This sector needs to care more about tax policy

I’ve been fuming since the Tax Cuts and Jobs Act was passed. Well, I’ve been fuming since November 8, 2016 (or maybe since birth, if I’m being honest) but that’s not the point right now…

I’ve been trying to wrap my head around all the thoughts and feelings I have about this atrocious piece of legislation (and there are lots of them!). To date, lots of good stuff has been written about the bill and its potential impact on nonprofits.

But I’m dismayed that the majority of the analysis coming out of the nonprofit sector about the tax bill is focused on the impact this is going to have on philanthropic giving. There’s endless speculation about exactly how much less people are going to donate because of the change to the charitable tax deduction. But the truth is—we don’t know. And no amount of hand wringing is going to figure it out. Study after study has proven that a tax deduction is not a meaningful incentive for giving so I suspect the sky is not actually going to fall. Build strong relationships with your donors (something you should be doing already) and let them know they make a difference (something else you should be doing already) and you should be fine.

In the meantime, maybe our philanthropic associations and advocates for the nonprofit sector can weigh in on some of the outcomes we’re 100% guaranteed to see because of this irresponsible reform…

For example, the tax bill is going to widen the already vast chasm that is the wealth gap between the rich and poor in the United States. We don’t have to wait until the end of the year to know that this is going to have a devastating impact on millions of people already struggling to survive. There’s also no question that taxpayers with incomes of $1 million or more will get an average tax cut of $69,660 in 2018. And by 2027, 81% of the tax cuts will go to people making more than $1 million, while taxes on those making less than $75,000 will go up.

What does this mean for the nonprofit sector?

One implication is that your wealthiest donors are going to have more to give. Maybe the philanthropic leaders so fixated on how much giving is going to decrease could talk about how the ever-more-wealthy can use their unearned windfall to stop the bleeding social service agencies are going to face when funding for federal programs and local aid is slashed again and again… Or better yet, how they can invest their “tax savings” in organizations working on progressive tax policy to reduce the growing divide between the haves and the have-nots.

The bottom line is this: The nonprofit sector needs to care more about tax policy on a broad level, not just when it may affect our fundraising.

As Dr. Martin Luther King, Jr. so eloquently said, “Philanthropy is commendable, but it must not cause the philanthropists to overlook the circumstances of economic injustice that make philanthropy necessary.”