When Nonprofiteers Want Tax Breaks for the Wealthy

As a nonprofit professional, I have a career stake in the question of how much people donate to nonprofits.  So does just about everyone in my sector.  It's mostly a touchy-feely, liberal-leaning group, but when there's even the slightest question about whether your major donors will give as much next year as they did last year, we tend to get a little jumpy.

So as it turns out, even social-equality-loving nonprofiteers can get enlisted over to the side that says rich people shouldn't pay more in taxes, even though these individuals are now earning much more and paying much less in taxes than they were two decades ago.  A recent debate raised by a post on Blue Avocado has inspired me to get in writing a few basic facts--a list of the nonprofit sector's limitations--that I think any nonprofit person should consider before they go to battle on behalf of the super-rich:

1. Nonprofits are not elected, nor are they in any way accountable to the public.  I would submit that there's a big philosophical dissonance when you argue that only those who can afford to pay should be making decisions concerning the common good.  This is what happens when nonprofits are the primary providers of social services.
2. It does not take any issue expertise to give to a nonprofit.  Say what you will about public servants: their careers are invested in public service.  Of course, foundation professionals are often subject experts; but even at their best, they are primarily answerable to someone who is unlikely to be an expert on the issues of our time.  And foundation giving only accounted for 14% of total giving last year.  The rest, presumably, took place without expert input.
3. People who earn more give less of what they have.  This is confirmed both by charitable giving stats and by behavioral studies of cooperativeness among people in different income brackets.  When you leave people absolutely free to decide how generous they want to be, those who have the most will not choose to contribute as much as others.  I find it hard to imagine what, other than progressive taxation, can successfully break this segment's overriding behavioral tendency toward stinginess.
4. Giving tends not to be rationally or strategically considered.  I don't think even the most sanguine foundation executive could successfully argue that people always give to the causes that are most in need.  For one thing, it's not the point.  People give for sentimental reasons.  The prevalence of "impact philanthropy" these days is the exception that proves the rule: we usually give to whatever cause is confronting us, without regard for strategy.  Too often, the problems that a rich person doesn't see are the problems that never get addressed.
5. The budget crisis is real.  Putting blind trust in politicians to resolve a budget mess isn't wise, but failing to resolve it means crippling society in ways that will hurt nonprofits--and all of us--before long.  Even if today's low taxes do support the proliferation of major gifts, I think it would be short-sighted to argue that the current tax structure is sustainable for the American experiment as a whole.

As for whether the Obama administration is right in wanting to cap the charitable tax deduction for households earning over $250,000--there I'm much less convinced.  Certainly I think it's critical to raise more tax revenue from those who can afford it.  But as long as the tax rate remains somewhat near where it is today, the social sector will be reaping close to $3 for every $1 forgone by the government as long as charitable tax deductions remain unlimited.  Assuming the wealthiest donors are motivated substantially by tax deductability, that's a return on investment that's hard to beat.

But the idea the rich shouldn't pay more taxes on their incomes and capital gains--when no connection between progressive taxation rates and and charitable giving has been established--is not a smart position for nonprofits to take up, no matter how indebted they are to their wealthiest patrons.  Nonprofits are crucially important to our society, but a successful society also requires a functioning government (in part to fund many of these nonprofits), and that is exactly what is slipping away from us.  I think it will take nonprofit employees' understanding of the big picture, especially when jobs at our organizations are at stake, to prevent our becoming a part of the problem, instead of the solutions we're all so eager to see.

Class Warfare, or, Why One Might Take a Part-Time Job

So, class warfare has come up this week—it looks like we are heading into an election cycle where the word "class" might keep coming up a little bit more often than it has in the past.  I'm guessing both sides will simultaneously gloss over the causes of income inequality while accusing the other side of making class differences worse.  Both sides will be partially correct, because class differences are getting worse, and being social mobility really is on the downturn.  Yes, that apple-pie phrase "pulling oneself up by one's bootstraps" has started to recapture some of its original meaning.

The dynamics of class in America can make your eyes cross.  What made my eyes cross recently was my online encounter with Resource Generation, a nonprofit started in Boston in 1995 that "organizes young people with financial wealth to leverage resources and privilege for social change".  I came across them via a job posting on Idealist.org today, and while considering what it might be like to actually work for such an organization, I felt compelled to capture some of my thinking.

