Business

Focus is on private donors as need grows | Don Brunell

With all the class warfare these days, "rich" has become a four-letter word. To hear some tell it, high-income earners are greedy misers who don't pay their "fair share."

 

Well, not quite.

 

When it comes to taxes, the IRS reports that, in 2009, the latest year figures are available; the top 1 percent earned 17 percent of all income and paid 37 percent of federal income taxes.

 

As for contributing to charity, Americans are a generous people. According to the Urban Institute's Center on Nonprofits and Philanthropy, private donors contributed $202 billion to charities in 2010. The Chronicle of Philanthropy reports that last year the top 10 wealthy individuals donated $8.3 billion, the top 10 U.S. foundations gave $8.1 billion, and the top 10 corporate foundations donated $8.7 billion.

 

Microsoft co-founder Paul Allen donated $372.6 million in 2011, including a $295 million gift to his Paul G. Allen Family Foundation and $70 million to the Allen Institute for Brain Science.

 

Like Allen, many wealthy people and companies form their own foundations. The Bill & Melinda Gates Foundation has a $37 billion endowment that funds their global charity efforts. In 2010, Gates and business magnate Warren Buffett announced that 40 of America's richest people — including themselves — had agreed to sign a "Giving Pledge" to donate at least half their wealth to charity, which works ut to an estimated $115 billion.

 

Washington companies that gave generously last year include Microsoft ($105 million), Intel ($90.6 million), Starbucks ($30.5 million) and PACCAR ($5.85 million).

 

As impressive as those numbers are, charitable giving is not about the "big guys," it's about the local folks and small employers who consistently and quietly give back to their communities.

 

For example, Ed Schweitzer, who started his engineering company in his garage in 1982, now runs a multimillion dollar engineering laboratory that employs 1,700 people in Pullman. A partial list of the Schweitzer family largess includes $2.4 million to build and upgrade the city's aquatic center, $1.7 million for the Girl Scouts and $1 million to the Palouse Discovery Science Center.

 

In western Washington, The Fulcrum Foundation depends on local donors and patrons to provide low-income families with tuition assistance so their kids can attend Catholic schools. In every community, fundraising drives solicit local business owners for donations for the Salvation Army, United Way and families of fallen police officers.

 

In Olympia, The Rants Group, a property management company owned by father and son Ron and Pat Rants, has led drives over the years to support the local Boys & Girls Clubs. In Grays Harbor, the Quigg family, owners of Quigg Bros., Inc., led the fundraising to build a new YMCA.

 

Ironically, these very donations are now being targeted by the federal government. In search of more tax revenue, President Obama is proposing to reduce the federal income tax deduction wealthy people get for their charitable gifts from 35 percent to 28 percent. Since many small business owners file their taxes as individuals, they're defined as "wealthy." Some Republicans have suggested that, instead of searching for tax "loopholes" to close, the feds could just impose a $50,000 cap on tax deductions.

 

Those proposals sparked a firestorm of protests from charity managers who argue that limiting tax deductions for charitable donations would undercut support at a time when the need is greater than ever. While the changes target "the rich," the greatest impact would fall on the poor.

 

At its core, the notion of severely limiting charitable tax deductions presumes that the federal government will do a better job helping community groups and causes than the local people who live there.

 

Do we really think that's true?

 

About the Author

Don Brunell is the president of the Association of Washington Business.

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