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Posts Tagged ‘Developing World’

In their rush to gain an end of the year tax deal, elected leaders postponed hard choices. In the process, they denied the government the revenues it needs to either respond to unforeseen crises or deliver on promises made.

At the same time, wary corporate decision-makers reported that uncertainty over tax and fiscal policy had discouraged them from creating jobs or making R&D investments essential to prosperity.

As self- imposed constraints limit the agility of these two important sectors, a third—the non-profit sector—worries that the 2010 Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act may have a cascading effect, further impoverishing state and local governments, shifting the burden of providing social services from the public to the non-profit sector. Moreover, its leaders fear that the estate tax provisions may reduce incentives for wealthy individuals to make the no-strings-attached donations and bequests that free the sector from the constraints of politics and markets.

Our tax structure has long reflected the value we place on the nonprofit sector’s ability to take risks and try out new ideas without fear of political or market reprisals. Income and inheritance taxes have encouraged donations and bequests, as well as the creation of tax-exempt foundations. As a result, our nation has a diverse charitable sector comprised of grantees and grantors who are tackling issues at home and across the globe. Free from the need to garner votes or generate profits, they needn’t test the political winds before offering services to the most marginalized Americans. Their reach extends to the developing world, where they have created or supported “social enterprises” with for-profit business models for providing off-grid communities with renewable sources of energy. And, globally they have even entered into public-private partnerships to effect high policy, as Warren Buffett did in making his $50-million gift to the UN’s politically-hampered and resource-strapped International Atomic Energy Agency. That grant will help to create a “nuclear fuels bank” upon which states committed to nonproliferation can draw to meet their energy needs.

Whether the tax deal will limit the freedom of non-profits to achieve such salutary outcomes is a matter of intense debate. But, it is up to us to ask and answer that question before the law’s review in 2012. An election year is a particularly poor time for political risk-taking. Policy-makers will need to be armed with the facts, and buttressed by a clear and unswerving sense of the sector’s purpose.

First the data: The law extends several provisions that can affect charitable giving—and provides time to gather data on their effect. It extends Bush-era tax cuts at all income levels and continues favorable treatment of capital gains and dividends. It delays a requirement that high-income tax-payers reduce their itemized deductions, including for charitable gifts. It exempts older taxpayers from treating up to $100k gifted to charities from their IRAs as taxable income. But, what worries some nonprofits is the 35% cap it places on inheritance taxes, while exempting estates of $5m or less. Many analysts argue that these estate tax provisions will remove incentives for bequests as well as giving-while-living aimed at reducing the size of the taxable estate. Others contend that estate tax considerations play a negligible role in the decision to give, but can influence the size of the gifts made. They draw on the 2004 predictions of the Congressional Budget Office, which anticipated a drop off in the number and size of bequests. Indeed fewer dollars were donated in this way during the phase-out of the estate tax, from 2008-2009. But, that year’s economic contraction is likely to have had far greater effect. More time in an improved economic climate can yield more data on which policymakers can base future choices.

And, the purpose – As we undertake that analysis, it is essential that we come to a shared view of the reasons for charitable organizations, and their tax-exempt status, in the first place. Americans value nonprofits because they can take actions and generate ideas that may be unwelcome, unpopular, and unprofitable in the short run, but produce true societal benefit over time. In the process, they can help identify and tackle truly hard problems when others cannot. Among the hard problems nonprofits can help address is the need to get our country on a financially sustainable course. Nonprofits have already contributed by sounding the alarm, providing analysis and offering policy options.

The deficit dilemma has helped to highlight the hurdles political and business decision-makers face when it comes to calling for sacrifice. Elected officials must respond to caricatures of their views repeated in 24 hour news-cycles. Business leaders are required to produce shareholder value as measured in quarterly returns. The nonprofit sector may be the only one that can afford to ask tough questions, test novel solutions and build consensus from the ground up.

In considering our tax laws in 2012 our goals should be straight-forward: to regain our ability to solve problems as a nation. Preserving the nonprofit sector’s freedom to help tackle society’s next hard problem is an essential first step.

—Jane Wales

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Of all the pressing issues confronting the developing world, cancer gets comparatively short shrift. And yet, a majority of new cancer diagnoses come from developing countries.

The fact that these countries are significantly less capable to care for the afflicted than, say, the United States, where cancer has been a leading health priority for many decades, means that cancer is “a time bomb waiting to explode,” says Princess Dina Mired of the King Hussein Cancer Foundation. At last month’s Clinton Global Initiative, Mired said that addressing cancer depends on a sophisticated medical infrastructure above and beyond traditional health care. Much of the world is ill-equipped to tackle the disease, and increasing numbers are dying because they can’t reach or afford adequate treatment. As such, it’s disturbing that cancer is not a part of any global health agenda, Mired asserted.

A special session on the topic at CGI offered a rare spotlight on this global issue, which has striking parallels to HIV/AIDS in the level of ignorance and stigma surrounding it. For example, widespread concern that the disease is contagious leads victims to refrain from publicly disclosing their status. In turn, a lack of visible cancer survivors leads people to think it’s always a deadly disease, or less common than it really is. And then there’s the omnipresent issue of gender discrimination and the need for funding to specifically advance women and girls, a major theme at CGI this year as it was last. When it comes to cancer, for example, some women in the developing world who get a diagnosis of breast cancer forego a mastectomy for fear of losing their husbands, according to Felicia Knaul of the Harvard Global Equity Initiative.

Paul Farmer of Partners In Health and the Harvard Medical School called for the creation of a Global Fund for Cancer, one focused on all areas of need, from prevention to diagnosis to care. But, a recent study from the Antwerp Institute of Tropical Medicine, as reported by VaccineNewsDaily, found that single disease campaigns in developing countries “interfered significantly with routine health care delivery.”

So, while cancer demands greater global attention and care, this work should be approached in such a way as to strengthen the general health infrastructure in developing countries, rather than compete with it for needed funds.

—Jane Wales

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