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Tax Deduction or Philanthropy?

  • Donating for the right reason

  • Nonprofits need to push philanthropy

Philanthropy, love of mankind, is getting lost in a sea of solicitation materials for charitable causes. Once a descriptive phrase, "your donation is tax-deductible" has become a full-blown marketing method for many nonprofit organizations. It has also become one of the most misunderstood aspects of donating money.

I can't tell you the number of times I have told someone about a substantial gift made to a charity when they remark "Yeah it might be a large donation but they probably just wrote it off their taxes anyway." Just wrote it off? Many people don't understand that when a gift is made to charity, it isn't in exchange for a 100% tax write-off. It is a sacrifice that someone made for many noble reasons, some personal reasons and lastly, a tax deduction. Why is this a concern? It's a concern because skeptics who think like this have been taught that tax deductions motivate giving. They know nothing about the benefits of philanthropy, not only to others, but to them personally.

Most organizations start an appeal for funds with an endeavor to explain their particular cause. They tell people what they do and who will be helped. They also explain in their prose that, in addition, the donation is tax-deductible. That's great, but so what? It seems that just in case someone isn't completely sold on the value of helping with the mission, they are lured-in with "hey, it really isn't going to cost you." Rarely is there a complete explanation of tax issues including that, for most people, only 1/3 or less of that gift might be covered by a reduction in taxes. It may be the reality of solicitations today, but I don't like that tax considerations are part of the appeal.

Promoting a tax deduction is not the best way to build a foundation of donors. Teaching people about philanthropy instead will serve to build a donor base hungry to support you. There is great personal benefit in becoming a philanthropist and nonprofits need to get the word out.

Many people don't know what philanthropy can do for them. Giving feels good and can be addictive. Philanthropy can be one of the most self-satisfying acts a person can perform and the more addictive it becomes to a person, the more they will give. While the end result of philanthropy can cure many of the world's ills, the act of philanthropy first must be taught.

People must be told why they need to be philanthropists and how to become one. Use examples of donors and volunteers who have supported your organization, but don't necessarily look to market your largest donors. Look instead for those who have made a great sacrifice to help. One who knew sacrifice, Mother Teresa of Calcutta said, "If you give what you do not need, it isn't giving." That's a good lesson in philanthropy.

What role does every nonprofit organization have in educating people about becoming philanthropists? They have the lead role. I realize that many people interpret "your donation is tax-deductible" as some sort of seal of approval for a charity, but nonprofits must lead the way in teaching people about the more important benefits of philanthropy. Teaching love of mankind may be harder, but it will result in greater long-term benefits than the easy short-term love of a tax deduction.

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