Reeling In Rebates for Charity

Groups encourage taxpayers to donate their federal refunds

President Bush is hoping people will jump-start the economy by spending their federal tax rebates on consumer goods, but Boys & Girls Clubs of Greater Sacramento, in California, had another idea. It recently put on a fund-raising event designed to get people to donate their rebates to help kids from poor families.

Called “The Broke Ball” — a takeoff on a more-formal event in Sacramento know as the Baroque Ball — it was held atop a parking garage, featured hot dogs and coleslaw as the main dishes, and used recycled party decorations from a Chinese New Year celebration. The price of admission: $300, the amount that most single taxpayers will receive this year in rebates, and half what most married couples will get.

The event paid off, says Kathy Jean Lavoie, the charity’s president. The ball cost $9,000 to put on, but raised $112,000 for the organization’s three facilities and the 3,000 children they serve. “I hope we have a rebate every year,” she declares.

Like the Boys & Girls Clubs of Greater Sacramento, countless charities nationwide — including many that are opposed to the Bush administration’s $38-billion tax cut — are trying to reap a piece of the rebates. While it is too early to know how many Americans will donate their tax refunds, surveys suggest that nonprofit organizations stand to gain millions of dollars in rebate-related donations. A poll by the Gallup Organization in July found that 2 percent planned to donate money from their rebates, while a Christian Science Monitor survey put the figure at 4 percent.

Among those promising to donate their rebate checks are President Bush and U.S. Treasury Secretary Paul O’Neill. The president has not said what organization will benefit from his family’s tax refund, but Mr. O’Neill says he plans to donate his $600 to the Western Pennsylvania School for the Blind, in Pittsburgh.

Modest Sums

Rebate money already has begun flowing, albeit in modest amounts, to a number of other charities as well.

GiveForChange, an online site that raises money for 400 charities, has brought in $500,000 in tax rebates since July 4. That amount will be matched by Working Assets, a telecommunications company in San Francisco that runs the Web site. Working Assets, which annually donates part of its revenue to charities engaged in social-justice and environmental causes, plans to match all donations made in amounts of $300 or $600 to charities listed on the Web site.

Michael Kieschnick, president of Working Assets, says he expects total donations to be above $1-million by the time the campaign ends in November. So far, Planned Parenthood Federation of America, one of the 400 charities listed on GiveForChange, has garnered the most money from the campaign: $33,000.

Other charities, besides those benefiting from the Working Assets campaign, are also beginning to benefit from the tax rebate. For example, 15,000 people have pledged their rebates to a mix of environmental and social-service charities through the Web site of the Sierra Club, an environmental charity in San Francisco.

And in Maryland, a number of small social-service groups have begun receiving rebate donations, thanks to efforts of a consortium of foundations and corporate-giving programs that is asking residents of the state to give up their IRS checks.

While no one can offer a clear estimate of how much money might flow to charities as a result of the tax rebate, history suggests that tax refunds can be a windfall for groups that focus on education, fighting poverty, and other such efforts. Last fall, when the state of Pennsylvania gave residents property-tax rebates worth $330-million, an advocacy group called Philadelphia Citizens for Children and Youth urged residents to donate their $100 rebate checks to public schools in poor areas. The result, says Shelly D. Yanoff, the group’s executive director, was $100,000 in donations to schools in Philadelphia and other localities across the state.

Effects on Giving

Some experts believe the federal rebate will help to increase total giving nationally this year. Patrick M. Rooney, director of research at Indiana University’s Center on Philanthropy, predicts giving will rise at a slightly higher rate in 2001 than it did last year, in part because of the tax refund. But he says the rebate’s effect will be offset somewhat by other factors. Those include increasing uncertainty about the economy and the fact that reduced federal tax rates will lessen the incentive for people who itemize their taxes to make charitable donations, he says.

Other observers, however, predict that rebate-related donations will have little or no effect on total giving this year. Some believe, for example, that if donors give their rebate checks to charity now, they might not give money during the end-of-the-year giving season, when many charities raise the most money.

