Why It Would Be Really, Really, Really Stupid to Eliminate Charitable Deductions for Churches

I’ve seen and heard quite a few comments from folks recently about the possibility of eliminating the charitable tax deduction as a way of balancing the federal budget. My secular friends of both conservative and liberal persuasions, and a few of my liberal religious friends often complain that a lot of church energy is spent not on helping the poor, but on providing country-club services for their members. They point to celebrity preachers who have made “ministry” into a big business.


There are two main reasons, from an economic perspective, why eliminating the tax deduction for charitable contributions to religious organizations would be a bad idea.

First, churches have an enormous positive economic impact on their communities. It has been referred to as the “halo effect.” The researchers in the linked article gauge the average net economic contribution of churches to their local communities at anywhere from two to six times their annual budgets. In other words, every dollar you give to a church is creating more than a dollar of value. This is due in part to the way that churches multiply their ministry by the volunteer power of their constituents.

There are few other organizations that can compare to this kind of value multiplication. Cities who grant tax breaks for a new Wal-Mart often find that the economic effect is negative. Local churches (and, I would guess, other religious organizations) are a much better investment. (I think it’s debatable whether or not this kind of deduction should count as a subsidy, but that’s another topic).

Second, the people affected most by this deduction would be the poor—not only because it would hurt ministry to them, but because the poor are more generous. People at the lowest end of the income scale give an average of 4% of their income to ministries that directly benefit their communities. Upper-middle-class and rich folks give only around 3%. (There are both psychological and social reasons for the stinginess of the wealthy). I recognize that most of the poor and middle-class are already receiving the maximum tax deduction allowed, but these giving patterns in poorer communities reflect the kind of civic engagement and social responsibility that people like Rick Perry, Rick Santorum, and Newt Gingrich (none of whom tithed last year, while insisting that churches, not government, should take care of the poor) talk about all the time. Why would we signal that we no longer wanted to encourage this kind of engagement?

Every fundraising expert I know talks about the importance of motivating a community to give—not just individuals. When a community takes on a big task (a building, a mission trip, an event sponsorship), the first big gift sets the tone and pace for the entire giving effort. It takes a lot of $50 gifts to match the first $5000 gift. We’re not just talking about the giving of individuals. We’re influencing the giving patterns of communities.

From a political perspective, there are two reasons I find all of this rather irksome. The first is that this is yet another way that people are proposing we avoid taxing the wealthiest people in the country at rates equivalent to the rest of us. The second is that this rhetoric is a favorite argument by people who disagree with the way churches “meddle” in politics. People have made these same anti-church arguments when the church got involved in civil rights, child labor legislation, women’s suffrage, and so on. They do not make the same arguments for other organizations: the humane society, environmental clubs, public health charities, higher education, and arts charities can lobby for legislation for animal rights, environmental protection, and public funding for education and the arts with minimal public outcry. It is fine for them to spend money on “evangelizing” and recruiting more members.

From a historical and theological perspective, I know some of my religious colleagues find this kind of reasoning about the economic value of churches rather crass. They like thinking of the church as the “Body of Christ” but not in terms of corporations (from corpus, “body”). The church had no 501(c)3 status in the Roman Empire, where it spread like wildfire, just as it has no privileged status in modern China, where it has thrived underground. That’s fine. I will concede the point that my giving should not be tied to some kind of tax benefit, that tithing should be a way of life for anyone, religious or not, who wants to be part of something larger than themselves.

But if we’re going to talk about budgets and priorities, then let’s actually think about the kind of place we want to live instead of just grasping at every possible source of revenue. When households face a financial crisis, short-sighted people first eliminate their charitable giving and later think about things like their cable bill. Those who understand that budgets are about priorities and character make sure that giving, saving, and spending are all part of their plan. Prioritizing giving helps us recognize how much we already have.

This Old House: DIY Soul Improvement

New home owners tend to buy a lot of stuff to fix up their new digs, which helps the economy. My spousal unit gave me an early Christmas gift: a cordless drill-driver. Now I’m helping to drive the economic recovery by making lots of visits to hardware stores.

It has been fun taking on home improvement projects. I built a headboard for our bed out of pieces from an old pipe organ. I put up some display shelves in our dining room that are made from 100 year-old floor joists. I tore down an old plaster ceiling in a closet, replaced it with drywall, patched and painted the plaster walls, and installed some shelves. We also painted a chess board on a cafe table for our living room.



Our house will be 100 years old this year. It has some standard old-house issues: drafty sash windows, doors that won’t close, lead residue in the soil, and so on, but the previous owners made a lot of wonderful improvements and took good care of it. Regardless, when you buy a house, you commit to an unspecified series of home improvement projects. Even in a new house, there will always be something that needs fixing.

Last week, my friend Bill Morgan preached a sermon that referenced John Wesley’s house metaphor about salvation. Wesley said that prevenient grace, the grace that comes before we’re even aware of God, is like the porch of a house. Justifying grace, when we commit to enter a new life of faith, is like the threshold. Sanctifying grace, the process of God shaping us and growing us in love, is like the house itself.

Bill extended the metaphor a bit and talked about moving into an old house. and part of his message was that this old house always needs work. There is always a room that is messy, or a leak that needs fixing, or something that needs painting. Some of us may need major foundation work. But all of us need repair.

After the sermon, I thought about the word salvage that is hidden in the word “salvation,” the idea that God is on a major salvage operation in our lives and our world. I thought about how Jesus was a builder who probably worked contracting jobs in Sepphoris, and I had a picture of Jesus showing up at our house, like Norm Abrams from This Old House, saying “Today we’re going to work on your contempt issues. We’re going to have to do a lot of sanding to get down to the original grain, but there’s some beautiful stuff under here if we can just scrape off some of this accumulated gunk.” After some work he says, “Ah, see here? You’ve got some self-loathing down here rotting out these supports. You need to get rid of that or the contempt will come back.”

I thought about Jesus walking through the rooms of my life, tool belt hung at his side. He takes a look at a project I’ve done myself. He whistles. “Well, no offense, buddy, but this is something you need some professional work on. You can’t just spackel over this.” I anxiously ask him to take a look at another problem spot and he says, “Aww, no, this isn’t a big problem. We can take care of this.”

Some people will claim that sanctifying grace is all about just turning it over to the master builder because we can’t do anything on our own. Do-it-yourself soul improvement only gets you so far, because we have a tendency to think we can tinker our way to some kind of spiritual enlightenment, but the reality is that we’ve mortgaged our soul to the forces of death and domination. The salvage we need is not just cosmetic, but a total purchase-and-renovation. While I think this is true, I also think part of the joy of sanctifying grace is the invitation to participate with the master builder, to learn by watching, then doing. We “work out our own salvation” because God’s salvage operation requires different things for different people. I think God’s intention in our salvage is that we put in some sweat equity and take responsibility for our spiritual growth. Growing in grace has to be intentional.

“Do it yourself” doesn’t mean “do it alone.” It means joining a community of people who admit they all need work. Thankfully, we have a master builder who invites us to be apprentices and puts into us a passion for salvage work.

I imagine asking the master builder what I need to do. He chews a toothpick thoughtfully. “Well,” he says, “every job is different. Every soul has its quirks, and sometimes you can’t really tell what it’s going to require until you roll up your sleeves and get started.”