Over the past decade, legislators have been looking for ways to increase private charitable giving and direct these resources to programs that serve low-income people. To further these goals, Arizona enacted a charitable tax credit in 1997 as part of the states welfare reforms. This brief examines the structure of the Arizona program, the initial effects on giving, and the types of organizations that benefited from the charitable tax credit. It concludes that although the Arizona charitable tax credit stimulated some additional giving during relatively good economic times (1998-1999), it is not a panacea for funding the nonprofit sector. The jury is still out as to whether it may weaken a broad array of organizations that create community cohesiveness and civil society.

In response to a Senate Finance Committee Staff Discussion Draft of June 21, 2004, which made suggestions aimed that strengthening transparency and accountability of the charitable sector, the Center on Philanthropy submitted comments covering three major points: (1) Electronic filing of Forms 990 will improve the quality, access, and timeliness of data on charities, and will reduce costs for the IRS, the states, and charities. (2) Gaps and omissions in Forms 990 and Forms 990-PF must be eliminated and better reporting must be enforced. (3) An accurate list of tax-exempt organizations must also be a priority.

For a long time I have tried to remain open on the issue of valuing stock options. I know that despite modern finance theory they can be hard to value perfectly, due mainly to their unusual and asymmetric risk structure and lack of open trading in the market. I have listened patiently to all the arguments of start-up companies who complain that it is somehow harder to give restricted stock than stock options to their executives. I know that valuation for financial purposes and for tax purposes are not exactly the same policy issue. Still, none of this offsets my fundamental distaste for accounting badly for income, a distaste that derives in no small part from my experience with Chinese accounting as it had evolved in the 1960s and even the 1970s.