It’s very easy to confuse philanthropy with ‘giving away stuff you don’t want.’ This is so much the case that it’s become something of a comedy staple. There’s an early South Park episode called ‘Starvin’ Marvin’ where the boys have to donate to a pledge drive for starving children in Africa, the whole enterprise fails pretty quickly as the only thing that arrives at school to be air freighted over is a small stack of creamed corn, a food that pretty much no-one in their right mind would want to eat and so processed and nutritionally bereft that it would almost certainly do as least as much harm as good. This type of thinking is present when you robotically dump your change into whatever charity coinbox is present at the counter, without checking to see which cause you’re donating to. This isn’t the worst crime in the world but it is a particular symptom of Western privilege – that compassion is only afforded when it is eminently affordable, when it is in fact costs the giver nothing at all. You might argue that “at least I’m giving something. Every little donation helps, right?” Well, yes and no. Sure the small change unthinkingly given by one hundred people will help a cancer charity, but it depends entirely on the quality of their annual reporting and accounts management as to specifically where that money goes. If a charity is poor at handling its accounts, your donation could be paying for stationary. Or somebody’s bonus. And that’s fine, but don’t expect to be called a philanthropist because of it. This is the moment where your money becomes creamed corn – it exists but it is utterly insubstantial, it feeds but it cannot sustain. And with just a little forethought, we can all do better.
So how do you give mindfully?
Giving meaningfully to charitable causes boils down to three key principles:
The first step is to give up mindless giving. Pledge that you will not reach into your pocket or dusty food cupboard purely in order to dispel guilt. Instead, know that you’re going to give something, be it money, time or goods to a charity which you believe in and concentrate your resources on finding the causes that you’re passionate about. This is an ideal opportunity to support smaller charities who don’t have the promotional resources of behemoths like Amnesty International or Oxfam. An important part of identifying need is also to evaluate what kind of help would most benefit your chosen cause.
It might be the case that you don’t have a lot of money to spare, but consider the other ways in which you can give. Perhaps you have professional expertise that would prove useful in a volunteer capacity – you might be a skilled events organiser, a gifted web developer, a facility with a white van or just have an excellent soup ladling arm. Smaller non-profits and charities are often crying out for the kind of skills you take for granted and if you are able to donate even a small but consistent amount of your time, the value of your work will be so much higher than emptying your pocket change into a plastic bucket. It can also help you gain valuable experience and even lead to an opportunity to explore charity jobs as a paid career option. Equally, if you’re time poor but cash rich, you can source the most deserving charity by looking at a site like New Philanthropy Capital in order to analyse which place your money would be best utilised. If you earn enough to pay taxes, make sure to declare your charitable gift on your tax return so that the charity can reclaim the basic tax rate.
This applies to situations where you are donating goods rather than cash or services. When it comes to donating items like food, toiletries and clothing, it’s important to take a step back and evaluate what would be most useful to your given charity rather than just ridding yourself of useless tat. For instance, a lot of food shelters have websites where they list the food and personal items that are running particularly short. Always make sure to research a particular organisation so that you’re offering the most relevant help. It often surprises people that camping equipment is in high demand – unwanted tents and sleeping bags can make a real and tangible difference to a homeless person’s quality of life.
So there you have it. Go forth and give, but give mindfully. Leave the creamed corn in the cupboard, the world will thank you for it.
Neil Golman writes about Third Sector jobs, philanthropy and working for not-for-profits.
Posted by Guest Blogger
Categories: Ways To Help
You have already had the brilliant idea and formed the nonprofit organization within your state to address the need in your community. Your organization meets all of the state requirements for a nonprofit organization, but you have discovered your efforts at fundraising are hampered by the fact that you do not have federal recognition of your nonprofit status; therefore funds to your organization are not tax deductible. What is your next step? How do you take your organization to that next level? Should you take your organization to that level?
If your organization has an attorney, you can ask if it is a prudent step. If you already know it is, then you can certainly complete the paperwork yourself. It is a process– and not a small one– to complete the forms and collect the documentation. Form 1023 from the IRS will guide you through the entire process. It also provides a complete checklist that you can use to make sure that you are providing the IRS with every piece of information, along with the appropriate user fee, that they require.
