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Perpetual Trusts Give Wealthy One More Reason Not to Give to Charity

South Dakota Republicans are trying to tell us that our complicity in global corruption and wealth concentration via perpetual trusts is good for our economy. Yet Republicans also try to tell us that we can reduce government and rely on charity to provide a social safety net.

Surprise, surprise: once again, Republicans run into another practical contradiction in their superficial ideology. When South Dakota offers aristocrats the opportunity to hoard their wealth forever without risk of taxation or legal accountability, South Dakota  relieves pressure that might otherwise induce those greedy elites to support charity:

“There’s every reason to think that the ultimate effect of this type of wealth being put into these vehicles will also be a long-term loss in revenue for charitable organizations,” said Ray Madoff, a professor at Boston College Law School who teaches philanthropy policy and taxes. “The impact on the charitable sector, I would say, is probably already underway, but will grow over time.”

…According to a recent study by the consulting firm CCS Fundraising, 25% of donors cited the tax deduction as a motivation for their charitable giving. A joint study from Bank of America and the Indiana University Lilly Family School of Philanthropy found that 22% of the wealthy donors surveyed would reduce their donations if tax deductions for charitable giving were eliminated. The same study found that 51% of wealthy donors said they sometimes contribute to charity to receive a tax benefit [Haleluya Hadero, “A Growing Worry for Charities: Tax Havens for the Rich,” AP, 2021.10.09].

When we help the world’s über-rich hide their cash from taxes and courts, we’re also helping them lock their wealth away from worthy causes.

13 Comments

  1. O 2021-10-09

    “Giving to charity” does not necessarily mean what many of us would assume. Charity has become its own vehicle for money to be used in some shady ways. Certainly charities can be what we all think of on first glance, but pet projects can be formed into non-profit organizations that enjoy donations under the “charity” denotation and give the same tax breaks to donors.

    If there exists a vehicle to avoid taxes, assume the uber-rich have exploited it beyond its intentions.

  2. grudznick 2021-10-09

    People should be free to give to whatever charities they want, not forced to donate to organizations like the National Right to Life Committee, or the Atlas Economic Research Foundation. Forcing people to donate to charity, even good ones, is like stealing from their pocket as they walk down the street.

  3. O 2021-10-09

    But my dear Grudznick, you undermine the conservative/GOP argument. Our conservative (common sense and otherwise) would have us believe that government intervention is not needed in the social safety net because charities can do that life-saving work. In reality we find that to have a civil society, a safety net is necessary and taxation is needed to sustain that net. The goodness-of-hearts charity approach at best creates a selective net to all too many slip through — not a civil society but a Lord of the Flies/Survival of the Fittest monstrosity.

  4. grudznick 2021-10-09

    The fittest are the ones who usually survive the best, Mr. O.

  5. Eve Fisher 2021-10-09

    Being a Christian, indeed, being truly human, is not about survival of the fittest, Mr. Grudznick.
    Matthew 40 “The King will reply, ‘Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.’
    41 “Then he will say to those on his left, ‘Depart from me, you who are cursed, into the eternal fire prepared for the devil and his angels. 42 For I was hungry and you gave me nothing to eat, I was thirsty and you gave me nothing to drink, 43 I was a stranger and you did not invite me in, I needed clothes and you did not clothe me, I was sick and in prison and you did not look after me.’
    44 “They also will answer, ‘Lord, when did we see you hungry or thirsty or a stranger or needing clothes or sick or in prison, and did not help you?’
    45 “He will reply, ‘Truly I tell you, whatever you did not do for one of the least of these, you did not do for me.’

  6. mike from iowa 2021-10-09

    Coming atcha, Grudzilla…

    https://nonprofitquarterly.org/republicans-give-more-to-charity-than-democrats-but-theres-a-bigger-story-here/

    While red counties may be more philanthropic, tax rates are higher in blue counties, reflecting stronger support for collective action and for a social safety net of services and organizations. “The county you live in and the political ideology of that county affects the tax burden of the community,” Dr. Nesbit said. “That in turn has an effect on charitable contributions. If you leave tax burden out of the equation, you’re not getting the full story.”

    Importantly, the study did not find that in Republican counties, private funds replaced public funds so that social services were equally supported.

    Those in favor of lower taxes have argued that individuals are more capable than the government of allocating money to important causes, including people in need of assistance. But the study found that was not true. Donations do not match government assistance, and without tax money, social services are not funded as robustly.

    “The evidence shows that private philanthropy can’t compensate for the loss of government provision,” Dr. Nesbit said. “It’s not equal. What government can put into these things is so much more than what we see through private philanthropy.”

  7. O 2021-10-09

    Mike, great link. To my previous point:

    “But we don’t know what type of institutions they’re giving to.” It also wasn’t obvious “whether donors were being purely generous or whether they would also benefit from their donation. This relationship is called consumption philanthropy, in which people give to a religious organization or a school from which they will derive a benefit in the form of, say, a better religious education program or a new gymnasium.” Giving to a food bank or a homeless shelter has a very different outcome than does giving to a private school.”

  8. Bonnie B Fairbank 2021-10-09

    Dear Eve Fisher: I cannot proclaim I’m a Christian, but my experiences and observations have been the poorest among us are the most philanthropic. Got beans and rice from a food pantry? Share with a neighbor. Too poor to pay your property taxes but just got your “stimmy?” Help a friend pay his rent. “Impoverished people” (po’ folks) know what a sh*t storm of no money looks like, but keep on supporting each other. No one else is helping us, other than poorly funded social services agencies.

  9. ArloBlundt 2021-10-09

    The political or “cause” not for profit corporation which masquerades as a “charity” has bee very destructive to strictly charitable agencies providing shelter, food, emergency assistance or job training and placement. The “agenda driven” so-called charities siphon off money from much more worthwhile, mission driven charities.As a group, the very wealthy give the lowest percentage of their income to mission driven or religiously affiliated emergency services organizations.

  10. Richard Schriever 2021-10-10

    grudz, you make the classical error in your understanding of Darwinian theory. It is survival of the “best fit”, not the most fit. Yours is the perversion of the idea ala prototypical chauvinist Herbert Spencer.

  11. mike from iowa 2021-10-10

    Food for thought? “e pluribus unum sounds exactly like magats wealth distribution in America since, at least, the days of Ronnie Raygun.” e platypus onion

  12. O 2021-10-10

    Conservatives always want to “simplify” the tax system, so how about this: when you get money – from ANY source – it is your income and should be taxed as such. Simple.

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