Religion & Beliefs

Tzedakah, Philanthropy, and Tax Breaks

The always-provocative Peter Singer has a fascinating column in this week’s Forward in which he argues that charitable giving that benefits the poor should be eligible for tax breaks, but that giving to philanthropies that do not work on poverty … Read More

By / April 27, 2009

The always-provocative Peter Singer has a fascinating column in this week’s Forward in which he argues that charitable giving that benefits the poor should be eligible for tax breaks, but that giving to philanthropies that do not work on poverty issues should not.  

In my new book I point out that, according to UNICEF, 27,000 children under 5 die every day around the world from avoidable, poverty-related causes. That’s an emergency that we ought to be doing much more to prevent. If Obama were to increase the tax deduction for donations aimed specifically at reducing that terrible death toll, and the extreme poverty that causes it, I’d applaud. But that doesn’t mean that I want to subsidize every charitable donation made by an American taxpayer. By far the largest slice of the roughly $300 billion dollars that Americans give to charity goes to religious organizations. I’m not religious, and I don’t see why people should pay less in taxes because they give to their church, synagogue or mosque. No doubt some religious organizations do some good, but others definitely don’t. . . I also don’t want to subsidize all of the museums, art galleries, theaters and performing arts organizations that are registered as charities. . . In the United States, public schools in poor districts tend to start from behind when it comes to funding, because the property tax base just isn’t there. And rich school districts can tip the balance even further in their favor because their residents can better afford to donate money to their local schools. Such giving is often done through tax-deductible donations to nonprofit organizations and foundations that channel money to specific schools and districts. Since the rich are taxed at a higher rate than the poor, and are more likely than other taxpayers to itemize their deductions, the government actually gives an additional subsidy to schools in affluent districts.

Ultimately, Singer’s suggestion that the government should distinguish between charitable organizations that alleviate poverty and those that do not seems untenable. Virtually every non-profit can make an argument that it works on poverty in some way. Even the largest university can point out the amount of financial aid given to students in need, many cultural institutions offer public education programs for schools in low-income areas, and virtually every religious institution does some kind of service work. It doesn’t seem reasonable for the government to try to sort out whether gifts to a church that hosts a soup kitchen should be tax deductible, or whether only gifts to organizations that devote the majority of their budgets to poverty relief should be eligible. The reason that tax guidelines for non-profit donations are so broad is that the government doesn’t want to get involved in deciding which organizations are worthy and which aren’t, lest we end up with government subsidies only for groups with one political agenda or another.

But Singer does tap directly into the very Jewish question of the distinction between tzedakah and other kinds of philanthropic giving. Though he is not one to speak from a Jewish text perspective, he (unwittingly?) precisely defines one of the problems with the way in which we often speak about tzedakah. Quite simply, tzedakah refers to monetary or other material support for the poor. So–giving money, food, clothing, medicine, or even spiritual sustenance such as books to those in financial need is tzedakah. Giving money for other purposes is not. In one teshuvah (legal opinion), the contemporary legal authority, Rabbi Eliezer Waldenburg counts buying books for a synagogue library as tzedakah, as these will be lent to those who cannot afford their own books, but draws the line at buying candles or other items that will help the synagogue but will not directly benefit the poor. (Tzitz Eliezer, 9:1) This is not to say that there is no obligation to give to institutions that do not directly benefit the poor. In fact, rabbinic law mandates sharing in the cost of public infrastructure. However, such donations do not count for the 10-20% of income that Jews are obligated to dedicate for tzedakah. In the Jewish world, we often speak of tzedakah as interchangeable with philanthropy. We classify as tzedakah gifts to synagogues, JCCs, cultural institutions, and schools, as well as gifts to social service agencies, community organizing groups, and anti-poverty advocacy initiatives. This slippery use of language probably owes a lot to the IRS’s lack of distinction among different kinds of non-profits. We are used to itemizing all deductions to 501(c)3 organizations, and therefore begin to think of all of these deductions as tzedakah. And, of course, as I said, the line between organizations that work on poverty issues and those that do not is not always clear. If I allocate my university donation for financial aid, is that tzedakah, even though I know that the vast majority of university expenditures do not directly benefit low-income students? What about supporting an advocacy effort to raise the minimum wage, even though the benefits may be far in the future? What about a donation to build a local park that will be available for families of all income levels? While there are no easy answers to these questions, simply asking these questions forces us to think more seriously about the ways in which we allocate our own personal and communal tzedakah. When I choose where to give my own 10-20% of income, I at least have to justify to myself that the recipients address poverty in some significant way. Other giving–to my prayer community, to my alma mater, or to cultural institutions comes out of regular expenses–even if I do declare these gifts to the IRS at the end of the year. During these economic times, many of us are cutting back on our giving because we have lost our jobs or fear losing our jobs; or because we have lost money in our savings accounts, or simply fear what the future may bring. Of course, low-income communities are suffering disproportionately from the new scarcity of resources. As the need grows, those of us who can afford to do so should increase our tzedakah giving beyond the bare minimum of 10%. Those of us who cannot afford to give more now might think about how to allocate our money so that the giving that we count as tzedakah does, in fact, meet the requirement that tzedakah should alleviate–and ultimately end–poverty.