Saturday, February 4, 2017

How Would Nuking the Charitable Tax Deduction Affect Higher Ed (and Law Deaning)?

Fr[from Rick Bales]

We may soon find out. According to Forbes (Ashlea Ebeling , This May Be The Last Year You Get A Charitable Tax Deduction), via Dean Dad, the tax deduction for charitable contributions may be history.  This could be devastating for higher education. As Dean Dad puts it, this "wouldn’t be so bad if it signified replacing private philanthropy with robust, reliable public support.  But in this context, that’s not what it means at all.  It means desiccating one of the major alternate revenue sources for most colleges, beyond appropriations and tuition/fees."

The Forbes article suggests that charitable giving would plummet absent the deduction. What would this mean for the typical law school dean? Ten years ago, fundraising was the coin of the decanal realm. Today, fundraising is still important, but developing donors is a long-term commitment (it can take 3-5 years to establish the kind of relationship/trust that results in major gifts, and even then bequests may not "mature" for decades). Fundraising is critical to a school's long-term future; many struggling schools are surviving thanks to endowments created by decanal fundraising decades ago. However, short-term enrollment crises pose existential threats at many law schools, and immediate existential threats always trump long-term investments, so my guess is that fundraising already is getting less decanal attention than it did several years ago. Moreover, donors give to opportunities, not need, so fundraising is almost never a solution to current budget challenges.

My guess: if the charitable deduction disappears (or diminishes substantially), law deans will continue to spend time friend-and fund-raising, but will skew their time even further toward the wealthiest donors, whose giving has the greatest immediate impact and who may be less affected (or motivated) by changes in the tax laws. If so, this will be a shame, because recent graduates and mid-level donors have not only future treasure, but also current time and talent (not to mention referrals for prospective students and job opportunities) that can benefit the law school far beyond the current budget cycle.

rb

 

 

 

http://lawprofessors.typepad.com/law_deans/2017/02/how-would-nuking-the-charitable-tax-deduction-affect-higher-ed-and-law-deaning.html

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