Cropped BHI

BHI forum highlights Compassion Tax Credit

from NewsLink, Vol. 1, No. 2, Winter 1997

The debate over welfare reform is far from over. The welfare reform act may have shifted the bulk of the nation's welfare policy from the federal government to the hands of the 50 governors, but no one sees this as the solution to the dependency crisis in America today. There is still the very real risk that the federal bureaucracy will have spun off 50 state clones set to repeat the failures of the past three decades.

What is needed is a commitment to go beyond devolution, to reconsider the problems of dependency, and to seek new ways to help those in need lift themselves out of poverty.

There are thousands of private charities throughout the country that are helping to change lives today and that could do more if they had the resources. Could providing new funds to private charities spur competition and innovation in the delivery of welfare services, encourage accountability and achieve cost savings? Could infusions of new funds be the catalyst for private charities to do what the welfare bureaucracy has been powerless to do? The answers may be "yes."

In order to do more, private charities need additional resources. One method for providing these resources is the "compassion tax credit," under which taxpayers receive a tax credit for contributions to qualified charities. The compassion tax credit represents a way of empowering private charities to apply innovative methods to the solution of the poverty problem in their own communities.

Compassionate Welfare Reform: Empowering Charities and Private Citizens

On December 12, 1996, the Beacon Hill Institute and the David R. Macdonald Foundation co-sponsored Compassionate Welfare Reform: Empowering Charities and Private Citizens, the first national forum ever held specifically to consider tax credits for charitable giving. The forum was held in the Caucus Room of the Cannon House Office Building in Washington, DC. The message heard by the more than 200 attendees is that reform will not become reality until welfare is taxpayer funded and taxpayer controlled.

Participants included Senator Dan Coats, Congressman John Kasich and Congressman Joe Knollenberg as well as many of the nation's foremost authorities on welfare reform. Also speaking were Roger Allee and Avis Jones, who describe how they went from dependent to hopeful lives. CoatsAvis2.jpg

Syndicated columnist Arianna Huffington moderated a panel that examined qualities of successful private charitable organizations. She observed, "Here is an opportunity to say that all the problems that we are facing as a country ­and there are many ­need to revolve around a reinvigorated civil society; citizens who, once again, personally become involved in the solution of problems in their own communities. This is what the charitable tax credit ultimately will do, reconnect citizens to those most in need."
"When was the last time you heard of somebody volunteering at the welfare department?"
­Lou Nanni

Robert Woodson, president of the National Center for Neighborhood Enterprise, boldly stated the power of tax credits. "I say today that the charitable tax credit issue is to poor people what Brown v. Board of Education and the Voting Rights Act were to blacks. It is a fundamental issue of liberation. It is a fundamental civil right that we must see become law in order to change the stranglehold that the poverty industry has over programs to aid the poor."

JohnFundDGT

Building upon an American tradition of private giving, a tax credit would greatly empower private nonprofit organizations. Lou Nanni, executive director of the Center for the Homeless in South Bend, Indiana, said private funds enable his group to serve people more effectively. "Eighty percent of our funding comes from the private sector. Though we could easily access more, we have philosophically said that we do not want more than a 20-percent match from the public sector." One reason is that private sector funding helps stimulate voluntarism and volunteers are crucial. Said Nanni, "When was the last time you heard of somebody volunteering at the welfare department?"

ShamieMcDonald 


       Observed Wall Street Journal editorial board member 
      John Fund, "In order to help people most you need to combine warm hearts 
      with hard heads; compassion must be married with personal responsibility." 
      Fund moderated a panel on implementation of compassionate welfare reform.	
       
      
 The compassion tax credit offers clear incentives 
        to taxpayers to increase their support of qualified nonprofit charitable 
        organizations. And unlike the current standard of deductions, tax credits 
        would be available to everyone. "It makes the provision of charity more 
        democratic,"said David Tuerck, BHI executive director. "It opens up greater 
        participation by low-income taxpayers and by nonitemizers in the provision 
        of welfare services."  
      
 While there was general consensus in support of 
        tax credits, one panelist voiced concerns. Robert Rector, senior policy 
        analyst at the Heritage Foundation, suggested, "In reality, most of the 
        money that will go into this credit will go by name recognition and most 
        of the money, probably 80 percent of it, is going to go to organizations 
        like United Way and Catholic Charities."  
      
 These organizations place a high value on voter 
        registration. They lobbied Congress against last year's welfare reform 
        measures. Their thinking, he said, "is actually 20 years behind the public 
        sector."  
      
 However, Peter Ferrara, chief economist for Americans 
        for Tax Reform, said such criticism underestimates the consumer choice 
        embodied in tax credits.  
      
 "The key factor here is that this is a power-to-the-people 
        proposal. And that's why the approach will work. It's the taxpayers who 
        choose which one of these groups gets these funds."  
      
 Congressman Kasich, in his luncheon speech, offered 
        the following.  
      
 "The tax credit helps us to reclaim our country. 
        It helps us to reclaim our community and it says to us, 'You don't have 
        to build a gate, you don't have to have all the security systems.' It 
        helps us to reach out and knit our communities together. The strength 
        of America is a knitted, strong community. That's what it is and that's 
        what the charitable tax credit does."  
      

      
 NewsLink  is 
        the quarterly newsletter of the Beacon Hill Institute for Public Policy 
        Research at Suffolk University. © 1996-2002. All rights reserved.

         
      
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