Miller describes the general size and scope of activities being conducted a progressive nonprofit infrastructure that has “taken on an outsized part of the Democratic Party’s election strategy” and, specifically, how they “work around legal restrictions on nonprofits that accept tax-deductible donations by selectively engaging in nonpartisan efforts including boosting voter education and participation.”
The infrastructure also includes nonprofit grantmaking institutions, which are also tax-advantaged and also evade restrictions on partisan political activity.
Rates and Rises
The current 1.4-percent tax rate on the endowments of colleges (whose student bodies are majority U.S. citizens, where more than 500 students are tuition-paying, and where total assets exceed $500,000 per student) was set by the Tax Cuts and Jobs Act of 2017.“If we believe the rationale for imposing the excise tax stems from a distaste for excessive accumulation on the part of these wealthy universities, perhaps we should take the rationale even further,” she observed. “Why are we focused only on universities? … Seeing the 2017 tax bill’s university endowment excise tax as opening the door to imposing tax as an incentive tool to stop the excessive accumulation of wealth by non-profit entities lets us imagine what else we might see ….”
Rationales for Reform
If one believes there’s a good rationale for proposing an increase of the tax in the higher-education context, it seems the same rationale would apply to private foundations. Here’s how Vance’s explained his reasoning for a higher-ed endowment tax increase on the Senate floor: “How is it,” he asked, that universities, which “should be responsive to the public will, responsive to their donors and alumni, responsive to their students, how is it that they can go so far so fast without any pushback?”The answer, he continued, “is university endowments, which have grown incredibly large on the backs of subsidies from the taxpayers, and they have made these universities completely independent of any political, financial, or other pressure ....”
Why is it that if you’re spending all your money to teach literal racism to our children in their schools, why do we give you special tax breaks instead of taxing you more? …
The decision to give those foundations and those organizations special privileges is a decision made by public policy. It was made by man, and we can undo it.
Questions
Along with the similar work of others—including at the Capital Research Center, where I’m a senior fellow—Miller’s article, the Ways and Means oversight-subcommittee hearing, and Vance’s bill raise even more fundamental questions. These are especially relevant to conservatism, and conservative philanthropy.Of philanthropy: What’s it for? If it’s for charity, but it being used for partisan electoral politics, what’s to be done?
Of conservatism: Where on the spectrum of proposed policy reforms, between the carefully tailored oversight subcommittee options and Vance more-existential “threat” to large nonprofit endowments, should principle nudge us? Slight alterations or frontal assaults, or a mixture of both?
Finally, regarding conservative philanthropy: Can it face the truth of how radically progressive, policy-oriented, and partisan most Big Philanthropy has become? Are conservatives bound by principle to defend such a regime? Is the traditional understanding of charity worth somehow trying to preserve despite how the system has been abused by partisan politicization?
Or should the conservative side of philanthropy aggressively “fight fire with fire” and engage in the same kind of politicization itself, if only to try neutralizing the other effort? And if the other side’s fire so often includes successfully influencing the formulation, passage, and implementation of government policy—shouldn’t its fire too?