and you might throw in a third one that's more around leadership of boards, but I'm going to focus on the first two.

On the tax side, we know we have the charitable deduction, but regularly we have seen policymakers raise the idea of limiting the charitable deduction to families that make a certain amount of money. So if you're wealthy and make above, I'm just throwing out an arbitrary number of $250,000, well suddenly you can't claim as much of that charitable deduction. The idea of limiting the deduction, how much different types of earners can claim. Let's not forget that even though low income households gives the bigger portion of their percentage of their income to charity, big households, big earners, give in dollar for dollar the most when it comes to charity. So you suddenly make that change the incentives for upper-class households and you may start to see some negative backlash when it comes to what charities can raise.

Then also on the charitable deduction there's this idea that certain types of organizations you should be allowed to deduct your donations to certain types of organizations. So it's saying, "Oh no giving to your Alma mater, your college, giving to those big institutions that's not really charity. So you shouldn't be able to deduct what you give to those; you should only be able to deduct what you give to the soup kitchen or the homeless shelter."

Well wait a minute, the richness of our civil society is that you can give to whatever causes you like and that is what has created such a diverse civil society that expands every single issue you can imagine. I mean, you can come together and start a nonprofit to help kids learn how to cut hair and become barbers one day, and if you like that cause you can donate to that. So limiting the deduction to certain types of charities puts government in the role of picking winners and losers among charitable causes. That's wrong.

Beverly: A part on that I wanted to pick up on that you mentioned, which I think is such an important part. You talk about people being able to choose what they want to give their money to, maybe even creating something new if they find that there's a vacuum for it, but you brought up this aspect that has been talked about a lot, which is whether or not donors can remain anonymous and that does seem to be a big battle. You even have people being doxed on Twitter, where their name and information is being put out there. But the anonymity of donors, why do you think that aspect is so vital?

Patrice: Oh, it's so important. Number one, I mean for some religious givers, they are required by religious teachings not to promote what they give and not to assign their name to their giving. For other people, it's simply a matter of safety. They don't want to expose their family and themselves to potentially being targeted, kidnapped, or frankly having a bunch of people would knock on their door asking for money every day.

And then as you talk about doxing and this idea of publicly disclosing private information, people don't want to be harassed. That's particularly true if you're giving to political causes or to causes that are not popular with some people or part of the mainstream. I mean, let's go back in history and look at the civil rights movement. Let's look at the gay rights movement. Let's look at abolition. During their time, it was not popular to support those causes, particularly to do so publicly. You could suffer economic reprisal, physical reprisals, harassment and what's popular today, boycotting. So if you, for example, support the president, your company may be boycotted online.

And so this idea that you should be able to keep your donation private if you so choose is very much a part of charitable giving and our history and should continue to remain so. But we do have states, and this is really a state issue we're seeing, introducing donor privacy laws. And they're really painted as this bringing sunshine to charitable giving and bringing sunshine to philanthropy, but it exposes people who would rather remain anonymous for many good reasons. It's not about being a nefarious reason; it could just be that you want to protect yourself and your family and you want to make sure that you're not going to be harassed. And so we've got to push back against those challenges that we see coming up at the state level.

Beverly: I do want to let people know, the policy focus on this is out. This is written by you. So do go to iwf.org. People have more information that they want to get on this. Please go there because it has all of this detailed.

But I want to kind of wrap up what you expect the battle to me on the federal sense. We did have tax cut reform about a year and a half ago. Of course a lot will depend on whether or not Congress is able to do anything this year. Do you see any potential battles where you see on the federal level where we see Congress trying to make changes to what we're able to deduct and how that would impact private giving?

Patrice: Well, I think you're always going to see Congress, particularly those on the left, come up and float these ideas around greater transparency and giving. You may see that if for example, the senate flips and the presidency flips, you may have now an administration that's looking for greater revenue and will target the charitable sector for greater revenue. Whether that's changing the deduction, as I talked about, limiting it to certain types of income levels or frankly just increasing taxes.

