Retired Leader of California Community Foundation Calls for End of Charitable Deduction

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December 18, 2011; Source:  Los Angeles Times | Longtime leader of the California Community Foundation Jack Shakely is something of a philanthropic icon. Now semi-retired, listed as CCF’s president emeritus, Shakely has written an op-ed that goes against the grain of his foundation peers, who in virtual lockstep have opposed President Obama’s proposed cap on the charitable deduction (and all other itemized deductions) for wealthy taxpayers.

Acknowledging that his “statement will create a firestorm,” Shakely’s op-ed not only endorses Obama’s proposal as a “good start” but also calls for the elimination of the federal charitable tax deduction, describing it as “an often abused and possibly unconstitutional section of the tax code.”

altWatch NPQ‘s latest trendcast, “Taxes and Giving: A conversation with Patrick Rooney about What a Change in the Charitable Tax Deduction Might Really Mean.”

According to Shakely, “nobody can say positively, absolutely how much, or even if [the charitable deduction] stimulates giving, which was its primary purpose.” He challenges the contentions of the United Way’s Brian Gallagher and the Mormon Church’s Dallin Oaks, who testified before Congress that the Obama proposals would seriously harm charitable giving.

Shakely notes that nonprofits get relatively little of the moneys that are claimed as charitable giving due to the pervasive tendency of many donors to significantly overstate their charitable giving. He also suggests that there are potential church/state separation problems in providing charitable tax deductions for religious donations. And he decries the tradeoff of nonprofit rights of political contributions in return for charities’ access to tax deductible contributions.

Eliminating the charitable deduction will reduce the federal deficit by $250 billion, Shakely contends, and charitable giving won’t be much affected. Are nonprofits fighting for an essential instrument in their toolbox to attract donations, or is the charitable deduction really a “well-meaning but often nonproductive” element of the tax code that we would all be better off without?—Rick Cohen

  • dclaudew

    Mr. Shakely’s argument makes sense to me. When I look at a typical Form 990, all the cash goes to office, salaries, lawyers, accountants (I’m a CPA) and other non-program expenses. The only incoming contributions that ever become outgoing individual grants are the in-kind gifts. Mr. Shakely is probably correct that donors will continue to make their in-kind gifts. Taking away the cash will take away the huge salaries to bad NPO leaders, and have no effect on the good NPO leaders. 😐

  • Andrew Geary

    Shakely brings up potent points, including how the 501c3 status creates

  • Kim Klein

    I am really proud of Jack Shakeley for taking this stand. Finally a leader in the nonprofit sector decides to speak out in favor of fairness!
    Kim Klein
    Nonprofits Talking Taxes

  • political contributi

    Political contributions combined with short terms in office along with term limits are killing the ability of lawmakers to push real change. Time in office should be changed from 2 to 5 years. This can help lawmakers focus on big picture issues rather than worry about where reelection contributions are coming from.

  • Arlene

    Mr. Shakely makes some good points. I don’t see among any of them, here, any demonstrable facts that make his arguments compelling or pertinent.

    Simply stating,