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Charitable Donations for Haiti Tallied

July 12, 2010 · 8 comments

It has been a grim year for most charitable organizations over the past two years. Giving has been down markedly, with gifts in 2008 representing the largest dip in charitable giving (-5.7%) in more than five decades.

That’s why the total amount of donations made to various relief agencies in Haiti is fairly mind-boggling. According to the Chronicle of Philanthropy, US relief organizations have raised $1.3 billion in donations since a number of earthquakes and aftershocks rocked the island nation of Haiti, displacing or injuring an estimated 3 million people. The total amount of donations was just a bit shy of the pre-recession tsunami donations about five years ago.

Even before the earthquakes, Haiti was a fairly poor country. The amount raised in charitable donations in 2010 equals about 20% of Haiti’s annual GDP. To put that into perspective, charitable contributions would have to total nearly $3 trillion to make up 20% of the US’ annual GDP – more than 2,000 times as much.

While it’s true that Americans tend to be a fairly generous people, the uptick in donations to Haiti were likely spurred by the special tax considerations given for donations. I asked the question then – and I wonder the same thing now – whether that made sense. Is it smart (or fair) to drive donations to one particular relief effort? Should we pass a similar rule to promote donations for the Gulf?

I get that it happened in January and that Haiti is a poor nation. And I’m not quibbling with the need for donations (I donated). I just happen to hate the piecemeal method of putting together our laws. We’re so… reactionary and yet still so short-sighted.

If Congress *really* wanted to give taxpayers incentives to be charitable, they’d scrap the “special” rules and simply make charitable donations available for all taxpayers whether or not they itemize. An above-the-line deduction for all qualified charitable gifts. What do you think?

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{ 7 comments… read them below or add one }

1 Evan July 12, 2010 at 10:39 am

I actually think it would really hurt the US. If you were to sit down with your CPA and he or she gave you two choices:
- Pay Uncle Sam $1,000 OR
- Pay the Red Cross (or your private foundation if we were to get really cynical) $1,000 which would you do?

2 Chris July 12, 2010 at 10:45 am

If our governments really wanted to help people, they would lower taxes across the board. Private charities can misuse funds as much as the government, but when money is taken out of our pockets and forcefully redistributed then people feel like they have already “done their share.” The choice of what is done has already been taken out of their hands.

3 JBruce41 July 12, 2010 at 10:46 am

I think it’s reasonable for our tax system to encourage charitable giving. I also think the deduction should be “above the line’ (i.e.: allowable in addition to the standard deduction for non-itemizers).
However, the IRS also has tightened up on the “proof” for charitable contributions. That would be an annoyance for a lot of people, especially the part about substantiating cash donations (such as collection plate in church, Salvation Army kettles, etc.) I can understand their reasoning; this is an area that can be a fertile ground for taxpayer fraud. I itemize, so I’m used to the forms for non-cash deductions, but the additional forms and documentation would be intimidating for most taxpayers. I don’t know how to make this part easier. You could allow a “limit” of, say, $250 of unsubstantiated cash donations, but that just would lead to an amazing number of taxpayers claiming exactly $250 in cash donations (whether they made them or not).

4 Robert July 12, 2010 at 3:23 pm

Evan – Obviously, I would rather pay charities the money, however, being that it would be a tax deduction, paying $1000 to a charity is not the same as paying $1000 to Uncle Sam…I also believe that it should be applicable regardless of whether you itemize….that would certainly encourage more contributions…heck…if it meant me getting to a lower tax bracket, it might be worth it!!

5 JBruce41 July 12, 2010 at 3:56 pm

Chris: What does “forcefully redistributed” mean? If it means the gov’t spends money on stuff you don’t like, then that label could be put on any tax — Federal, State or local. At the Federal level, the huge lion’s share of tax $$ goes to Defense, Interest on the national Debt and Social Security/Medicare/Medicaiud. That’s been the case for a long time. Are you suggesting the gov’t should welsh on its debts? Should we abandon Social Security, Medicare and Medicaid? Or should we just leave Iraq, Afghanistan, and all US bases overseas? Should we give up the military entirely?
If you look at the rest of Federal expenditures you can find a lot of stuff you don’t like (bridges to nowhere, “earmarks” for dubious projects, etc., subsidies to oil companies) but if you add up all of those that you don’t like it would be a drop in the bucket of your entire tax liability.

6 Chris July 12, 2010 at 7:23 pm

JBruce41: Where in the constitution are we allowed to maintain a standing army? The Navy is allowed, yes. Marines are grouped under the Navy. Everything else has a 2 year limit. The “National Guard” cannot be counted any longer as the Second Amendment “Militia” as they are being deployed overseas.

Social Security, Medicare and Medicaid are also not authorized for the federal government to dabble in. If states want to do those, then it is up to them to create and legislate those programs. The new health care bill is in the same category.

I am not speaking only about earmarks, even though those are unbelievable also. I don’t fit into either the “liberal” or “conservative” camp. :P

7 Rich July 13, 2010 at 9:50 pm

If congress wants to create special “pet” charities for any particular year they should at least try to allow the “above the line” option to allow an incentive for non-itemizers. I have no doubt that many of the folks in this group gave to the Haiti cause. Why should only home-owners (mortgage debters) be able to add to thier tally of deductions? In my honest opinion the deduction for being in debt to own a home has me wondering who is lobbying for this? If people can only afford a home (finance a home) with the aid of tax relief and credits (i.e. first/long time homeowner credit), wouldn’t this create a false bubble in the housing market? Uh, oh!

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