Patricia Annino
Patricia Annino
No Bah! Humbug: Year-end reasons to give to charity

Charitable milestones to inspire you.

December 20, 2012
by Patricia M. Annino, Esq.

As we ring out 2012 with an uncertain federal fiscal and tax climate ahead, we are mindful that many clients are concerned for their own financial future. They are unsure whether to make a significant gift to family members and concerned about the impact of the pending tax increases on their earnings and small businesses.

December is the month many of us decide whether to donate additional funds to our favorite charities. In doing so, it is inspirational to remember that many significant philanthropic gifts that have made this country what it is happened before the concept of tax-deductible donations became such a big factor in gifting.

In 1913, the 16th Amendment to the Constitution was ratified. This established the federal income tax. The Revenue Act of 1913 established an income tax system with tax exemption for certain organizations “organized and operated exclusively for religious, charitable, scientific, or educational purposes . . .” The War Revenue Act of 1917 made contributions to such tax-exempt organizations deductible.

Before these acts, significant philanthropy occurred.

The website of the National Philanthropic Trust contains many inspirational reminders as to why giving is an important part of our history, and the site reminds us that no matter what the tax consequences may be, charitable giving is an essential part of what makes America strong. The following are highlights of some of the philanthropic milestones this website features. It is clear that the time, treasure, and talent of American gifting pre-dates taxation and is a fundamental root of American greatness.

(The following edited timeline represents a portion of an ongoing research project by the National Philanthropic Trust. For more information on this project, call 888-878-7900 or visit www.nptrust.org).

1644 – Four New England colonies recommended that each family contribute a peck of wheat or a shilling in cash to Harvard for the support of students. For a decade or so, the revenues of the “College Corne” were sufficient to support the entire teaching staff of the college, as well as a dozen scholars.

1731 – Benjamin Franklin and 50 friends started The Library Company of Philadelphia, the country’s first successful circulation library, so that people of moderate means could better themselves through reading.

1826 – James Smithson, a British scientist, drew up his last will and testament, naming his nephew as beneficiary. Smithson stipulated that, should the nephew die without heirs (as he would in 1835), the estate should go “to the United States of America, to found at Washington, under the name of the Smithsonian Institution, an establishment for the increase and diffusion of knowledge among men.” Smithson died in 1829. On July 1, 1836, Congress accepted the legacy and, in September 1838, Smithson’s gift of more than 100,000 gold sovereigns (or $500,000 U.S.), was delivered to the mint at Philadelphia. An act of Congress, signed by President James K. Polk on Aug. 10, 1846, established the Smithsonian Institution as a trust to be administered by a Board of Regents and a Secretary of the Smithsonian.

1860 – Boys & Girls Clubs of America was organized by several women in Hartford, Conn., who believed that boys should have a positive alternative to roaming the streets.

1891 – A Salvation Army captain in San Francisco, determined to provide the poor with a free Christmas dinner, began what has become the oldest continuously run fundraising campaign in America. To pay for the food, he put a large pot at a ferry landing where those using the ferry boats could easily see it. This launched the tradition of the Christmas kettle, which has spread throughout the United States.

1902 – Goodwill was founded in Boston by the Rev. Edgar J. Helms, a Methodist minister and early social innovator. Helms collected used household goods and clothing in wealthier areas of the city, then trained and hired those who were poor to mend and repair the used goods. The goods were then resold or were given to the people who repaired them.

1909 – In a small apartment in New York City, Ida Wells-Barnett, W.E.B. DuBois, Henry Moskowitz, Mary White Ovington, Oswald Garrison Villard, and William English Walling formed the National Association for the Advancement of Colored People (NAACP). As the nation’s oldest civil rights organization, it has changed America’s history in countless ways, including playing a role in desegregating schools, extending voting rights, and preventing employment discrimination.

Of course, many significant philanthopic acts followed the establishment of the Internal Revenue Code and its deductions. However, in this turbulent economic and financial time, it is important to remember that in years past when Americans faced adversity and stress, philanthropy was, as it is now, important regardless of any tax consequence.

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Patricia M. Annino , Esq., a nationally recognized authority on estate planning and taxation, chairs the Estate Planning practice at Prince Lobel & Tye LLP. She is a fellow of the American College of Trust and Estates Counsel (ACTEC)