The Charitable Deduction: Who Really Benefits?
Kevin K. Murphy
President, Berks County Community Foundation
Living inside the Washington beltway must be a profoundly disorienting experience. Maybe there’s something in the Potomac River, maybe it’s just too much time in the world’s most self-absorbed echo chamber, or maybe it’s just the pressure of too much traffic. Honestly, I don’t know.
But there must be something that explains the recent Washington Post editorial by Fred Hiatt that concludes that the federal income tax deduction for charitable contributions “overwhelmingly… benefits the wealthy.” Mr. Hiatt goes on to opine that “the rest of the country has to make up the gap.”
Huh? Only in the current weird climate of our nation’s capital could anyone conclude that the benefits of the charitable deduction accrue to the people who donate money to charitable causes. And only in D.C. could a newspaper imagine that it’s news that the people who give the money are — sit tight now — people who have money to give.
Since it doesn’t seem obvious to the Post, and growing numbers of others hold the misconception that the charitable deduction only benefits the wealthy, perhaps a little clarity from out here where most of the nation lives would help.
People who donate money to the March of Dimes are encouraged to do so by the charitable income tax deduction (which has existed since 1917). The March of Dimes has had some pretty big success with that money. It funded the research that lead to the Salk vaccine that prevents polio. In 1954, there were about 38,500 new cases of polio reported in the United States. Since 1999, there’s been one case reported. The World Health Organization reports a global drop in new cases of 99 percent since 1988. I’m pretty sure the beneficiaries of the charitable gifts made to the March of Dimes are all the people who didn’t contract polio this year.
There’s a little town north of where I live called Bethel. Sitting at the base of the Appalachian Mountain range, Bethel’s population would be described as somewhere in the working-class to working-poor range. More than 40 percent of the children who go to the elementary school there qualify for free or reduced lunches. There’s not much in Bethel, but they do have a library. It’s only about 1,500 square feet, but it’s packed with children after school and it circulates about 150,000 books a year. For many in the community, it’s also the only place to access the Internet. Last year, the people in Bethel raised more than $40,000 to keep their library open, and I’ll bet some of those donors took the charitable deduction. But the beneficiaries, it seems to me, are the children whose reading levels improved and the people who were able to find critical information about jobs, health care and perhaps even read The Washington Post online.
This list could go on and on. Outside of the Washington D.C. orbit, every town in America, in fact, every American can tell you who benefits from the charitable deduction — or perhaps when they themselves benefited from it.
And anyone with, as my late mother would have said, “the common sense that God gave a goat” can understand that the charitable deduction doesn’t “benefit” the giver. If I have $100 and I keep it, I have $100. If I give that $100 to the local food bank and, if I were entitled to the 35 percent deduction that Mr. Hiatt finds so offensive, I’d still be out $65. The charitable deduction would reduce my cost of giving, but it sure doesn’t make money for me. What that $100 does accomplish, though, is to fill backpacks with food for some of the many children in Reading, Pa., who live in poverty. Those children take the backpacks home each Friday after school, ensuring they have something to eat over the weekend until they come back to school on Monday.
Mr. Hiatt concludes his editorial with a list of some of the choices that Congress will have to make and the comment “You need to keep all of them in mind as you decide how much you want to pay to help renovate that hospital wing with the billionaire’s name above the door.” Out here in Reading, very far from the beltway, we’re all very grateful to Terry McGlinn and his family for donating the money for the McGlinn Family Regional Cancer Center at Reading Hospital. The center is a specially designed facility where all of the specialists who treat cancer are located together, making it easier to create and implement a holistic plan for patient care. Every year, the center treats about 1,600 cancer patients. One year that group included my wife. If you asked my sons who the beneficiaries of the McGlinn’s generosity were, they’ll say “we are because we still have Mommy.”
That’s how we understand the charitable deduction out here, a long way from Washington. Perhaps the folks from the Post should come visit.