Our Blog Has Moved!

As part of our name change from Servant Christian Community Foundation to National Christian Foundation Heartland, we’ve moved the blog to a new location. To read the latest posts and catch news from the generosity movement, visit:

www.nationalchristian.com/heartland

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Could Charity Marketing Programs Actually Hurt Donations?

We’ve all seen the Red Campaign to raise awareness and dollars for the fight against AIDS in Africa by giving a small portion of the profits of from sales of certain products (coffee, yogurt, t-shirts) to charity.  (An example is below).  But have you ever wondered if all that buying of cause-related products hurts donations to charities? The answer is yes, according to a study from the University of Michigan’s Ross School of Business.

“If two consumers have equal preference for a product, which is offered at the same price to both, but one of them buys this product as a cause-marketing product, her charitable giving will be lower than the other’s,” Ms. Krishna writes.

It was a reminder to me to see my purchase of Newmans’ Own products (the profits of which are donated to charity) as simply another purchase, rather than as a charitable gift.  It’s also prompting me to ask myself what are the unintended consequences of other innovative fundraising initiatives?

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Why Tuesday’s Supreme Court Ruling Matters to You

The Supreme Court yesterday handed down a decision (ACSTO v. Winn) that experts consider a win for proponents of parental choice in education. But the case has other significant ramifications for charitable giving, as explained by National Christian Foundation’s President, David Wills:

Tuesday’s ruling on parental choice in education is undoubtedly a significant victory for several states, including my home state of Georgia. However, there is another angle at the heart of this case that is quite important to us all: the nature of dollars deducted as charitable donations. Are charitable gifts government money or private money? The answer over the last several years coming out of DC has clearly been the former. In fact, you may have heard me mention that the the term ‘government subsidy’ is often used by our elected officials and their key staffers – both Republican and Democrat – when describing any funds that generate a charitable income tax deduction.

Whose Dollars Are Your Dollars?

The majority opinion makes the point that there is a distinction between a government appropriation and a personal expenditure that results in a tax benefit. The former is public money. That is to say, when the government collects tax revenue and then determines where those funds are to be spent, that is money over which the government does and should have control.

On the other hand, when a taxpayer makes a charitable gift and receives a deduction for doing so, the reality of the deduction does not change the nature of the funds.  The funds retain their status as private, non-governmental dollars.  The individuals who have earned and given those funds retains the private right to determine the use of those funds. Simply, a deduction or credit does not cause such funds to become the property of the federal government.

At first blush, one might think, ‘Of course, those are private funds.’ Don’t think so too quickly…and read Justice Kagan’s dissenting opinion.  Though I disagree with it, it is well reasoned. We are to be thankful that Justice Kennedy sided with the conservatives on the court and a 5-4 decision was rendered.  He essentially said that there was no standing for bringing the suit because the taxpayer (Winn) was not harmed because the funds were not governments funds.

Kennedy wrote: “A dissenter whose tax dollars are ‘extracted and spent’ knows that he has in some small measure been made to contribute to an establishment [of religion] in violation of conscience…”  On the other hand, with a tax credit the funds were never collected in the first place. “When the government declines to impose a tax,” Kennedy wrote, “there is no such connection between dissenting taxpayer and alleged establishment.”

Inside The Progressive Mind

Kagan countered by calling the distinction between tax appropriations and credits “arbitrary.”  She wrote, “Either way, the government has financed the religious activity. And so either way, taxpayers should be able to
 challenge the subsidy.”

Here is an excerpt from the NYT regarding Kagan’s dissent:

In her dissent in the case, Arizona Christian School Tuition Organization v. Winn, No. 09-987, Justice Kagan said the majority’s position was an elevation of form over substance. “Taxpayers experience the same injury for standing purposes,” she wrote, “whether government subsidization of religion takes the form of a cash grant or a tax measure.”

She offered examples. “Suppose a state desires to reward Jews — by, say, $500 per year — for their religious devotion,” she wrote. Would it matter to
 taxpayers offended by the practice whether the reward came in the form of a government stipend or a tax credit?

