IRS Uses Charities for Target Practice

Posted: Aug 30, 2013 9:44 AM

Many wise people have observed that a government that gives you everything can also take it all away. For all its flaws, our nation was founded on a healthy skepticism of government power, and the most recent scandal at the IRS demonstrates yet again that such skepticism is well founded. The IRS admitted to heavily and disproportionately scrutinizing conservative organizations that were applying for tax exempt status. Those organizations were subjected to lengthy wait times and invasive questioning, including in at least one case, inquiries into the content of the prayers of the organization’s leaders.

While many of us feel tempted to throw up our hands in frustration with “politics as usual,” I believe this incident actually goes beyond the simple abuse of authority by the party in power. This latest revelation is part of a larger pattern of behavior that seeks to marginalize institutions of faith. The ultimate goal is to render churches and similar organizations inert, and to force Americans to turn to the government rather than to churches or private charity for help and guidance.

Obtaining tax exempt status allows donors to obtain a tax write-off for their contributions to particular charities. Thus a charity is severely impeded from raising money until it has its 501(c)(3) status confirmed. The IRS’s hostility to many of these organizations has been correctly characterized as political discrimination, but it is also religious discrimination. An IRS released audio file records IRS agent Sherry Wan lecturing the head of a faith-based charity about the need to keep her religious beliefs to herself in order to obtain tax exempt status. Is it much of a stretch to imagine this unconstitutional standard being applied to churches?

The federal government was never designed to meet every human need, and thus private charities and churches have always played a vital role in a healthy society. In fact, there are innumerable ways in which faith-based charities do superior work when compared to their government-run counterparts. First, they tend to use funds far more efficiently. Government agencies strive to use all their allotted funds before the end of the fiscal year to justify their existence and expand their departments. In contrast, private charities must constantly demonstrate to donors that their dollars are being put to good use. If donors are not satisfied, funding will dry up. In short, government programs are rewarded for spending, while private charities are rewarded for results.

Secondly, private charities are able to offer more accountability to those they help. This is why at-risk black children who participate in local church activities receive far more benefit (as measured in educational outcomes and over-all stability) than children who participate in government-run after-school programs. It is impossible for public programs, no matter how well intentioned, to equal the holistic care that local churches provide.

Yet the federal government is not just scrutinizing the tax-exempt status of various organizations. For years now, the Obama Administration has called for a cap on the tax deductions that can be taken for charitable giving by the wealthy. This would, in short, divert donations away from private charities and toward the government. Most recently, the Charitable Giving Coalition warned in a letter to Congress that, “Giving will decrease if the charitable deduction is capped, limited or replaced by other provisions. For example, if the Administration’s proposed 28 percent cap were imposed, the sector could lose upwards of $5.6 billion per year, according to one study. Additionally, according to the Urban-Brookings Tax Policy Center, the Administration’s 28 percent cap proposal would reduce individual charitable giving by an estimated 2.2 to 4.1 percent, which would result in a loss of up to $9.1 billion annually in charitable donation.”

Because the Administration’s proposed cap affects mostly wealthy donors, larger organizations like colleges and hospitals are more likely to be negatively affected. This would reduce options for medical care and education for all Americans, forcing more people to choose a government-run option. While some might not see this as inherently negative, ask yourself if you would prefer to be treated in a private hospital or a publicly funded hospital.

I am not suggesting that the Administration wants to do away with faith-based organizations altogether. But I believe they want to marginalize them to the point where they become the “irrelevant social clubs” Dr. King warned us about. The kinds of churches they are comfortable with play an extremely limited role in the lives of the people who attend them and do not seek to influence anything that goes on beyond their four walls.

This is not so much an issue of party, but of power. This Administration wants a government that gives everything, so it has the power to take it all away. What can you do? Every voice of every reader of this article can make an impact. Go on your senator or representative’s website and tell them how important it is to limit government’s interference with charities. Let them know that the IRS needs to back off of the unmitigated scrutiny of these important sources of help for the American people.