New Issue of Philanthropy Management: Taxes on charitable giving tend to work against the public good

Among developed nations, US and UK offer charities the most generous tax relief

Jul 17, 2012, 11:21 ET from Philanthropy Management

NEW YORK, July 17, 2012 /PRNewswire/ -- In the new issue of Philanthropy Management, a panel of experts from the philanthropic sector agreed that charitable giving is often hampered by misdirected government tax policies.

Sam MacDonald, charity taxation expert for Farrer & Co., a London-based law firm, told Philanthropy Management, "There's a point where the logic of taxing charities falls down. Taxing the assets of a legitimate charity takes money from a public good and recycles it to deliver what is purportedly another public good. It can be difficult to see what benefit has been achieved."

Government taxation of charities tends to reduce the philanthropic sector's ability to address social needs that are often not covered by government, according to Richard Schwartz, Philanthropy Management's editor. "This calls into question the ability of tax authorities to assess the consequences of their policies," he commented.

The panel considered the position shared by Stanford University's Robert Reich that charitable giving is a form of consumption and should be taxed as such. Schwartz and other panelists questioned this thinking, noting that it equates consumption with activities that can contribute to, and strengthen, society.

Members of the panel observed that the US and UK have consistently enjoyed a high level of giving, according to a Charities' Aid Foundation study. Perhaps not coincidentally, they also offer the most generous tax relief among developed nations. Germany was mentioned as an example of a country that offers minimal tax relief and has a much lower degree of giving as a percentage of GDP.

Panelist David Altschuler, chairman of the Board of the One to One Children's Fund, suggested that government services and philanthropy are not mutually exclusive. "Somehow we need to find a way to work more closely together, whether fiscally or in partnership," he said. Charles Keidan, director of the Pears Foundation, concurred that there is no reason why public-private partnerships shouldn't exist, but cautioned that nonprofits should not undertake initiatives that are "the proper role of government."

About Philanthropy Management
Philanthropy Management, an Asset International publication, focuses on the financial, operational and strategic services provided to foundations, endowments and other large-scale grant makers by banks, asset managers and other professional advisors. Edited by Richard Schwartz, it is distributed globally to more than 11,000 senior executives within the largest grant making entities in the Americas, Europe, Asia and Middle East, including foundations and endowments, family foundations and family offices. Philanthropy Management aims to provide philanthropic institutions with a broader and more refined range of tools, resources and research to measure their own success and the impact of the advisors they use. Please visit

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