The scale of the funding disparities between trendy arts and environmental charities, on the one hand, and humanitarian charities, on the other, can be staggering. For instance, one popular nonprofit, the Community Center for the Arts, had $268,158 back in 2000, but its assets grew to $40 million just seven years later—an increase of nearly 15,000 percent. Likewise, environmental charities have also seen stunning growth: in 1997, the Jackson Hole Land Trust had $3.9 million in assets, but by 2014 it had $22.5 million. Meanwhile, the Latino Resource Center, a prominent human services organization, had $355,452 in assets in 2014, a relatively modest increase from the $126,438 it had in 2005—giving it roughly 1 percent of the assets held by some of the more fashionable conservation and arts charities.
This is from a review essay of Billionaire Wilderness: The Ultra-Wealthy and the Remaking of the American West, by Justin Farrell. The book sounds interesting.
The non-profit sector is much over-rated in our society. Non-profits seduce young employees with the intention heuristic–the mission of the organization must be good, since it does not seek profit. But non-profit status is mainly a way to avoid accountability to customers. The only accountability is to donors.
I wish that the only non-profits that we had were those dedicated to helping poor people take care of basic needs and obtain education and training. If I were king, I would get rid of the non-profit status for universities, environmental groups, and other organizations that employ and serve the affluent.
Arnold;
You – like many others – mistake the real reason for granting the tax exemptions. It is not because society gets some benefit from the organizations; making them quasi-governmental and thus state-sanctioned and supported. It is because there were reasons why society might fear the organizations and the government might seek to destroy them; the power to tax being the power to destroy. So churches, initially, being the biggest lightning rods for potential censorship, and the universities, arts, and charities they supported as part of their religious mission, were exempted from taxes. The perversion was the establishment of secular equivalents (competitors) by the government and the provision of direct government financial support to either… which quickly became an indirect power to tax, by threatening to withdraw this support.
This analysis is most clear at the federal level; though most states became little copies of the federal government and so it can apply there as well.
It’s one thing to make certain organizations exempt from taxes, it’s another to make the donations to those organizations tax deductible, and it’s yet another thing to allow such deductions for sketchy items like tickets to observe college athletic events (these were 80% deductible until the Trump tax reform, which repealed it), names on buildings and schools at prestigious universities, or in-kind items like ‘art’ asserted to be valued at crazy inflated prices.
If you repeal the tax deduction, most people would continue paying their dues to their houses of worship and buying tickets to watch the games, but a lot of the rest of the nonsense will evaporate.
Would most people continue paying their dues? And would they at the same level?
If you exempt the organization but tax the contribution, seems like it’s just disguised taxation of the exempt organization; all you’ve done is shifted the incidence some.
If the goal is to have exempt organizations provide services and assistance, rather than the government, taxing the contribution would have a counter-effect.
Preach it! Can I hear a big “amen” for brother Kling?
Eliminating income taxes in favor of consumption taxes might help neutralize such tax distortion.
Amen!
We often hear that the welfare state has crowded out philanthropy. We should distinguish two questions: Does the welfare state reduce aggregate philanthropy? Does the welfare state change the composition (targets) of philanthropy? Casual observation suggests that there has been a shift away from the destitute (poor, ill, disabled) and towards fancy colleges, arts, preservation (causes of the HEE). Might readers point to a good overview of changes in the composition of philanthropy since the New Deal?
Perhaps:
“Inventing the Nonprofit Sector” and Other Essays on Philanthropy, Voluntarism, and Nonprofit Organizations
by Peter Dobkin Hall
The blurb notes “The oldest American nonprofit corporation—Harvard College—dates from 1636, but most of the million or so nonprofits currently in existence were established after 1960. In “Inventing the Nonprofit Sector” and Other Essays on Philanthropy, Voluntarism, and Nonprofit Organizations cultural historian Peter Dobkin Hall describes and analyzes the development of America’s fastest growing institutional sector.”
Thx for the pointer.
I would add most churches to the list. Limit tax-deductability and tax avoidance status to only those functions you mentioned. The fancy new golden cathedral that is basically just a gleaming clubhouse for the tribe? No way.
I can’t think of anything worse then ugly modern churches that try to be purposely ugly.
The poor will always be with us. At least let them worship somewhere grand. Impoverished medieval peasants would commit generations of effort to that goal, even when it was just a local chuchhouse that outshone their hovels.
Sometime in the last year I heard that argument from a bishop on the conservative Catholic radio system EWTN.
He noted that the church was concerned about serving the poor and had a social doctrine and various programs.
It was also the case, he said, that the poor needed beauty in their lives, and churches should be a place of calm, order, quiet and beauty. Those things were needed by the poor as much as by the rest of us.
Who said this I don’t recall. He may have been discussing a new cathedral completed or in the works in someplace like San Diego, CA.
