Saturday, November 26, 2005

Should arts organizations qualify as "charities"?

Nonprofit arts organizations clearly can achieve charitable goals. However, simply because an arts or educational organization, or any organization for that matter, has nonprofit status - should we consider it a charity in the same sense as organizations that dedicate themselves exclusively to serving poor or disenfranchised people?

The comment on my previous blog brings this issue into the discussion.

Humanity needs the arts. Creative thought opens our eyes, provides new perspectives, and expands human potential. Without the arts, society will miss opportunities to nurture and sustain the values important for civilization. Moreover, the written word and spoken word have, for example, led us to understand and act on problems that confront society; theater has portrayed societal issues in ways that other media cannot.

However, should an arts organization - let's say a symphony orchestra or a dance company - be exempt from taxes? Should contributions to such an organization be allowed as deductions on individual tax returns? What if such an organization serves exclusively middle and high income audiences and does nothing to spread the arts to lower income groups?

These are not merely academic questions. Taxpayers and some public officials are increasingly raising them, sometimes in connection with challenges to the ability of organizations to achieve the privileges of nonprofit, tax exempt status. After all, nonprofit organizations place demands on the services of cities, states, and the federal government in just the same way as profit-making organizations do. The salaries paid to some leaders of nonprofit organizations put them well into the ranks of this country's highest paid professionals.

In the 1960s, a shop in Greenwich Village sold a variety of "protest buttons." Some were purposeful; some were satirical. One proclaimed "Tax the Churches". It seemed funny to me then; it seems serious now. Both sides of the debate have some valid points, and we need to pay attention to them.


Anonymous said...

Churches have gotten off easy in this country. They collect a lot of money, and they own a lot of property. They use up services, like you say. If we have separation of church and state, the churches should pay taxes. All organizations should pay taxes.

Anonymous said...

I think this is a really interesting question. Charity, I'm pretty sure, comes from the Latin caritas ("love") and originally meant self-giving toward others. I've been told that the rationale behind tax-free status is to not tax groups that are not part of the government, but are performing services for society that government would otherwise need to perform (like health care, education, immigrant assistance) or that are seen as a worthwhile good for society (like the arts and, I believe, religious worship and congregational care & outreach). Does anybody know whether this is the original & still-functioning idea behind tax-free status?