“Or assume,” she wrote, “a state wishes to subsidize the ownership of crucifixes” in one of three ways. It could purchase them in bulk and distribute them; it could reimburse buyers with a check; or it could pay with a tax credit.

“Now, really — do taxpayers have less reason to complain if the state selects the last of these three options?” Justice Kagan asked. Justice Kagan said the majority’s opinion was particularly surprising because the court had never thought the point even worth arguing over. “To the contrary: We have faced the identical situation five times — including in a prior incarnation of this very case! — and we have five times resolved the suit without questioning the plaintiffs’ standing,” she wrote.

Note where she uses the phrase: ‘government subsidization of religion’. When this belief becomes widespread, the charitable income tax deduction (or in this case a tax credit) for contributions to any religious organizations will eventually end.

A WSJ op-ed with a different slant began, “The Supreme Court’s big school choice decision yesterday is notable mainly for its insight into the progressive mind. To wit, no fewer than four Justices seem to believe that all wealth belongs to the government, and then government allows citizens to keep some of it by declining to tax it.”

Hanging in the Balance

This decision is a good news case for charitable giving, but let us not be lulled into thinking we have won the war.  We have only won a battle and are only one vote away from sweeping changes regarding the taxpayer and religious activity of many kinds.

One thing that is needed now are well reasoned law review articles that substantiate the ruling of the majority in this case and help under gird this ruling for future courts. A great deal is hanging in the balance.

David Wills serves as president of the National Christian Foundation in Atlanta, Georgia. He lectures throughout the country on issues involving foundations and nonprofit organizations, the transition of wealth, responsibility from one generation to the next, as well as tax and spiritual issues in charitable giving. Learn more about the National Christian Foundation and our other affiliates at www.servantchristian.com.

Gas Prices & Charity

Some pundits are quick to proclaim that “recovery” is complete. Likewise, some are quick to say that the non-profit world can expect a better still 2011.

But before you jump on that bandwagon, consider this fact: the dollar remains low and there is a global push to move away from the dollar as the currency of choice. What impact does that have?

One area to look is at gas prices. Here’s a quick look at gas prices around the world.

 

Netherlands               $6.48

Norway                       $6.27

Italy                            $5.96

Sweden                      $5.80

Germany                    $5.57

France                        $5.54

 

Today, gas prices in the US are roughly $3.00 per gallon. But if the dollar no longer is the standard of exchange, we’ll have to pay more our gas. What impact will $5.00/gallon have on average American families?

Here in the US, we’ve built a way of life around the vehicle—travel. Travel to and from work, travel to and from the grocery store, travel to and from our leisure are all daily and expected facets of American life.

But if the amount of money I have to pay for that travel nearly doubles, then I’m going to feel the squeeze. It will affect my standard of living. It will change my day-to-day patterns. It will change what and where I spend my money on. One of those changes will be in the giving arena.

Given the crash of 2008, we’ve already seen a decline in giving. If we see the dollar remain low, and the rise in gas prices we are likely to see further changes in giving patterns.

The wise charity is planning ahead now.

William F. High is the President/General Counsel of the Servant Christian Community Foundation. Servant’s mission is to inspire, teach and facilitate revolutionary biblical generosity. He may be reached at whigh@servantchristian.com.

 

What Egypt is Teaching Us About Giving

The unrest in Egypt started with a simple idea: people wanted to be free. They were tired of their poverty. They were tired of the oppression and dissatisfaction with leadership unwilling to change.

In the past, the oppressors could quell the riot by finding the ringleader and putting him to death. Not so this time—every time they sought to cut off one head another grew in its place.

Freedom was an “idea” that could not be stopped with the death of a person. Moreover, freedom had a way of being communicated that could not be stopped. Through social media, cell phones and texting, the word was out, and in the push of a button, the message could spread.

The early church was like that. No matter how hard the opposition tried, they could not quell the “idea” of Christianity—that men and women could be free from the bondage of their own hearts through Christ. It was a simple message and carried from life to life. It was the hope that smoldered no matter how much water had been thrown upon the flames.