The organization needs to be aware that, while there are several advantages to receiving tax exempt nonprofit status (510c3 status), there are some disadvantages and the Board of Directors needs to have all of the information in hand when making the decision.
Your organization will receive a tax benefit by having this status. The organization will need to contact qualified tax/accountant professionals to ensure that all state and federal rules and regulations are being followed. The primary tax benefit will be that an organization does not have to pay taxes on the profits earned at the end of the year. This will enable the nonprofit put more funds back into the organization to further your mission.
For many nonprofits, this is the key advantage. Donations made to your organization become tax deductible once you have received your 501c3 status. This status makes your organization so much more appealing and trustworthy in the eyes of donors.
This does not just apply to individual and corporate donors but to the Federal Government, as well. Almost 100% of the federal dollars awarded through grant competitions are awarded to organizations that have 501c3 status. Simply put; if you do not have nonprofit tax exempt status you are not eligible to apply for and receive federal funding. If your nonprofit does not think it will ever need to rely on federal funding, then this may be something that does not persuade your Board. However, diversifying funding streams is essential to every organization– profit and nonprofit.
We have all heard the phrase: “There is no such thing as a free lunch.” And obtaining and keeping your tax exempt status is evidence of that statement. While the advantages may bring in various quantities of much needed funds, it is not without a price. From the cost to complete the comprehensive federal forms (unless you feel qualified to complete the forms on your own) to the user fee that EVERYONE who applies has to pay. The user fee changes frequently and it is advisable to double and triple check that fee before finally sending off the completed forms.
In addition,there are ongoing costs that are associated with maintaining your tax exempt status. These can include professional staff to monitor your program compliance, audit and accounting staff. Be aware before you apply that the costs do not stop when the application is mailed.
There are a number of words that could have been used to name this disadvantage; bureaucracy, compliance, rules or regulations. However, it all amounts to the same thing. The ongoing cost to keep your tax exempt status can all be boiled down to “red tape”. If your organization receives funds from the federal government, you have to spend that money the way your contract requires. They do check.
Depending on the amount of federal funding received and the organizations bottom line, a set of audited financial statements will need to be prepared by a qualified third party accountant. All of the rules, regulations and requirements are provided to you with your federal award. It is worth the time to read and understand that document so that you know what is expected of you.
The last thing a nonprofit organization wants is to have your federal funds recaptured, that is, having to pay back all of the federal funds you were given. No one wants that; so read your grant agreement fully and follow the rules.
Prepared by the Grammarly grammar checker writing team to encourage and educate in the field of non-profit activities in partnership with www.wideawake.org
If you have a desire for helping others, and are considering starting your own organization, a degree in social justice can help you learn the skills you will need.
Posted by Guest Blogger
I have already made many posts about taxes on this blog. The most stunning point to me in those posts is that the rich pay less taxes than the working class in terms of percentage of income–at least in the USA.
I didn’t want to make yet another post about taxes on a blog that is supposed to be about poverty, but I read an article this morning that got my blood boiling. In part, the Buffalo News Editorial says:
Congressional Republicans, who seem to have sworn some kind of blood oath to the preposterously unfair Bush tax cuts–regardless of the damage they do to the economy–now want to eliminate the reduction of the payroll tax they helped to enact last year. The reduction in payroll taxes, while it puts additional stress on Social Security, which it funds, is of greatest benefit to the middle class and working poor.
That’s because it’s a “regressive” tax, taking the same percentage of everyone’s pay, regardless of income level. The amount of income subject to the tax is also capped, meaning a portion of the income of higher earners—sometimes a very large portion—goes untaxed.
In other words, these politicians want to keep the regressive tax system we already have but also make it even more regressive! This is done by simultaneously lowering taxes disproportionately for the rich while increasing government spending and disproportionately increasing taxes on the working poor and middle class.
I understand the psychological complications of a two-party pseudo-democratic system that enable politicians from both parties to get away with a lot of selling out the many to the wealthy special interest few, but I am still surprised these politicians who openly try to make a regressive tax system even more regressive are not overtaken and tarred and feathered or some such by a stampede of angry masses fighting not only for what they think is fair but for what is clearly in their own self-interest. Maybe what gets my blood boiling with this issue is not so much the politicians who I personally have been long convinced are all—that includes both parties—special interest bought self serving liars. Rather what really gets my blood boiling about this kind of issue may be that the masses of people who have the real power in terms both of sheer numbers and productive ability just let themselves get so blatantly exploited.
