Arts giving: Tax deductions or tax credits?

One of my concerns about our very decentralized arts funding structure is that so much depends on the tax deduction for charitable giving.   This concerns me less because of rumblings about repealing the deduction and more because the beneficiaries of the policy, the “policy targets,” are those citizens who have a large enough income and large enough tax burden to itemize their deductions. (Which is why I’m not concerned about its repeal.) By targeting wealthy taxpayers who contribute to nonprofits, the tax policy indirectly incentivizes artists and arts organizations to produce work that will appeal to wealthy donors who have a disproportionate voice in the allocation of support.  How can policy instead — or in addition — incentivize participation by more arts supporters, including those with lower incomes?

One possibility could be tax credits. In a tax credit scheme, all citizens can contribute a portion of their taxes directly to the arts.  My friend the brilliant Shelley Cohn (former director of the AZ Arts Commission) suggested I look at the Oregon Cultural Trust as an example of the implementation of a tax credit program to support the arts.  In this program, a supporter can receive up to $500 in state tax credits if they contribute the same amount (on a tax-deductible basis) to a qualifying arts organization.  The majority of the funds (58%) go toward building a permanent endowment) with the remainder (42%) going toward 3 targets: the counties and indigenous tribes for program expansion, the five largest cultural organizations in the state (such as the state arts council and state humanities council), and other arts and culture organizations via a competitive grant program.

On the one hand, I’m glad that the program requires direct matching contribution to an arts organization of one’s choice because it incentivizes such contributions, but on the other hand, that requirement targets the same privileged group described above.  Would it be possible to give directly to an arts org of one’s choice through a tax credit?  It’s a complicated question, and one I hope to explore in greater depth.  In the meantime, I’m watching the controversy over Arizona’s tuition tax credit scheme closely to see if how that plays out may have some applicability to this question of interest.

About lindaessig

Linda Essig is director of Enterprise and Entrepreneurship Programs at the Herberger Institute for Design and the Arts at Arizona State University, including its award-winning arts entrepreneurship program, Pave: http://pave.asu.edu The opinions expressed on creativeinfrastructure are her own and not those of ASU. You can follow her on twitter @LindaInPhoenix and "like" the Pave Program in Arts Entrepreneurship at http://www.facebook.com/pages/pave-program-in-arts-entrepreneurship/386328970101 Find Pave's journal, Artivate, at http://artivate.org
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