Tax-Exempts Stepping In for Government

There has long been some discomfort for the federal and state subsidies tax-exempt organizations (and their donors) receive. A big criticism is that by allowing donors to deduct their donations, the wealthy can direct some amount of government spending without democratic oversight, perhaps overfunding universities and cultural organizations at the expense of the humanitarian or other organizations that a democratic society would prefer to fund.

I was think about this with respect to the influx of refugees Chicago (and other cities) is experiencing. The city has provided some housing in hotels and other locations, but many migrants are sleeping in, for example, police stations for lack of other places to sleep.

Part of the problem, of course, is logistics. But part is political; there is often a political cost to helping people who won’t be voting, especially where the surrounding community feels like aid to newcomers will come at the expense of things that they need.

Tax-exempt organizations can (and do!) step into this space. In Chicago, faith-based organizations are housing refugees, are asking other faith-based organizations to house refugees, and are collecting money and goods that the refugees need. Bike Grid Now and the nonprofit Communities United have worked to provide bicycles for refugees. 

In both ways, nonprofits are filling gaps that the government doesn’t fill, either for political reasons or, in the case of bikes, because it likely didn’t occur to government.

And it’s critical to note that we can’t devolve all of the work of providing a safety net to nonprofits and tax-exempts–they lack the capacity and the democratic responsiveness that social safety nets should have. But it’s also important to remember, as we consider the place of nonprofits and tax-exempt organizations, that they can fill an important role that the government doesn’t always fully fill.

Samuel D. Brunson 

Photo by Robert V. Ruggiero on Unsplash