What do you think? Please comment on this post, comment on any other posts about taxation or discuss the relationship between poverty and taxation in this thread about taxation and poverty in the forums.
For years CT has been dealing with a budget crisis. Spending is greater than revenue, and revenue is down as a result of the recession. In terms of poverty this is dangerous because government spending cuts need to be made and are being made, and that means many of the government sponsored-programs that are struggling to keep this state’s poor afloat are are a risk of being cut away leaving the people to sink into poverty.
Worse yet, the alternative–increasing taxes–can be just as harmful. One new tax attempt severely hurts local online retailers many of which are small businesses including many financially struggling entrepreneurs. Here’s the issue: States cannot collect sales taxes from out-of-state businesses. By absurdly claiming online referrers, who independently contract as advertisers for companies like Amazon and happen to live in-state, are a physical presence of the business in the state. In other words, the state intends to claim that paying an independent contractor a commission for advertising is tantamount to opening up shop in the state, even though neither the advertising nor the sales resulting from the advertising are actually happening in the state. If that sounds complicated it’s because it is so absurd a rationalization for collecting an illegal tax. Being such an absurd rationalization, there is a good a chance of the new tax attempt not bringing any new tax revenue. But what is simple is that this tax hurts CT businesses and struggling entrepreneurs.
This new tax means companies like Amazon will end their affiliate programs with any and all CT businesses and entrepreneurs. This is a painful loss of revenue for many of these CT businesses. Ironically, that means the state will be collecting less income taxes from these local businesses and yet will still not be collecting taxes from the out-of-state Amazon. I know this first-hand because I was an affiliate with Amazon until June 10th when they terminated me and all other CT affiliate advertisers. Now my income has gone down as a result of a failed attempt by the CT government to collect sales taxes on a Seattle-based company.
A well-written July 1st editorial from Investors Business Daily explains the way history repeats in regards to this failed tax attempt:
There’s a bigger issue at stake here, though. Ever since the catalog was invented, states have tried to force out-of-state retailers to pay their sales taxes. The matter went all the way to the Supreme Court, which in 1992 ruled that doing so violated the interstate commerce clause.
Now states think they’ve found a way around this restriction by vastly expanding the definition of “presence” in a state to include online marketing affiliates.
Also a New Haven Register editorial from May 27th summarizes the issue well in my opinion:
The budget counts on this new tax raising $9.4 million in the next year, although those following the battle over the tax, which is strongly opposed by online retailers, don’t expect it to yield any revenue next year[...] The likely loss of $9.4 million in tax revenue next year is minor in comparison to a state budget of $19 billion. Its impact, however, will be far larger on the small Connecticut companies that counted on the referral fees from Internet sales.
To balance the budget spending cuts and new taxes may both be needed. But we cannot let most of the burden of these spending cuts and taxes fall on small businesses, the poor and the struggling, who are already unfairly burdened, especially if the burden is from an ill-conceived tax or cut that doesn’t even work and won’t even provide the claimed balance to the budget.
Like many states and like the nation, my home state of CT is facing massive budget deficits that require significant budget changes to avoid bankruptcy and crisis.
I believe there are large amounts of wasteful spending that could be cut from the budget that would close most if not all of the deficit. Unfortunately, what is wasteful for taxpayers is often considered a sacred cow by special interest groups, lobbyists and and the politicians collecting the campaign contributions and other kickbacks from the ones receiving government handouts that they do not need. The regular folks and the poor would be much better off if this type of spending was cut regardless of whether we had a deficit or surplus, but it won’t be cut because of undemocratic, bipartisan corruption and cronyism.
So when cuts are made, they are made on the services that are needed most by the taxpayers, particularly the poor. Shelters are closed. School programs are cut. Emergency services like ambulances and fire departments are cut back. Social workers are let go. Poverty is increased. The poor are told to make sacrifices so the rich don’t have to make the sacrifices.
