Charitable Contributions Don’t Belong to the Government

S ome left-wing agitators have it out for philanthropy. As I regularly peruse headlines related to my work in this sector, it’s not unusual for Google to send me links from Jacobin, Democracy Now!, or other left-wing rabble-rousers about the supposed evils of the rich. Although it caught my eye to see, in Bloomberg, and from an apparently benign tax professor, the following call to action: “It’s Time for Private Foundations to Start Paying a Fairer Share.”

Give author Brigitte Alepin credit for knowing how to get my attention. She had me at hello with this doozy of an opening sentence: “Private charitable foundations are emerging as a fiscal threat, with their wealth and numbers growing.” A fiscal threat! Not to the 1.8 million nonprofit organizations housed in the United States, I presume.

How is the thought of private charitable foundations multiplying nightmare material? Alepin charges that the assets of private foundations have increased 50 percent since the pandemic, data ostensibly included to scare the reader. Never mind that if you invested $100 in the S&P 500 at the beginning of 2021, you would have $168.46 at the end of 2024, a return on investment of about 68.5 percent. Shouldn’t the assets of private foundations have increased more? Perhaps they did not because they also gave approximately $100 billion per year to charities over that same period.

Ah, but you see, the tax incentives foundations receive are “allowing trillions of dollars to multiply tax-free, to the detriment of urgent societal needs.” This lament reveals Alepin’s real concern. Not the tax rate on a foundation’s investment earnings (currently 1.39 percent in the U.S.), but rather that there is money on the table not being used for her preferred priorities. Or, as she refers to them, “urgent societal needs.” She proceeds to outline the many ways foundations and donors should be further taxed.

It turns out that Alepin is more than just a tax professor. She wrote a book on the horrors of tax avoidance which was adapted into a documentary called “The Price We Pay.” Watch the trailer; it could double as a hype video before one goes to occupy Wall Street or throw soup on a van Gogh. You won’t be surprised to learn that she’s involved with United Nations Climate Change Conferences and was tasked with suggesting how to better use taxation to help Canada make a green transition. She’s a strong proponent of global taxation, which she says is vital to combat climate change. It seems she’s quite the muckety-muck in the “tax justice” community. (If I had to learn that such a farcical term exists, so do you.)

Alepin’s article suggests that the government should seize more wealth for redistribution. This seems to betray an underlying twisted and grotesque worldview. You could characterize it roughly like this: You do not own the fruits of your labor; they are simply on loan from a benevolent government. Indeed, she states explicitly that “the current tax system allows private charitable foundations to gain excessive control over social issues that should fall under the responsibility of the state.”

Such logic is — or at least ought to be — alien to American political life. James Madison would certainly object to it. Recall that when Congress appropriated $15,000 for relief of French refugees, Madison stood on the floor of the House to protest. “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.”

In 2024, more than half of the federal budget (representing 17.8 percent of U.S. GDP) was spent on those “objects of benevolence” — federal entitlements. This is to say nothing of federally subsidized schools, federally subsidized meals, and foreign and other aid, which all could be similarly construed as such. State governments also spent $744 billion on welfare programs. Yet somehow Alepin thinks the social safety net is in danger because, of all things, of the tax rate of private charity?

Those who desire the limited federal government that Madison envisioned are demonized as uncaring. Yet in my professional experience working with philanthropists, I’ve found the complete opposite to be true. They just recognize that private charity is better than the one-size-fits-all manner of government that treats all recipients alike. In government, money flows out, regardless of whether it helps. For example, the federal government has spent more than $25 trillion on poverty programs since America declared “War on Poverty.” Yet  Americans still live in poverty. When government programs are wasteful, ineffective, and counterproductive to the aims that they are trying to achieve, they persist. When charities encounter waste or fraud, their donors may leave, or they are shuttered.

Alepin, and people like her, seem fundamentally uncomfortable with the idea that your treasure is yours. Does she agree with the maxim that if you want less of something, tax it more? Does she not feel this would apply to charitable giving? Dutch theologian Abraham Kuyper once said that “there is not a square inch in the whole domain of our human existence over which God does not cry: ‘Mine!’” This tax professor would replace “God” with “government.”