This article is written by Matthew Tucker and is part of the Webjam Charity Channel
On Tuesday 4th November 2008, America elected a new President to lead the country in its next Term. President-Elect Barack Obama said of his election triumph that “change has come to America.”
As a world superpower, actions in America can have global consequences; the saying goes that in a global economy “America sneezes and the world catches a cold”. So what affect will this new leader and ruling party have on the Third Sector?
As well as public generosity, many charities rely on the financial support of businesses. With the current recession, corporate cash for charities is drying up. For example, the former Bank giant Lehman Brothers had a huge Charitable Foundation that now no longer exists. With dwindling corporate support, some charities now face an economic crisis of their own. The BBC One Show recently reported that The Butterwick Hospice in the UK has had to put vital expansion plans on hold as their applications to businesses for money received almost unanimous refusals.
The good news is that Barack Obama has vowed to deal with the American economy “head on” in January 2009, adding that “a stimulus package to boost the economy is long overdue and would be a top priority.” The UK government took similar action with the dramatic step of reducing VAT to 15% last Monday, with the purpose of stimulating Christmas shopping and in turn the economy. With a British economy returned to prosperity, many more businesses will be in the position to continue charitable donations in the UK.
However, it is not just Obama’s actions in the US economy that will affect the Third Sector; with a returning Democratic Party there will be new policies that will directly affect charities. Predicting the effect on the Third Sector is not easy; there appear to be no details on Obama’s campaign website which deal directly with charitable plans.
I used an Internet forum to put the question to American voters: “Is Barack Obama’s Presidency good news for charities?” A clear concern with a raise in taxes emerged:
-
“[Obama] is going to raise taxes on ‘rich’ people who give a lot more than your average person to charity, so I would go with say [Obama] is really bad for the Third Sector.”
-
“People will be taxed higher and have less to give."
-
“I don't know what his policies on charity are, but I know when he starts ‘spreading the wealth’ by forcing people to give more taxes, people will stop giving so much to charity. I think charities will suffer under his presidency.”
-
“Bad news. Obama plans to ‘close the tax loopholes’, which will no doubt include charitable giving and estate planning methods currently used to provide charitable trusts. He hasn't said this, but his talk of closing tax loopholes can hardly mean anything else. Charitable giving is about the best ‘tax shelter’ left.”
-
“Just look at his plans for new government spending and look at his tax plans. The government is a better provider of charity.”
America is the world’s biggest giver of private charitable donations, with 1.67% of its GDP given away (as of 2005), and it has the wealthiest charitable foundation: The Bill and Melinda Gates Foundation with an endowment of $35.9billion. If higher taxes significantly reduce this trend of public donations then the third sector will inevitably suffer. However, as one contributor pointed out “If we don't need charities that would mean the government is working wouldn't it?” highlighting the notion that Charities exist to make up shortfalls in government provision. So with higher taxes, would the US government have more money to reach out to those in need, to spread the wealth more evenly? This question alone opens an entire separate debate on the possible future changes to the American capitalist model; a debate that will no doubt be played out in the media for some time.
The Bush administration did have foundations for charity, such as the The United States’ President’s Emergency Plan for AIDS Relief (PEPFAR), however, one forum commenter pointed out that government funds will hopefully be better spent with the new President-Elect: “I personally think the situation is going to be easier for some international NGOs, especially those working in the field of HIV. During Bush, 90% of PEPFAR funds were spent on abstinence programmes (abstinence from sex). I really believe Obama will change this nonsense.”
Of course, with politics come strong views: “President-Elect Obama, will certainly do his part to help. Too bad Bush spent eight years ripping support for people down, and bankrupting our economy.”
Like all political affairs, America’s politics are complex and arguably unpredictable. In any political campaign there are policies and promises bandied around in an effort to win voters, knowing which ones will actually be implemented is not always easy. As Shami Chakrabarti, Civil Rights Campaigner, said in response to Obama’s triumph: “All Politicians are doomed to break our hearts.” Time will tell how Obama’s Presidency plays out and whether the Third Sector is in for an easy or a rough ride.
Webjam welcome your views; how do you think the new President will change the Third Sector? Tell the Charity Channel your thoughts by posting a comment.
(Please note: the opinions quoted in this article represent a small number of randomly selected individuals and are not representative of the opinions of Webjam.)
This article is written by Matthew Tucker and is part of the Webjam Charity Channel
Flickr image from BohPhoto's photostream







