NCPA - National Center for Policy Analysis

CONGRESS TARGETS PHILANTHROPY

December 30, 2008

Congressman Xavier Becerra (D-Ca.) thinks he's discovered a new source of political treasure: the money inside private and community foundations. 

The tax exemption foundations enjoy, says Mr. Becerra, is a "$32 billion earmark."  As he explains: "I have an obligation to make sure that those $32 billion that would have gone to the federal government are used for a ... public good."  Unless foundations reprogram money in the direction of Mr. Becerra's preferences, he'll start proceedings to dismantle their tax exemption.

But he may want to think twice.  A study out this month suggests that foundations spread economic benefits more broadly through society than had been previously imagined.

For the $43 billion that foundations spent on grants in 2007, they created direct economic benefits of $368 billion.  Those nonprofits that consistently outperform government programs have been saving taxpayers a bundle.

  • Foundation dollars spent on home care for the elderly reduce the need for costlier hospital visits.
  • Money spent on job-training programs reduces unemployment rolls.
  • And foundation-sponsored prison re-entry program lower recidivism rates, saving states the cost of another incarceration.

Consider:

  • Foundations offered $10 billion to support health-related programs, which yielded $75 billion in benefits.
  • Some $10 billion for education programs produced $49 billion in benefits.
  • $6 billion for human-services programs produced $65 billion in benefits.

The study also posits that the productive jobs that result from programs in turn produce revenue flows for the government.  In all, state, local, and federal governments can thank foundations for putting some $145 billion in tax dollars into their coffers last year.

Source: "Congress Targets Philanthropy," Wall Street Journal, December 24, 2008.

For text:

http://online.wsj.com/article/SB123008104731031939.html

 

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