Valuing Volunteers: The Case for a Community Service Tax Benefit
7 Pages Posted: 9 Mar 2009 Last revised: 20 Oct 2013
Date Written: March 7, 2009
First passed by Congress in 1954, section 170 of the Internal Revenue Code allows individuals and corporations to deduct from their income taxes monetary contributions they make to charitable organizations. However, there has never been a comparable provision that allows deductions for volunteer community service hours on behalf of those same organizations for which money donors benefit from section 170's incentives to give.
This paper proposes that section 170 be amended to allow taxpayers to deduct the value of their volunteer community service hours at the federal minimum wage rate, and outlines mechanisms to account for those hours and properly audit those claiming community service tax benefits. Such a provision would provide a small but measurable incentive for more people to get directly involved and invested in the charitable services and grassroots development programs they value most in their communities. This incentive could help engage people in charitable activities who otherwise cannot afford to give money to those worthy causes.
Further, the President's proposed budget for 2010 includes limiting or eliminating line-item deductions, including those for charities, which threatens to dry-up resources for those foundations and make it difficult or impossible for them to continue their work. This paper proposes the volunteer service deduction as a compliment to the current monetary donation deduction, not as a measure envisioned to supplement entirely the operational capabilities that community services and charities will lose if the budget passes as-proposed. But the looming possibility that existing incentives for charitable giving could soon be quite limited makes it even more important to facilitate the continued operation of invaluable charitable foundations and community services through volunteers, impassioned about their organizations' respective missions, for the benefit of their neighbors in need.
This proposal was presented at American University's Graduate Leadership Council's conference: Urban Transformation: Public and Private Practices for Social Change. Currently posted are the principal proposed amendments to section 170, and Treasury Regulation section 1.170A-1. The full paper is forthcoming.
Keywords: tax, community service, volunteer, tax deduction, incentive, charity, charities, neighborhood development
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