Giving It Away

I'll happily admit that I'm not much of a charitable donor one way or the other. Still, I'm always a bit flabbergasted by the fundraising solicitations I get from Harvard. It seems to me that insofar as I give money away, it should be directed at an institution that actually helps people in need. As Kevin Carey puts it:

As Richard Vedder pointed out in the Post over the weekend, Princeton recently built a new residence facility, Whitman College, named after major donor and alumna Meg Whitman, CEO of Ebay, which cost a staggering $388,571 per unit, roughly what Donald Trump spends building a luxury resort. Here we have a fabulously wealthy person donating money to a fabously wealthy university to built a fabulously expensive facility for the benefit of students who come from, in many cases, very wealthy families. I have no problem with that personally if that's how they want to spend their money, but why am I, as a taxpayer, footing part of the bill?

I'm not 100 percent sure on the best remedy. Tyler Cowen argues fairly persuasively in Good and Plenty that the U.S. tax code's scattershot approach to subsidizing charitable donations is a very effective form of arts subsidy for a diverse society. And I think it would be pretty reductive to say that it would be a good thing if all of our donor supported museums, ballets, symphonies, aquariums, zoos, libraries, classics departments, etc. all shut down and had their funds redirected to soup kitchens and drug treatment programs.

To me, to figure this out we'd need to have some serious estimates about the impact of restricting charitable deductions. How much new tax revenue are we talking about? If we kept the deduction in place for institutions aimed at helping the poor, how much charity would be redirected in their direction? But how difficult would it be to administer a rule like that? How much would giving to cultural institutions decline? It's a lot of thorny policy questions. But it'd certainly be my advice to any super-rich people out there that if you're considering making a large charitable donation in the near future, a big gift to an Ivy League university is one of the least socially useful applications of your cash imaginable.

Photo by Flickr user Mr. Littlehand used under a Creative Commons license