Such is the idea of generosity. Today, it is part of the movement of Christ. As people experience the freedom of Christ, they are inclined to see their hope less in this world and more in the world to come. Accordingly, they are free to give away the stuff of this world in exchange for the real treasure of the world to come. It is a simple message. It cannot be quelled by the promise of new vehicles, new ownership in houses or lands. It is the freedom that so many desire.

Our job as charities? Ministries? Fuel the flame of generosity. Have less concern over our own organizations and our budgets and more for the cause of generosity. When we do this, we will see the flame advance farther than we might ever dream or imagine.

William F. High is the President/General Counsel of the Servant Christian Community Foundation. Servant’s mission is to inspire, teach and facilitate revolutionary biblical generosity. He may be reached at whigh@servantchristian.com.

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Challenges to tax exemption for churches

A spat in our own Mission, Kansas made the Huffington Post.  It’s not just the local interest that prompted me to write about it here.  Rather, I bring it up because it highlights a disturbing trend: people and governments calling into question the sanctity of tax exemptions for religious and nonprofit groups.

The argument between the City of Mission and churches in the area boils down to this question: “When a community needs to rebuild crumbling roads, should houses of worship pay fees for the number of times their congregants drive on them?”  I don’t want to weigh in on the debate here, but you can read the whole article if you want to know more.

To understand what’s going on here, remember that a church has typically enjoyed two favored tax benefits: (1) donations are deductible for those who give them and (2) the organization’s income is not taxed.  Both are under attack from various sources.  We have all heard that President Obama proposed limiting the charitable deduction for high-income families.  (Note also, the shift from talking about “tax exemption” to calling it a subsidy.)  And now cities like Mission and Houston are levying “fees” on churches.

What can a ministry do?  It seems we have a few appropriate responses: (1) speak out publicly; (2) vote; (3) become increasingly savvy with fundraising (we’ve written on this topic before – see Bill’s post from 2010 about giving trends).  Also, consider getting plugged into an initiative like Mission Increase.  It offers strategic training around fundraising as a transformational aspect of a ministry, rather than a means to an end.

Servant is hosting a training soon.  Here are the event details:

The Journey to Transformation
Thursday, February 3, 2011
9:00 AM to 4:00 PM

 

Sylvester Powell, Jr. Community Center
6200 Martway, Mission, Kansas

Register online

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How the 2010 Bush Tax Cuts Are Bad for Giving in 2011 and Beyond

There was much uproar at the end of 2010 about extending the Bush tax cuts with their lower income tax rates, etc.  And frankly, there’s little doubt that they had to happen—despite the protests of President Obama and the Democratic faithful.  They had to happen because of the sheer will of the populace that, as the November elections demonstrated, needed satisfaction.

However, there’s a disturbing trend at hand.  It bodes poorly for our country, the charities which serve our nation’s needy, and the younger generation.

Here’s the sad truth.  Our government has approximately 55 trillion dollars in unfunded entitled in the form of Social Security, Medicare and Medicaid.  You can debate whether our national debt of some umpteen trillion is stacked on top.

At some point the debt bill must be satisfied.  The debt must be satisfied in one of three ways:  (1) Cut the budget, (2) Cut the entitlement benefits, or (3) Raise taxes.  None is particularly appealing.  But our Congress has shown no restraint with the budget, so they are forcing themselves into a hole.  They are only deferring the pain to our children and our grandchildren.  Our children and grandchildren are likely going to face the highest income tax rates in the history of the country.

Not long ago, the leadership in Ireland faced a similar crisis.  They took the drastic step and did all three:  cut the budget, cut benefits and raised taxes.  In so doing, they declared that the standard of living would go down for everyone in the country.

When the standard of living goes down, giving will go down and charities will be affected.  Of course, as the standard of living goes down the demand for nonprofit services will only increase.

We are at a critical time in the history of our country.  The leadership of the country needs to take a close look in the mirror and determine if they have the courage to lead and make hard decisions for the long term good of our country.

William F. High is the President/General Counsel of the Servant Christian Community Foundation (www.servantchristian.com).  Servant’s mission is to inspire, teach and facilitate revolutionary biblical generosity.  He may be reached at whigh@servantchristian.com.

 

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