August 12, 1999 | Read Time: 5 minutes
The rapid creation of an entirely new type of charity ought to be cause for great celebration. It can be the signal that a great new idea to help society is spreading nationwide.
But a new breed of charity is cause for great alarm, because the organizations are the antitheses of what charities should be: They are designed to promote the welfare of a few well-to-do property owners, ultimately at the expense of society at large.
In more than 1,200 locales, businesses and others have joined hands to set up non-profit organizations — usually called business-improvement districts, or special-services areas, or something similar. Once a district is established voluntarily, all property owners in its territory must pay additional municipal taxes, which are collected by the local government and turned over to the non-profit group. The district’s hand-picked board then acts like a quasi-government, using the money to supplement police patrols, trash removal, street sweepers, or whatever else the territory needs — and sometimes getting rid of homeless people and others whom businesses and their customers might view as nuisances.
In so doing, the business districts allow the well-to-do to subvert the democratic process: Property owners successfully persuade politicians to cut taxes — and then come together and voluntarily set up a system that requires the property owners, in essence, to pay more taxes. In the process, they insure that their tax money goes directly to improve life for themselves — and they divert money from local governments that are supposed to serve everybody.
Though the levies that finance the district are collected by the city, they aren’t treated like part of the regular tax base in that they cannot be used for the benefit of all. Yet, property owners can claim a federal tax deduction for all the money they channel to their business districts, just as they can for all regular state and local taxes, and for charitable gifts.
If all of our nation’s citizens were getting the basic necessities, such as shelter, food, health care, and high-quality education — and if our communities were getting the basic municipal services they needed, such as police protection and clean streets — then the business-improvement district might be a good way for neighbors to come together to collaborate for some distinctive goal or purpose, something extra for their community. But instead, the non-profit business district is an instrument of privilege. It allows the well-to-do to privatize and narrow public services.
One might expect the philanthropic world to be up in arms over the idea that organizations driven by such selfish motives are joining charity’s ranks. One might expect anger at schemes to create a non-profit government for the privileged.
The exact opposite seems to be the case, however. Foundations have supported the establishment of business-improvement districts. Although their intention was to enable much-needed urban renewal, they have become complicit in spreading the idea that it is acceptable to set up self-serving charities that benefit the affluent and that allow, even encourage, government to escape from its obligation to serve us all.
That this idea is taking hold so strongly is probably not surprising. Charities of all kinds have been created — especially in the past two decades — to fill the growing breach left by government. Non-profit groups raise money in behalf of public libraries so that government cutbacks won’t force neighborhood branches to shut down or curtail their hours. Charities finance after-school programs from which governments have withdrawn support, and they maintain and improve local parks and playgrounds, which were once supported by municipal funds.
As in the case of the business districts, those charities are set up by people with good intentions, but their good works too often benefit only themselves and their neighbors. And usually, those beneficiaries are the people and the neighborhoods that already have plenty of resources.
Because so many charities have rushed in to fill the gaps created by government, is it any surprise that our political leaders think it is acceptable to cut taxes and deny governments the resources they need to provide public services? Instead of allocating funds for pressing problems — such as the lack of good schools and affordable long-term care for the aging — our leaders slash away at government programs. They feel safe in the knowledge that people with means will create a charity to provide services for themselves and a small circle of people in their immediate locale.
Political leaders used to argue that tax cuts were needed as an economic stimulus, and that budget deficits required them to cut funds for government agencies and non-profit programs. But that’s no longer the case. Most people recognize that fact. And only about 10 per cent of voters want tax cuts more than they want better government services.
At a point when such extraordinary wealth is being created in this boom economy — and huge government surpluses abound — charities should stop being so accommodating as politicians continue to shed governments’ responsibilities. As Congress has been debating cutting hundreds of billions of dollars in taxes, largely in ways that would help the wealthy, most charities have been silent. Instead they should be demanding that lawmakers provide sufficient tax revenue and appropriations for local and national problems, to protect the environment, to fight disease, and to insure that myriad other needs are adequately met.
In saying that government needs to do its share to take care of all citizens, non-profit groups will take a much-needed step to show society that they still play a critical role in protecting the common good. And they can’t waste time in doing just that — or else far too many Americans may come to believe that starting a charity is about helping yourself, not about helping others.
Mark Rosenman is a vice-president of the Union Institute, in Cincinnati. He directs its Office for Social Responsibility, in Washington.
