Week 3 Post

Blog Post # 2

Hello, here is my blog post for Tuesday January 18^th. 

In class last week we reviewed the nonprofit taxonomy, how they are organized, and the federal laws the IRS uses in governing them.   One point of interest that immediately jumped out was how non-profits are organized.  It’s interesting to see how the board of directors provides oversight, yet how difficult it is to get rid of them.  Additionally, I was surprised to hear professor Choquette say that many charities would donate only 60% of their proceeds directly to their cause.  At first this didn’t seem like much -- where did the money end up getting caught up?  When the professor put it into perspective however, it made a lot more sense.  It’s actually remarkable how a company can manage to pay all of its staffing fees, which must be considerably less than in a for-profit company, and manage to give away more than half of its revenue.

 On Tuesday Professor Choquette went into the types of IRS 501(c) laws.  I found one particularly interesting.  In order to receive tax-exempt status the organization may not intervene “substantially” in political campaigns or attempt to introduce legislation.  In order for a non-profit to serve some political function it must be registered as a 501(c)(4), which however, revokes its ability to deduct taxed contributions.  The ability of 501(c)(4)’s can be powerful particularly in light of the most recent Supreme Court decision regarding them.  In Citizen’s United v. FEC, a non-profit 501(c)(4), Citizen’s United attempted to air an electioneering campaign against Hillary Clinton in the 2008 democratic primaries.  The broadcast was originally seen as conflicting against the McCain-Feingold Reform Act which restricted electioneering communications 30 days before primaries.  The case was subsequently struck down and the airing was cancelled.  However, the Supreme Court’s 2010 decision saw money as first amendment free speech and thus put no limitation on the amount of corporate (profit or 501(c)(4) non-profit) money.  The view of the court is that there is no quid pro quo between indirect campaign expenditures and a candidate, and therefore one cannot limit speech (money).  In my opinion the real danger of the case is the unlimited power it now gives corporations to campaign in an obviously quid pro quo relationship with the candidates, these dangers can also be real for non-profit 501(c)(4)’s.  The case changes the ability of 501(c)(4)’s to act in a more political fashion.

One thing professor Choquette said in class particularly surprised me.  He said that Lane County and Oregon are actually below the national average in non-profits per people.  I thought that either one was pretty non-profit heavy.  I think that one of the reasons could be that Oregon and Lane County probably have fewer churches than the rest of the country, but even so it was surprising.

The readings this week were fairly interesting.  The one titled Charitable Deduction under Scrutiny was very relevant to the debates we’ve had in class.  While trimming the charitable deduction tax write-off can be important for improving the federal debt, I found most of the arguments not compelling.  I feel that non-profits need to be relevant, particularly in recessions.  There was one part of it, however, that I had to agree with.  One of the deficit-reduction plans was to eliminate the way the tax reductions are structured.  The current system allows for taxpayers to write-off their donations in the same way as their tax rate.  Therefore, the wealthiest tax payers get the biggest write-offs.  Instead of a regressive tax rate, the donation incentive should be progressive so as to give the poorest households more incentive to donate.  I thought the chapter on religion in the O’Neill book was decent, but not very insightful.  One point of interest was the recent trend of secularism in America and how that will affect the separation of church and state dynamics if at all.  I thought that this growing trend will be particularly relevant in the future but not yet in America, which is one of the more religious developed countries (O’Neill).

               

Intro blog

William Sercombe

Introductory Blog Post

            The purpose of this blog is to provide an analytical forum for what the relevance non-profits have on contemporary society.  In doing so I will look at the history of the non-profit sector, its value to society, and what it can bring to the future world.  The PPPM 280 class will hopefully give some insight about this issue.  If at all possible my blog will commit to how non-profits can help bring to the table environmental issues that would not normally be tackled by the public or private sector.  Environmental NGOs have helped bring environmental treaties to the international arena and can be seminal in drafting an equitable climate change treaty for the future.  I hope to provide a forum for the future development of environmental non-profits and how they interact with the private and public sector.

            My name is William Sercombe, I am from Portland, Oregon, and I have absolutely no experience with how non-profits function.  This is definitely the main reason why I took this class.  I am a PPPM and Political Science major but I am really more interested with how those two fields can serve the environment.  PPPM and Political Science have given me some optimism about how cities and local governments can plan sustainably by taking this class I want to find out what the non-profit sector can do also.  However, aside from the environment there are many other important functions of the non-profit sector that I hope this class will help me with.

            The class question on Thursday was whether tax write-offs for those who donate to non-profits is a generally good idea.  At first question seemed to come easy – of course it is a good idea.  However, once one parses the question there are several fundamental issues at stake.  One must answers two questions when trying to answer this question.  First, are non-profits “good?” that is, do they benefit society so as to warrant a tax write off for those who donate?  Second, are donations to non-profits of a specific economic nature that would forbid it from being taxed?  When one asks if non-profits are “good” it is certainly a value based question.  One must admit that non-profits have the potential for benefiting society that the private sector generally does not provide.  Non-profits, particularly in America, have been vital to providing a “civil society” and extending a separate sphere that is neither public nor private (O’Neill).  Many non-profits have also served traditional government functions more effectively than the public sphere.  It must be conceded that non-profits have the potential to serve the general welfare but does that mean that all of them do?  How inclusive should tax write-offs be by the government in terms of donations to non-profits?  Should non-profits that are very limited in scope and serve only a particular segment of society be included in this?  These are questions that are important to parsing this issue.  The second part of the question deals with the economic character of non-profits.  In order to be non-profit a company must “not distribute net profits to individuals who control the organization” (O’Neill).  Therefore, non-profits are by definition of a different economic character than a business who would distribute profit.  This certainly is nothing new; after all they are called non-profits.  It can therefore be assumed that non-profits don’t actually have an economic character that commonly is associated with taxable goods.  They are for a purpose that is not in conjunction with the private sphere.  Generally the sole motivation for private businesses is to make a profit, non-profits have no such motivation.  Taxation occurs with the changing of hands of economic capital commonly for the purpose of making profit.  To tax a non-profit or the donation of non-profits from ones income would be to assume that it is of the same economic character as a private economic transaction, which, clearly it is not.  Therefore, tax write-offs for charitable donations to non-profits are important because a) non-profits have at least potential of bettering society and b) are not of the same economic character as a taxable good.