Why nonprofits should care more about tax policy

For most of us, tax policy is a MEGO (as in "my eyes glaze over"). How a society constructs its tax policy, however, is central to social justice, according to Kim Klein, co-founder of the Grassroots Fundraising Journal and frequent visiting lecturer and trainer in Hawai‘i.

Klein points to the sales tax – cousin of Hawai‘i’s general excise tax – as being inherently regressive, since everyone pays the same rate regardless of income, which places a disproportionate burden on the poor.

She cites the case of Salinas, Calif., the city of writer John Steinbeck, where only 16,000 out of 80,000 register voters cast ballots. 10,000 of those ballots defeated a sales tax increase to fund public libraries, resulting in the closure of all the city’s libraries. In other words, 10,000 people decided the fate of a public institution – “I can only speculate that the majority of these 10,000 voters are not library users,” Klein writes.

“Are there institutions whose importance is so great that their funding should be guaranteed by government, or should private fundraising take care of everything not related to life and death?” Klein asks. “If so, should some of our nation’s high net worth individuals be persuaded to take those on?”

It was tax policy that created those rich individuals, such as Bill Gates and Warren Buffet. The tax cuts that began in the Reagan administration increased the number of U.S. billionaires from 13 in 1986 to 230 today. Worldwide, the number jumped from 20 to 793, who are now worth a combined $3 trillion. “The GDP of the poorest 48 countries in the world is less than the wealth of each of the three richest people in the world,” Klein said.

“It is fairly obvious why nonprofits should care about tax policy,” she says. “Social service agencies are burdened to the breaking point with people needing help at the same time as their government grants are cut again and again. Arts and humanities programs have been cut out of government budgets so completely that some states don’t even have State Arts Commissions anymore.”

Tax policy affects nonprofits more than any other institutions. What can we do about it?

• Get organized – nonprofits make up 10 percent of the workforce, almost 15 million people, plus 65 million volunteers. As a voting bloc they could swing any election, particularly when the turnout is as light as that election in Salinas that killed its libraries.
• Start talking about taxes – people don’t have well-informed opinions about taxes. Talk about the role of government in board meetings, committees, speeches, gatherings and conferences – “in fact, everywhere we gather.” Raise these questions: What are taxes for; and what is fair taxation? “Send to those working on tax policy at the state and national levels a buzz of conversation from the grassroots.”

Click here to find Kim Klein’s complete article “Gates, Buffett, World Poverty, Nonprofit Staff...”