Making Political Points

Whatever the effect on overall giving, scores of nonprofit groups are pressing ahead with rebate fund-raising appeals. For many, the efforts are aimed not only at raising money for programs, but also at making a political point about the Bush administration’s fiscal policies, which officials of the organizations say benefit the wealthy at the expense of the poor.

The Fund for Tax Fairness, a nonprofit organization in New York that is run by the Funding Exchange, a network of community foundations, has received $104,000 in pledges so far, but the promised gifts are not simply a gesture of charitable support, says Chuck Collins, a spokesman for the effort. They also represent “about as direct a protest as you can make” of the president’s tax policy, he says.

Similarly, Mr. Kieschnick says that rebate gifts to GiveForChange show donors’ disagreement with the government’s decision to cut taxes. Money that is being used for the rebates should be spent instead on such programs as environmental protection and programs for poor people, Mr. Kieschnick says.

Despite their opposition to the rebates, Mr. Kieschnick, Mr. Collins, and a number of other nonprofit advocates say the best way to fight back against the administration’s fiscal policy is by attracting as much of the tax-rebate money as possible to charity. “It’s making lemonade out of lemons,” Mr. Kieschnick says. “We want to hoist Bush on his own petard.”

The National Council of Churches, which represents 140,000 Protestant, Anglican, and Orthodox congregations, also has been a vocal foe of the Bush tax policy and is encouraging people to donate their rebates to charitable causes.

The council is soliciting the donations to help pay for a national antipoverty program it began this year — and to send a message to the Bush administration that its tax policies harm the poor, declares the Rev. Robert W. Edgar, the council’s general secretary.

Mr. Edgar, a former Democratic congressman from Pennsylvania who says that he has donated his personal tax rebate to the National Council, came under fire recently in a Wall Street Journal editorial for condemning the tax cut and yet seeking rebate donations. He says he sees nothing wrong with doing both.

“We see no hypocrisy” in soliciting the rebate money, he says. “The consistency of our position is that it’s good for the poor. It would be more hypocritical of me to spend my $600 check on a new television set.”

‘Difficult Position’

Some charity officials concede, however, that they are torn between opposing the tax rebates on ideological grounds and seeking donation of the rebates to help their organizations.

“We’ve found ourselves in a difficult position, where we don’t support the rebates but want to give people a better option than spending them on Weber cookers and golf clubs,” says Steven Newcom, executive director of the Headwaters Fund, a foundation in Minneapolis that focuses on social-justice issues. “All of us are living with this tension,” he says.

The Headwaters Fund, along with the Community Solutions Fund, a community foundation in St. Paul that focuses on social activism, last month started a statewide campaign called Pledge Minnesota that seeks to raise rebate money for nonprofit groups that focus on such causes as a higher minimum wage, better transportation systems, low-cost housing, and stricter environmental controls.

So far, Pledge Minnesota has raised $27,000, primarily through the Pledge Minnesota Web site, where visitors can either pledge to donate their rebate to a specific cause or make a contribution to one of 25 nonprofit organizations.

Despite the success of Pledge Minnesota, officials of some nonprofit groups say they have mixed feelings about the effort.

“The purpose of Pledge Minnesota is to allow people to do with the money what they wish the government would do with it,” says Katy Lowery, executive director of the Community Solutions Fund.

But, she adds, “we don’t want to give voice to the notion that philanthropy can accomplish what government can. We don’t want to be pointed to as a reason for larger rebates.”

Nevertheless, that is exactly what some nonprofit officials fear could happen.

“Pledge Minnesota looks like an endorsement of tax cuts,” says Nan Madden, director of the Minnesota Budget Project, a nonprofit advocacy organization that monitors state spending to assist the poor. “It kind of muddies the water to say, ‘Here’s a good way to use the rebate,’ without saying, ‘Isn’t it good we got the rebate?’ It’s hard to not look hypocritical.”

Ms. Madden says she does not object to individual nonprofit organizations seeking donations from tax rebates, but she opposes coordinated fund-raising efforts such as Pledge Minnesota.

Still, she concedes that Pledge Minnesota could wind up helping poor people in the long run. “It’s something that I haven’t fully resolved in my own mind.”