The same humanitarian instincts that lead taxpayers politically to support the idea of a social safety net would lead them to take advantage of the tax credit. The provision of a tax incentive for charitable contributions amounts to a reduction in the price of private giving. There is a direct correlation between giving and voluntarism. We estimate that creation of a tax credit would add at least 2 million people to the pool of volunteers for qualifying organizations. Numerous studies show that private enterprise is more efficient than government at delivering services.
Nonprofit organizations achieve efficiencies in large part by utilizing volunteers.
A one-dollar increase in government spending decreases private giving by about 10 . By reducing government spending, the proposed tax credit would increase giving. Possible Concerns One possible concern is that the expected expansion in giving and consequent loss of tax revenues would require a substantial cutback in government welfare spending. The answer to this concern is that the very purpose of offering tax incentives for assisting the poor is to transfer funds from government to the private charities that would take over this role. Both taxpayers and the poor stand to gain from the efficiencies and innovations that would follow.