In terms of a mission, let me first say that very little in America may be more important than what Resource Generation is trying to accomplish.  With tax cuts financing lobbying pushing for further tax cuts ad infinitum until the state can no longer maintain the slightest semblance of a functioning democracy, the rich can and do control the destiny of this country.  And they will do so more and more as long as we keep spiraling down this awful path of power-leads-to-more-power.  Organizing poor people to fight for their rights is looking increasingly fruitless in these kinds of circumstances; what we really need is to somehow convince the rich that they will be fulfilled by a radical commitment to giving.  Not just giving—giving up; the abdication of their money and influence.  Giving to organizations that can reclaim democracy for the rest of us (here's one, for starters).  Resource Generation is fighting that fight (at least they are talking about fighting that fight, which is the best signifier I can glean, for the moment).

Next, let me also say that there are some great intentions going on at Resource Generation that in and of themselves are pretty unimpeachable.  These young people have decided that—despite the conflict this presents to their immediate financial interests—progressive social change is what they're about.  That's good.

And you can't really blame anyone for wanting to surround themselves with like-minded people from similar backgrounds.  It's what we do.

That being said, I think it's telling that the job Resource Generation is hiring for, which coordinates their chapters across the West, is 20 hours a week.  In other words—and I'm paraphrasing here—you should ideally be rich if you're going to accept this job.  Sure, a regular person like me could juggle another part-time position to make ends meet—and I won't say I haven't considered part-time work due to the state of the economy and the fact that some of the most interesting nonprofit organizations can only afford to pay you part-time.  I would be okay with fighting through a year or two of multiple jobs if I thought it would eventually get me where I want to be.  But when it comes to living a dignified existence where you earn more than you spend, there are few things less appealing than a part-time job.

By hiring this way, this organization has probably eliminated the vast majority of nonprofit professionals from their candidate pool.  I'm going to go out on a limb and argue that the people they are excluding are the most likely to go above and beyond their full-time jobs—because they care, sure—but because when you need a full-time job, it follows that have to be competitive and show results if you want to build a career doing what matters to you.  If you don't meet funders' and nonprofit employers' increasingly exacting standards of excellence, you can't raise a family; you can't buy property; you join the ranks of the poor people you would prefer to be serving.  So not only is part-time hiring exclusionary, it's precluding Resource Generation from ever bringing on board the kind of professionalism and seriousness that will make their ideals and the organization stand the test of time and reach the wealthy young people they aren't currently reaching.

Clearly it's of little immediate importance to the folks at Resource Generation whether they show a great track record of professionalism, or whether institutional permanence ever does materialize.  I counted 6 executive directors in the last 11 years while reading through their history page, and it's awfully hard not to read between the lines that these were people who could afford to walk away from a work situation the moment it became a little bit stressful.  Given the kind of self-absorbed detail they go into on this history page, it's clear that working tenure hasn't been a feature at any level of the organization, ever.  You can chalk some of this up to the youth factor.  But I think that in the process of creating a "safe space" for the privileged and young, they've mostly succeeded in creating a marginal space, with limited impact and marginal credibility, where rich kids will continue to be comfortably insulated and nothing consequential will be demanded of them.

I'm going to be optimistic and assume that many of these concerns have already been considered by the good folks at Resource Generation.  I'm going to hope that they are moving toward hiring more staff who are not themselves independently wealthy and are at least slightly motivated by the need to make a living, and that they're getting serious enough about fundraising from their immediate networks that they can afford to keep these staff.

I will take this a step further and say I hope for the sake of America's young progressive heirs that they are seriously considering taking that job their dads can easily get them at Morgan Stanley.  And mending ties with those jerks they went to private school with.  Now, that seems a little bit beyond this topic, and it probably deserves its own entry.  But in short, I'll say I believe those are precisely the jerks we really need to convince to go along with the progressive agenda if we're going to make any progress.  And Morgan Stanley could be doing a lot more good in the world, if it had the right people.  And for now, the only people who can do this work are at a Resource Generation gathering somewhere, eating organic snacks and exploring their feelings about privilege.  That's good, yes, and important to do.  But let's take the next step.

In the mean time, I think I've convinced myself to apply for that job.  Talking truth to privilege, in a setting where they'll actually listen—as I said before—what an incredible mission.  A mission for our times.