Charity Beings At Home As Expenses Rise & Charity Corruption On The Rise?

With the decline of giving due in part to the bad economy and the new health care law that threatens their very existence, it's also could be due to the people seeing how dysfunctional many charitable institution actually are. With the information age in full swing, it's not difficult to see just what these agencies are doing with the money they get, and in many cases much of the funds are wasted in over-head expenses.

Many charities are paying the executives huge salaries with generous expenses accounts that siphon off much of the needed capital that should go to help those that the charity proclaimed to help. According to watch dogs groups on charities, this is the case in a lot of their investigations.

Little wonder then the amount of giving is down and will go lower in the future as the economy becomes worse and ObamaCare take over health care. Many of those the gave so generously in the past will now being looking just to survive from one day to the next, let alone give what little funds that have left after taxes and the crushing new health care costs

The Impact of Taxes on Charitable Giving
Source: Arthur C. Brooks, "The Great Recession, Tax Policy, and the Future of Charity in America," American Enterprise Institute, December 3, 2013.
December 12, 2013

The recession has significantly impacted Americans' giving patterns, says Arthur Brooks, president of the American Enterprise Institute.

• Charitable giving in the United States was at $300 billion in 2007.
• But after that year, giving in the United States declined and it has yet to reach that previous level.
• In 2011, charitable giving was at $298 billion, with 73 percent of that figure coming from individuals.

What explains the decline in charitable giving after 2007? It seems intuitive that the decline could be attributed to the recession.

• Giving per household reached a high of $2,956 in 2005.
• But the recession caused the median American family to see at least four years of diminished purchasing power.
• Average household giving declined rapidly between 2007 and 2009. It then maintained a low level of about $2,460 per household between 2009 and 2011.

Brooks' study took the results from the recession and then estimated what kind of effect a charitable deduction cap would have on giving. President Obama suggested a 28 percent cap in his FY2013 budget. With such a cap in place, charitable giving overall would be expected to drop by 4.35 percent -- a total loss of $9.4 billion.

• For the top 1 percent of earners itemizing deductions, the study predicts a 24 percent reduction in giving. This would have a major impact on the nonprofits -- including universities, think tanks, orchestras and hospitals -- that depend on this group for funding.
• The study noted one caveat to the prediction, citing some commentators who believe that a deduction cap would stimulate growth. If that is the case, such growth could reduce the cap's predicted negative effects.