“Who killed civil society?” It’s a good question, and it’s the title of Howard Husock’s book, in which he pointed to the problems of government influence on nonprofits. “Government at all levels has now become the funder of social services, outsourcing to local nonprofits the job of distributing tax dollars, which influence the activities of those organizations,” wrote Husock, an occasional op-ed contributor to The Hill.
When the book was published in 2019, just over half of nonprofit organizations received government funding. Sadly, that’s grown to two-thirds today. That said, one third of us have resisted the lure of government bucks — and the question is, “Why?”
Well, we like to do our nonprofit work without any federal or state strings attached. We like the camaraderie that’s formed with community donors who make a willful decision to support us. And many of us like the idea of the government doing less in the charity sector, leaving it in the more capable hands of compassionate volunteers who relationally engage in ways that deliver real solutions.
Despite being a minority, our position signals that civil society, while no longer the dominant driver of charity work in this country, still has life. Indeed, I believe it’s the key to a resurgence of charity work done the best way with the most lasting results.
That said, the wolves are at the door. There are some judges whose recent decisions signal they’d like to deliver civil society its final death blow. In Buettner-Hartscoe v. Baltimore Lutheran High School and E.H. v. Valley Christian Academy, decisions were handed down asserting that privately funded organizations’ tax exempt status represents a form of federal aid and therefore renders those organizations subject to federal rules and regulations.
Before civil society dies, someone ought to ask a more pressing question: How do we safeguard privately funded charities? Sen. James Lankford (R-Okla.) and Rep. Greg Steube (R-Fla.) are answering it by co-sponsoring the Safeguarding Charity Act, a simple bill to guard the tax exempt status of private nonprofits.
Understanding the history of tax exemption may encourage you to support it.
It wasn’t until the late 19th century that a permanent income tax was seriously considered. At the time, tariffs failed to adequately fund a growing federal government. To close the gap, in 1894 Rep. William Jennings Bryan (D-Neb.) spoke in support of an income tax, saying, “It simply intends to put the burdens of government justly upon the backs of the people.” Somehow, such arguments held sway — and an income tax passed into law that year.
Although the Supreme Court later struck that law down, its tax-exempt language for institutions of civil society was carried over to the Revenue Act of 1909. At the time, President William Howard Taft also voiced support for an income tax to fund the growing needs of the federal government, contending the power to tax incomes “is undoubtedly a power the national government ought to have.”
And so by congressional approval and ratification of the states, the 16th Amendment was adopted — demonstrating most Americans agreed personal profits should support the national government. Unfortunately, however, the exemption for charities is now construed as a form of help from the federal government.
To illustrate the tragedy here, imagine that I met the need of a street beggar with a dollar, dispensed in ten dimes. He hands one back to me, saying he doesn’t need it. Does that mean I am now the recipient of his charity — that he has a right over how I spend the rest of my day? That analogy would have pointed out the absurdity of today’s thinking much more forcefully in the 19th century, before a restrained government of, by, and for the people grew into a slothful, entitled giant with a club in hand, demanding 90 cents from every passerby, then threatening to hold him ransom over the dimes he “allows” them to keep.
Clearly, that’s misdirected thinking. To be exempt from such a hustle and hassle is not the government doing us a favor so it can leverage non-profits’ compliance. To think so is to embrace a perversion of the founders’ commitment to our inalienable rights to life, liberty and property.
More pragmatically, as the economy sways in the winds of financial uncertainty, it’s crucial we understand the vital institutions of civil society can do a better job of educating the next generation, solving issues of poverty, and enriching our cities. Indeed, they are far better equipped to engage their communities through the formation of vital social bridges, strengthening neighborhoods through direct involvement and accountability.
Therefore, they should be given great freedom to operate. Conversely, involvement and accountability from a federal level is more than unnecessary. It is counterproductive interference. And if that interference takes the form of revoking tax-exempt status from nonprofits, it will certainly dissuade private contribution to do good.
Without codifying the safeguard this bill offers, the federal government risks shackling itself with more to be done — and more debt — while the good works of civil society take a hit to the pocketbook. Or worse, they may be forced to close their doors, exacerbating both social ills and society’s demands that an ill-equipped government do something about it.
James Whitford is co-founder and executive director of Watered Gardens Ministries in Joplin, Mo. and True Charity, which exists to champion the resurgence of civil society in the fight against poverty. He is also the author of “The Crisis of Dependency: How Our Efforts to Solve Poverty Are Trapping People in It and What We Can Do to Foster Freedom Instead.”