Charitable Tax Reform

An important way that the ultra-rich avoid paying taxes is through tax deductions and loopholes associated with charitable gifts. While philanthropy by the wealthy does support nonprofit organizations, hospitals, and educational institutions, it comes at a high cost. For every $100 donation that a wealthy donor makes, they can get as much as $90 in tax breaks.

This is particularly egregious when the contributions go to a private foundation or donor-advised fund, rather than to an operating nonprofit. The wealthy donor gets an immediate tax benefit, but society gets little or no benefit for years, if not decades.

Charitable tax reform to address this wealth hoarding by private foundations and wealthy donors would include:

• End loopholes that allow the wealthy to use charitable contributions to evade taxes.
• Increase charitable tax incentives for everyone else.
• Step up foundation payout requirements for large foundations and donor-advised funds.