The alternative to these cuts is more taxes. Politicians may try to increase taxes on the non-rich, again telling us we all need to make sacrifices but really expecting the regular folks and the poor to make all the sacrifices so the rich do not have to. But on this blog I have often pointed out that the rich already pay less in taxes than the rest of us as a percentage of income. Even worse yet, today I read an excellent but upsetting article in the Hartford Current by Jon Green about how big corporations in this state use tax loopholes and avoidance schemes to swindle millions of dollars from the state and thus make the struggling working people and the poor to pick up the tab.
For instance, he explains how AT&T pays itself to use its own logo to avoid paying taxes. Jon Green writes, “Over a period of 2.5 years, AT&T shifted about $145 million in Connecticut earnings to a subsidiary in Nevada, ostensibly paying licensing fees for the right to use the company’s own name and logo. Nevada has no corporate income tax, so the shifted earnings went untaxed and Connecticut lost out. If it sounds fishy, that’s because it is. AT&T is not alone. Many large corporations use sham transactions designed to move profits generated in Connecticut to a different state where they won’t be taxed.”
My good friend sent me the following quote from an article in his local paper:
A family of four in England tips the scales at a combined 1,100 pounds. They can’t–don’t want to?–work, so they live off taxpayers, collecting the equivalent to take-home pay of $42,000, on top of the “free” universal health care for assorted ailments linked to their morbid obesity. The family, of course, is grateful for the government’s generosity with other people’s money. Not exactly. “What we get barely covers the bills and puts food on the table,” says the father in demanding bigger government handouts. “It’s not our fault we can’t work. We deserve more.” We wish we could say this isn’t typical of people on the dole everywhere.
The information provided leads one to condemn that family and the policies that allow them to collect the money they get without working. Of course, without more specific information I cannot comment on that specific family. For example, they could have some weird illness or injury through no fault of their own. Or, if two or three of the family members are children, I think $42,000 is too little to securely raise children and would advocate for more for the children. But they could just be lazy people who could take care of themselves but who choose to not take care of themselves and leech off the working class.
Regardless of what that specific family does, there are many people in this world who do simply leech off the working class. That includes families who could work and take care of themselves but instead choose to take advantage of charity and anti-poverty assistance. Even more, it includes rich people who leech off the working class taxpayers from government spending such as the executives and share-holders of bailed out companies and the industries who receive large subsidies, contracts and favors from governments, such as the military industry and the private-owned prison industry.
Yes, let’s condemn those people who use resources meant for the needy who do not need them. They take advantage of probably well-intentioned but poorly administered anti-poverty programs. They misdirect funds to themselves that could have helped relieve actual poverty. They are not poor but are people who could live out of poverty without the assistance they lazily choose to take. They leech off of the working class, a form of legalized stealing or sometimes outright fraud. But perhaps even worse they make the general public skeptical of anti-poverty campaigns, programs and spending.
These lazy, greedy people and what they do raises an age-old wisdom I often point out on this blog: We need to find efficient, effective ways to help people help themselves. We need to teach people to fish, not unconditionally give them fish.
There is a major poverty problem in our society that needs to be fixed and that we would all benefit from fixing. There are many honest, hard-working people who are in poverty, near poverty or at risk of falling in poverty not from laziness or their own bad decisions but because of corruption in society and other external forces that could throw you or I into poverty just as easily and unfairly.
But with the limited funds currently going to solve the problem, it seems that we can only afford to give fish to hungry people rather than teach them to fish. In yet another analogy, we are spending $10 a day to scoop water out of a sinking boat rather than investing $100 today alone to fix the hole in the boat.
Doing and spending less in the short-term to solve problems like poverty costs us more in the long-term. But it also leaves room for those lazy, greedy people to take advantage of the inefficient, ineffective and short-sighted system. And by making the general public more skeptical, people want to put even less resources towards scooping water out of the sinking boat than we do now and even more unwilling to invest the big money now to fix the hole entirely.
In other posts, I have pointed out the fundamental, inherent flaws of government spending. I also wrote in my last blog post, “Ideally speaking, I see a society in which nobody suffers from poverty, where people don’t go hungry and homeless down the street from an overstocked grocery store and a vacant house. In that ideal society, neither taxes nor government spending would be needed.”
The less poverty we have, the less anti-poverty campaigns we have for lazy people to misappropriate. The less poverty, the less anti-poverty government spending.
