It's fun, but is it charity?

By Megan McArdle

I agree that the self-congratulatory round of charity events in New York City is rather spectacularly useless and self-serving. No one who buys expensive tickets to a charity gala should be preening themselves on their fine charitable instincts.

What happens in a charity dinner or auction is that people get something they value, for which they pay somewhat more on the grounds that "it's for charity". But they deduct, not the price premium they were willing to pay for a charitable event, but the entire value of the purchase. Unfortunately, the IRS doesn't have any way to look into peoples' souls and determine how much they would have paid, so we let them get away with it.

However, there often is a meaningful donation, which is the services and venues offered to the event planners. If the Waldorf-Astoria hotel donates its grand ballroom to a charity dinner, it sacrifices quite a lot of foregone income, and deserves our applause. Perhaps we should limit the tax deduction for charitable events to this sort of in-kind giving.

This article available online at:

http://www.theatlantic.com/business/archive/2007/10/it-apos-s-fun-but-is-it-charity/2036/