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Matt Beem
President, Kinetic Companies, Inc.

Don’t hit the givers the hardest

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Saturday, March 11, 2009

Dear President Obama,

You’ve entered the White House in one of the most difficult periods in U.S. history.  Your vision of and commitment to a brighter future are compelling.

For a while now, I’ve thought you should create a new cabinet position. Your late February budget, which would spike the cost of philanthropy 12 cents for every dollar given by itemizers earning more than $250,000, prompted me to write this letter.

Your proposal is short-sighted. Instead of restricting charitable deductions, you should lean into wind of tough times, encouraging those whose gifts comprise the greatest share of our country’s philanthropy to dig deeper.

Let me be clear: I’m not a tax expert. My opinion grows from years of experience as a professional fundraiser, which long ago taught me that tax savings alone don’t motivate charitable giving.

Eliminating tax deductions to recharge federal coffers is the wrong way to pump money into our nation’s strained social service infrastructure. Instead, you should appoint a philanthropy czar to secure additional charitable gifts from those largely unaffected by the current economic downturn – and who already give the largest share.

Philanthropy is a significant force for good in the United States. It fuels a nonprofit sector that delivers social services much more efficiently than government and makes ours the greatest civil society on earth.

In times like this, we should invest in our strengths. Appointing a philanthropy czar would:

  • Fuel an economic engine. Every year since we began tracking philanthropy in 1949, U.S. taxpayers have made gifts totaling about two percent of the nation’s gross domestic product. Put another way, philanthropy pumped more than $300 billion in 2007 into essential programs and services – money that would otherwise have been levied through taxes.
  • Endorse the nonprofit sector. Even as unemployment climbs and the financial services industry struggles, many will make charitable gifts this year and in the future. Our strained economy should not make us apologetic about philanthropy; instead, it should spur us to embrace it as the means to fund nonprofit organizations’ missions, which are more important now than ever.
  • Motivate a mighty minority. More than 85 percent of philanthropy is given by less than 15 percent of donors, 86 percent of whom are individuals – not foundations or corporations. Toward that end, the philanthropy czar should spend most of his time with our country’s greatest givers. 
Those of us who raise money for a living know it takes a special person to secure major gifts. The maxim “people give to people” is oft-repeated by professional fundraisers.

Toward that end, the philanthropy czar need not be a person of political skill or experience but one of philanthropic qualification and stature – a person like Warren Buffet, Bill Gates or Boone Pickens. After having made his significant investment in our nation’s social service infrastructure, he would invite others to do the same.
Sam Walton reflected several decades ago on the lessons of Wal-Mart’s explosive growth. “Opportunity often lies in the opposite direction,” he said.

Sam was right, Mr. President. Just as he responded to retailers’ suburban flight by planting Wal-Marts at rural crossroads, your answer to our strained social service infrastructure should be to invest in philanthropy, not stifle it.

Matt Beem

Matt Beem is president of Kinetic Companies, an international fundraising consulting firm. He lives in Independence.

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