So we can almost all agree that we need to reduce poverty as much as possible and ideally eradicate poverty entirely. We need to invest in doing that. To do that we need to change the methods we use to be more cost effective in the long run rather than the short run. We need to make sure the resources of anti-poverty campaigns and programs help those truly in need help themselves. And we need to NOT let those other greedy, lazy people misuse, misdirect and misappropriate resources and scare the general public into reducing the funding, efficiency and effectiveness of anti-poverty campaigns.
Please discuss the above blog post in this thread at the Philosophy of Politics Forum.
There has been a lot of frustration over the massive amount of pay, bonuses and luxuries given to the executives at failing banks which together received hundreds of billions of dollars from the U.S. government. Indeed, it leaves us asking why rich people get bailout money to pay for private jets and unnecessarily lavish Superbowl parties when working class people need bailout money just to pay for food, clothes, shelter and health care. In response, some people including President Obama have called for capping the pay of executives at banks that receive bailout money.
But the highly paid chief executive of Netflix, Reed Hastings, has asked for the taxes of executives like himself to be raised. In his op-ed entitled Please Raise My Taxes, Hastings writes, “Instead of trying to shame companies and executives, the president should take advantage of our success by using our outsized earnings to pay for the needs of our nation.”
That idea interests me. And I like when one of the very rich suggests it. At the very least, we could raise the richest people’s taxes enough so that they are no longer paying a smaller percentage of their income in taxes than the rest of us.
Anyway, stopping and undoing the recent economic crisis will cost a lot, but we do need to do it. The recent economic crisis has pushed many people deeper into poverty, many people into poverty and still pushes many people closer and closer to poverty. Raising the taxes of the extremely rich can help fund the costs of reversing the recent economic crisis.
However, poverty is not a new problem. Even before the economic recession, millions of Americans and billions of people worldwide lived in poverty. Even then, working class people still worked too hard for too little pay in a society riddled with corruption and social, political and economic unfairness. Even then, a lot of people were poor who would not have been poor and a lot of people were very rich who would not have been so rich had it not been for the corruption and unfairness.
I believe we can not only reverse the recent recession but also eradicate poverty completely. Just like reversing the recession, eradicating poverty will require an investment that costs a lot upfront. But that investment can permanently solve a very costly problem. In analogy, we can spend $1,000 once to fix the hole in a boat today rather than spend $10 a day to desperately scoop water out of the sinking boat.
Ideally speaking, I see a society in which nobody suffers from poverty, where people don’t go hungry and homeless down the street from an overstocked grocery store and a vacant house. In that ideal society, neither taxes nor government spending would be needed. So one could say I ideally want taxes to be reduced and even eliminated if possible. But noting the difference between theoretical ideals and practical steps, increasing taxes on the richest of the rich in our current messed up society seems like an effective and appropriate way to raise funds to make the investment to push us closer to that ideal society.
What do you think? Do you support raising the taxes of the very rich? Why or why not? Join the discussion and tell us your thoughts in this thread at the Philosophy Forum.
According to recent IRS data, from 2000 to 2006 the income of the 400 richest Americans doubled, but their tax rate fell by a third to only 17.2 percent.
The drop in the tax rate for the richest Americans is due mainly to ex-President Bush’s push to lower the capital gains tax to 15 percent in 2003.
As pointed out in my post Bob Edgar Stresses Poverty, Bush also drastically increased government spending, leaving even more government debt for working class taxpayers to pay since the rich people’s tax rate was decreased. In other words, Bush increased the total amount that the taxpayers have to pay by increasing government spending, but he changed the proportions so that rich people pay less of it while the rest of us pay more of it.
I also ask you to remember that the richest people in America pay less in taxes than their secretaries in percentage of income.
I think those policies of the Bush Administration and the mostly Republican legislature contributed to the current economic crisis. Worse yet, many politicians actually continue to propose the same policies as a solution to the problem. For example, Republican politicians are actually suggesting changing the “stimulus package” to include more Bush-type tax cuts for the rich while eliminating tax credits for the working class.
Please tell us your thoughts about this topic at the Philosophy of Politics Online Forum in threads such as this one.
In his song Changes, Tupac Shakur said, “Instead of a war on poverty, they got a war on drugs so the police can bother me.” That powerful line has always stuck with me.
