Package deals, like vacation packages, always sound great. All the pieces are neatly tied together. There’s only one problem – what if you don’t like part of the package. You may be able to change it but a change may affect other parts of the package. What does this have to do with towns donating to charities?
Some towns in Vermont, and probably some outside Vermont too, can designate appropriations for non-profits in their annual budgets. For example, your town may donate to the American Red Cross or a local animal shelter. This seems odd. Why should a town collect money from its citizens to make donations that the citizens can make as individuals and, presumably, take the charitable deductions on their tax returns?
Some light math ahead. Stay with me.
Let’s say that you give $10 to a charity. That figure is small enough that while the deduction might drop you into a lower tax bracket, its effect on your taxable income will probably be minor. The $10 itself is small enough as to be almost invisible in your budget, and you’ll have done a good thing.
Assume that your town includes 100 households.
Now, let’s say that you don’t make the $10 donation yourself. Instead, supporters of that non-profit will have gotten a number of signatures before the budget meeting, and, assuming the meeting went their way, got that non-profit added to the appropriation list. Now, your town assesses each of the 100 households $10 for that charity. That means that the town will be giving $1,000 to that charity. You won’t get the tax deduction but, when that deduction is for $10, who cares? So, in theory, everybody benefits.
But what if you don’t want your money to go to charity X? Perhaps you learn that 75% of donations go toward overhead, not actual services, and thus want to back away from supporting charity X. Perhaps switch your support to charity Y instead. If you’re donating to charity X as an individual, just switch your donation. But it may not be that simple when you’re dealing with an appropriation. Aside from any procedure required, what if the person who adamantly supports charity X is your sister or that nice lady down the road who always gives you the homemade pie at Thanksgiving? Voting against that person might be enough to harm or kill a friendship. There are unspoken social pressures that can persuade you not to rock the boat.
The more insidious problem in a situation like this is loss of control over your money. It’s your money and you should be able to spend it how you want. Perhaps you’ve gotten a great dog from the local shelter, always donate to their fund drives, and always will. But it’s your money and should be your decision rather than a decision that someone is making for you.