This issue is complex.
Some of the worst examples come from charities that are basically run as businesses to provide a source of income for their founders and employees.
The temptation is world wide. Long ago in Kenya they said you could only get rich in two ways: coffee and tea. Later “and tourism” was added to the folk wisdom. Next it became
“There are only four ways to get rich in Kenya. Coffee, tea, tourism, and NGOS.”
It is more than that. A common theological perspective on art and beauty is that of a thinning or breaking down of the barriers between the material and spiritual realm. The idea is that inspiration (a spirit ‘blowing in’ the idea to animate the artist, the Greeks used words similar to ‘pneumatic’) is not mere ‘influence’, but literal, not some mere metaphor with evocative imagery useful for conveying the feeling.
It is exposure to truly great art and extremely beautiful and sublime objects that feature quire often in tales of deeply religious experiences, and conversion events, and beginnings of lifelong spiritual journeys, e.g. Rod Dreher at Sacre-Coeur in Paris or Albert Brooks at Our Lady of Guadalupe in Mexico.
A church that gives up on that is not only being stupid and foolish, but turning away from God and their responsibility and duty to serve Him.
In the theological perspective, great performing artists are getting themselves into a special state that is opening the door to the other world allowing it to move them, and the enhanced emotions and resonance of audience is in part the sensation of being exposed to such spiritually-amplified phenomena. Indeed, there was some extensive commentary on the dangers because the door could be opened to malevolent and corrupting influences as well.
The elite embrace of intentional ugliness in public spaces – and their ability to impose it as a manifestation of their power to make aesthetic decisions – as part of their need to signal sophisticated distinction from ordinary human reactions and experiences, is yet another unleashing of the demonic, and Le Corbusier earned for himself a special place in hell for his service to the dark lord.
The writer / polemicist David P. Goldman, aka Spengler, has entitled one of his essays “Admit it, you really hate modern art.”
Sorry, Arnold, neither financing nor aid is unconditional. Leave aside the small change that we give to others so we can go on with our lives. Many grand enterprises have been funded by conditional aid, including the Catholic Church’s world enterprise and the Tompkins’ parks mentioned in this NG article:
https://www.nationalgeographic.com/magazine/2020/05/how-an-unprecedented-gift-built-a-legacy-of-conservation-in-patagonia-feature/
Who benefits from those enterprises? Sometimes a few people, other times many people. Many times the beneficiaries are people that share the donors’ motivation (say, to go to Heaven or a high-altitude park in the Andes). Other times they are the donors’ target population: donors subsidize these people’s access to some goods and services. Every time that I hear the Pope preach solidarity, I laugh at him because he’s not maximizing the flow of goods and services from the Church’s assets that may benefit the poor (btw, decades ago the Pope and I had the same mentor in Catholic Social Teaching but he didn’t study Economics).
In 1991-93, I worked on foreign aid to Africa. My job was to design conditionality for aid to be effective in achieving donors’ goals. It was frustrated to see most European governments impose their pet projects on the African governments, projects for which the donors funded only part of the fixed costs and none of the high operating costs. They didn’t like my final recommendation: to stop asking African governments to subsidize those projects.
“I would get rid of the non-profit status for . . . organizations that employ and serve the affluent.” I would rather eliminate the corporate income tax.
Non-profit often means that the excess that would be “profit” is consumed in higher salaries and benefits for senior staff. Also, some charities also seem to exist to provide a social life for donors through their gala events.
I recommend the 2016 post at Coyoteblog on “Lifestyle Charities”.
https://coyoteblog.com/coyote_blog/2016/08/the-lifestyle-charity-fraud.html
“For decades I have observed an abuse of charities that I am not sure has a name. I call it the “lifestyle” charity or non-profit. These are charities more known for the glittering fundraisers than their actual charitable works, and are often typified by having only a tiny percentage of their total budget flowing to projects that actually help anyone except their administrators. These charities seem to be run primarily for the financial maintenance and public image enhancement of their leaders and administrators. Most of their funds flow to the salaries, first-class travel, and lifestyle maintenance of their principals.”
Another oddity: There is an ongoing proliferation of non-profit centers, foundations, institutes in DC, often formed by members of an outgoing Administration. They get funded (largely by multinationals) and then the members return to power in the next Administration, or act as lobbyists but without the lobbyist hat.
Arnold, we should never forget that by far government bureaucrats are the most rotten and corrupt people. The malinvestment by wealthy people is peanuts compared with the abuse of power by government bureaucrats for personal benefit. For a recent example, read
https://www.ft.com/content/054a529c-e793-489b-8986-b65d01672766
Is Krumholz the one behind the Crooked Timber blog?
For what it is worth, Armen Alchian suggested that non-profits will on average employ prettier secretaries.