I believe we, the people of in society, can end poverty whenever we decide to end it. However, we generally rely on a government that underfunds poverty alleviation programs. Instead of putting it towards ending poverty, we let the government put our tax-dollars towards waging a needless war on drugs.
Estimates generally say that the “war on drugs” costs the United States government $50 billion per year. Worse yet, prohibition hands the lucrative drug market over to violent criminals, thus funding and increasing violent crime, which has a lot of unmeasured socioeconomic costs.
Just like with the alcohol prohibition, drug prohibition does not seem to decrease usage, but instead it costs a lot of money while increasing violent crime and corruption. Drugs may cause problems in society on their own, but I firmly believe drug prohibition makes matters much worse.
I would much prefer if drugs were legalized and the money spent on the “war on drugs” was put towards poverty alleviation. Better yet, the money could be given back to the tax-payers in the form of working-class tax-cuts, which I believe would also help reduce poverty.
In addition to saving the money spent on the needlessly devastating war on drugs, the government could tax drugs. In theory, I do not like any taxes, but I would much prefer taxing drug usage than income paid for labor. And I would much prefer taxing drugs than criminalizing them. Taxing drugs could bring in hundreds of billions of dollars in tax revenue. Again, the government could put that money towards poverty alleviation programs or income tax cuts.
Instead of wasting so much money throwing non-violent pot smokers in jail, imagine if we put all that money and extra tax-dollars into poverty alleviation programs. For example, imagine how much education that funding could provide to poor kids.
What do you think about the relationship between poverty and the war on drugs? Post your comments in this thread at the World Hunger and Poverty Forums.
Forbes named Warren Buffett as the richest person in the world as of March 5, 2008. Personally, I admire Warren Buffet for a variety of reasons. Namely, he behaves in a down-to-earth way, and he has earned the title of philanthropist. Last year, he pointed out that he pays a smaller percentage in taxes than his secretary. He also has pointed out that he believes the CEOs of all the top companies pay less in taxes than their secretaries.
Mainly, the rich people do it because they get to just pay a smaller “capital gains tax” rather than the regular income tax that most workers pay.
Ironically, workers are not really making an income if you ask me. Out of desperation, the typical working person has to sell his or her labor at extremely low prices. The typical working person is not profiting, but just desperately trading his or her labor away for whatever low amount he or she can get from the powers that be.
The lazy usurers who actually profit pay a smaller tax rate!
I think many working-class people believe taxes can help them regain some political standing. But I believe the rich can always manipulate the government to use it in their favor. As a result, in theory, I oppose taxation.
I recommend that the working-class demand tax relief.
Additionally, for people who feel some taxes remain necessary, I suggest taxing property ownership rather than income paid for labor. Let me explain why.
Unfair economies mainly oppress the working-class by letting the upper-class monopolize control over the natural resources. By claiming to own more than their fair share of the natural resources, the upper-class can make money by making the working-class pay them for permission to use the natural resources.
Taxing property ownership instead of income paid for labor would possibly help hinder the monopolization of natural resources by the upper-class. It would work most effectively if the tax only existed for people who “owned” an excessive amount of property, but not those who only “own” less than their fair share. For example, let’s not let the government tax the average working person who may purchase a cramped house on a small plot of land with a mortgage.
In theory, I do not support any form of taxation because I do not trust government with that power. However, as a matter of practical reform, I much prefer taxing property ownership and usury than taxing income paid for labor.
Remember, I think we could end poverty by giving all people fair access to natural resources. Poverty exists, in part, because working class people have to pay just to use natural resources to get the fruits of their labor. And that money flows to an unproductive ruling class. In other words, the so-called “owners” of the land, machines, oil, and other natural resources demand a huge cut from the workers’ production. And that is, I believe, the main reason why wages are so low. (Lack of education is the next reason, but working-class families could afford more education if they had higher wages.)
Whatever we do, we need to alleviate the unfair economic burden put on the working-class. As I have said before, that unfair economic burden causes poverty in the so-called first-world.
What do you think? Do you agree that it would help to tax property ownership and usury instead of income paid for labor? Post your responses to this blog post and those questions in this thread at the World Hunger and Poverty Forums.
Posted by Scott Hughes
Categories: American Poverty