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From the Chairman
I urge you to read the Wall Street Journal’s article “Nobody Does it Better” (October 24, 2008), which addresses a terribly troubling issue that could potentially affect all nonprofits in and out of the arts. The article suggests that Congress may re-examine the charitable tax deduction—expected to amount to some $32 billion in 2009—to consider whether the deduction should be reserved only for those organizations that can show that they are directly serving, in the phrasing of Representative Xavier Becerra, “the poor and disadvantaged.” Becerra, a member of the House Ways and Means Committee, has also raised concern about what he views as the low level of racial and ethnic diversity within organizations supported by charitable contributions.
The proposition that Congress might involve itself in evaluating the relative merits of charitable organizations after setting the guidelines under which the IRS grants nonprofit status to an organization suggests that subjectivity and inequity would become the cornerstones of our charitable tax policy. Representative Becerra’s words alone are fraught with unruly concepts of nonprofit evaluation. Who, precisely, are the “poor and disadvantaged”? And what constitutes an “appropriate” level of racial and ethnic diversity within organizations supported by charitable donations?
Nonprofit organizations, including the International Sculpture Center, currently comply with IRS guidelines to acquire 501(c)(3) status and then compete in the charitable marketplace for donation dollars. The qualification process and the ensuing competition represent a fair balance between regulation and free market principles. There is, of course, no shortage of worthy causes seeking funding, and the constituencies served are surely, on balance, all deserving in some way
or another. Might Representative Becerra find that the Museum of Modern Art doesn’t serve the “poor and disadvantaged”? What about local museums and art centers that provide arts education and exposure to thousands of students who have had those programs cut from their public school curriculum?
For many decades, Congress has worked for a tax policy that encourages donations to nonprofit causes demonstrating a desire to operate on a not-for-profit basis and serving a legitimate societal purpose. If Congress were to start vetting individual organizations to determine who is providing worthy services beyond the requirements currently in place, who is to say which religions, social causes, and arts organizations would be deemed worthy? Will these determinations now be subject to the same lobbying and corruption that already pervade for-profit activities seeking Congressional support?
Only time will tell how serious this effort to re-examine the charitable tax deduction will be, but even the notion of such a re-examination on the grounds sought by Representative Becerra should send shivers down the collective spines of all of us who give so much of our time, money, and effort to organizations we believe to be worthy of our attention. I have previously written in this column about my belief in equitable tax policy, and it is again time to remind our federal and state legislators that their role is to ensure that our tax policies encouraging charitable giving are equitable, and consistently applied and enforced. The rest should be left to the market to determine.
Chairman, ISC Board of Directors
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