Not only do nonprofits get only a fraction of the money claimed as deductions, they pay a heavy price for accepting tax-deductible gifts. Last year the Supreme Court ruled that when it comes to free speech, corporations are the same as people and can contribute all they want to politicians and political action groups. All corporations except nonprofit corporations, that is. Support a political candidate from the pulpit, or contribute to your local congressman, and you will lose your tax-exempt status. Nonprofits also are the only segment of our corporate society whose executive salaries can be sanctioned for being "excessive." (Try flying that one past Wall Street.)
Philanthropy may be a Greek term, but America perfected it. It is so much a part of who we are, it is not dependent on well-meaning but often nonproductive attempts to subsidize or control it. Charitable Americans created the charitable deduction, not the other way around. Would you really stop giving to your college, church or to children in need simply because the charitable deduction were reduced or removed?
Obama's suggestion to reduce the top charitable tax deduction to 28%, which has been part of the jobs bill currently languishing in Congress, is a good start. But the budgeteers and tax code reformers ought to go even further. It's time to do away with the charitable deduction altogether.
Jack Shakely is president emeritus of the California Community Foundation.