Ten Percent is a Low Bar

We often hear the criticism of the Clinton Foundation that it only gives ten percent of it’s income to charity.  The rest is used for salaries, expenses, travel, etc., while the foundation serves as a funnel for foreign countries to contribute to the Clintons.  For once, however, that 10% isn’t a case of “Clinton privilege” but rather the result of a rather weak IRS law defining a charity.  Ten percent is the minimum an organization has to contribute to it’s stated cause to qualify for tax-exempt status.  Consequently some charities give little more than 10% .  So, where does the rest of the money go?  Well, to salaries and expenses of course, but a lot of it goes to solicitors (those people who phone endlessly and send out address labels hoping you’ll at least cover the cost).  Now we know it takes money to make money but I think 10% is a pretty low bar to effectively get a subsidy from the taxpayers.

Let’s raise that minimum number to 35% incrementally.  A new charity would start out at 5% for the first year then increase by 5% each year up to 35%.  An existing charity would start out at the current 10% and would see the same increase each year.  Any charity could request one one-year extension and the increments could be delayed in the event of a major recession.  While it’s true that a charity might see a decline in total revenue if it hired fewer solicitors, that amount would have to fall by around 70% before the stated cause would receive less money than it would at the current 10% minimum.  The effect might be to sort out organizations run by people who really want to help humanity from those who simply want an income.  In some cases it might must make the organization more efficient.

Think 35% is too high or 1-year interval increases are too short?  How about 30% and/or 2-year intervals?  Even 25% should provide more money for those in need while better justifying the tax exempt status.  My point is simply that tax exempt status equals a taxpayer subsidy, and if that money is supposed to be helping worthwhile causes that’s what it should be doing.  A “slush fund” is not a charity.

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