Matthew Gerken, writing at Philanthropy Daily, has some good thoughts on the future of tax exemptions for religious institutions and nonprofits. I tend to agree with Mr. Gerken–the more institutionalized the group, the less threatened it is from losing the exemption. So, while a specific church or diocese is probably not going to see the effects of Obergefell for some time, smaller groups that are Christian or Catholic may be more susceptible to attack. And, as is often the case, the smaller groups that are less enmeshed in the official organization of the Church also tend to have fewer funds to fight the challenge to their exemption. Gerken’s piece reveals what donors and exempt religious organizations can do about future challenges to the exempt status and, in the end, whether it matters to most donors.
Gerken’s reasonable attempt to evaluate the problem and potential solutions contrasts sharply with another potential solution. Mark Oppenheimer writes that it is time to abolish tax exemption for charitable organizations–religious ones in particular–because the rationale that created the system no longer applies. Oppenheimer’s “solution,” however, is based on a view of society where the big-G Government is in the best place to deliver the goods and services that many nonprofits provide.
Defenders of tax exemptions and deductions argue that if we got rid of them charitable giving would drop. It surely would, although how much, we can’t say. But of course government revenue would go up, and that money could be used to, say, house the homeless and feed the hungry. We’d have fewer church soup kitchens — but countries that truly care about poverty don’t rely on churches to run soup kitchens.
Oppenheimer, I think, misses the point of charitable giving in America. Ideally, we would not create yet another national welfare system to support the many charitable works that religious groups already perform. (Oppenheimer’s assumption that the additional government revenue would automatically be directed to these endeavors is simple naive.) We do not want the government in the charity business. That is part of the problem. The original idea behind charity in America was something far more personal, local, and, in the end, charitable. The rise of “philanthropy,” as it is known now, is really a distortion of the original purpose and intent of charitable giving, but it seems to lead naturally to Oppenheimer’s way of thinking. (For a thorough and insightful history of philanthropy, see Jeremy Beer’s new book, The Philanthropic Revolution.)
Only time will tell whether religious and other nonprofits are stripped of their tax exempt status, it may be an opportunity for believers and others devoted to particular causes to reflect on the true nature of charity and return to supporting their local communities. That is something we should not fear; indeed, we should embrace it.