I mean, what's great about giving is that when you have more discretionary income, you have more money to give and that could be beyond your ties or beyond what you usually do. And so when you start to look for revenue, and that could be increasing taxes or limiting the charitable deduction or even putting limits on other types of giving vehicles such as donor advised funds, those are areas where at the federal level, I think we need to be on the lookout.

Now again, that's going to depend on I think how the 2020 elections go. These are not issues that are going to go away. I think they're going to be continual issues because you're always going to have a society where there are people who believe that, "You know what, let's give government all of the money to solve problems." And then others who believe, "Actually I think I and working with my community, other nonprofits are better able to solve those problems."

Beverly: As we hear a lot of politicians, especially some candidates right now talking about the wealthy should be paying more, we have too many millionaires and billionaires, if we did tax the highest income earners in this country, would we see a dramatic impact on different organizations, nonprofits that we like? Would their donations decrease do you think?

Patrice: I think they would because wealthy donors tend to be a little bit more motivated by the tax implications. Certainly they're able to get a bigger benefit because they're not taking the standard deduction; they're actually itemizing. But I think that when you start to really chip away at the income that they have, they're going to say, "Well, you know what? What should I do? What can I do with the giving?"

Now, I don't necessarily think we would see giving drop 50%, 30% but I think it would make enough of a dent that you could see scholarships at risk. Colleges and universities could see a decrease in the funding that they're receiving from their alumni networks. There may be some decisions about what projects to fund and some of the more traditional charity type organizations may benefit and others that tend to be considered oh that's nice to do, they may not get as much money.

I just think that we want to ensure that charitable giving, that we continue to encourage charitable giving, that policymakers recognize and continue to protect the role that it has in our country and to encourage it. Wouldn't it be amazing ... right now I think we give about 1.5% of our gross domestic product, which we're talking about $428 billion a year, imagine if we were giving a 10th of that. Imagine what problems could be solved in our communities. I think that would be great to get to if we could get there.

Beverly: And final question for you. I'm going to put you on the spot a little bit. I didn't tell you I was going to ask you this. But since we're only a few days away from 2020 and people can still get in their donations and therefore get a tax deduction, why do you think IWF is a place people should donate to?

Patrice: Independent Women's Forum is a place where women have put together common sense policy solutions that span a range of issues, but we're really trying to make a difference with these policies. I think we have a track record of coming up with ideas that actually get turned into real policies that have a better impact on people's lives. I'm talking about everything from earned [inaudible 00:22:29] around maternity leave to tax policies. I think we believe that the best outcomes for women, for families, for all Americans is when we have more control over our resources, our time, our businesses, and those are the types of policies that we really push for.

I think that we're a great organization to invest in. You can even invest in us through AmazonSmile when you were trying to get that last minute package. But investing in public policy could be just as critical as investing in soup kitchens and animal shelters.

Beverly: I'll put my own plug in as well. IWF I think is a great organization. It's been a pleasure for me to be a part of it as a fellow in the past year. And I can honestly say even prior to being officially affiliated with IWF, that the policies that you all researched and that you've worked on and that you've been working on, Patrice have benefited me as a business owner. So I want to give that push for people out there as well if they're looking to give. Independent Women's Forum is a nonprofit organization that you can give to and since we're talking about private giving today, why not put the plug. And do check out Patrice's policy focus on iwf.org on private giving if you want more information. But for now, Patrice, thank you so much for joining us.

Patrice: Thank you Beverly.

Beverly:  Before you go, I did want to let you know of a great podcast you should subscribe to in addition to She Thinks. It's called Problematic Women. It's hosted by Kelsey Bolar and Lauren Evans, where they both sort through the news to bring stories and interviews that are of particular interest to conservative leaning or problematic women. That is women whose views and opinions are often excluded or mocked by those on the so-called feminist left. Every Thursday hear them talk about everything from pop culture to policy and politics by searching for Problematic Women wherever you get your podcasts.

Last, if you enjoyed this episode of She Thinks do leave us a rating or a review, it does help and we'd love it if you'd share this episode. Let your friends know where they can find more She Thinks episodes. From all of us here at Independent Women's Forum, thanks for listening.

 





Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
Follow us