Christian Generosity and Tax Wisdom: What Formation Looks Like When the Tax Code Enters the Room

Is It Okay for My Generosity to Depend on Tax Incentives?

Katie Brubaker: Welcome to the Smarter Generosity podcast. I’m Katie Brubaker.

Eric Fleshood: And I’m Eric Fleshood.

Katie: Today we’re asking a simple but honest question: Is it okay for my generosity to depend on tax incentives?

Eric, I wanted to open with that question because we get to work with a lot of generous donors. What role do you think tax incentives should play in generosity?

Eric: That’s a really interesting question, and I hope we can explore its different aspects because saving on taxes is something we all appreciate. I haven’t met anyone who doesn’t like to save on their tax bill. It’s also part of the conversation I’m having with people every day in the work that I do.

I think it’s important to consider what the appropriate place for tax incentives is, how we should think about them, and what role they should have in both our hearts and our practical decisions.

But there’s one distinction I want to make at the beginning, Katie. I think the question combines two definitions that we shouldn’t necessarily equate.

Generosity goes far beyond charitable donations. The tax question really has to do with giving to charity, and I think it would be a mistake to say that generosity and charitable giving are synonymous.

Charitable giving is one expression of generosity, but generosity is much bigger than that.

Katie: That’s a good clarification.

Eric: So, are tax incentives a proper motivation for charitable giving? Like a lot of things, I think it depends.

Maybe we should start by talking about some practical examples of why people want to save on taxes, particularly in our line of work.

Katie: I’ll give you one example. We often work with people toward the end of the year who have experienced an unusual spike in income.

They might decide to contribute a significant amount of cash to a donor-advised fund because their income taxes would otherwise be much higher than normal that year.

So, they’re looking at making a larger charitable contribution before the end of the year to help offset that tax liability.

Eric: That’s a great example.

Paying taxes can be painful in certain situations, especially when it puts pressure on your cash flow.

Maybe you’ve had a significant taxable event, such as receiving an inherited IRA, and suddenly you’re facing a substantial tax bill that you weren’t necessarily prepared to cover.

One of the things we’ve discussed in other episodes is this idea of ownership versus use and control.

Whenever you pay taxes, you’re fundamentally giving up control over some of the resources God has entrusted to you. Those resources are transferred to the government, which then determines how they’re used.

One way to think about the value of reducing taxes is that we’re maintaining the ability to direct more of those resources toward God’s purposes.

We’re retaining some influence over how those resources are used rather than surrendering that influence to someone else.

Katie: I think a lot of people don’t realize that charitable giving can sometimes provide alternatives when they’re facing a significant tax liability.

They assume they simply have to pay the tax because they may not have the information they need to understand what other options are available.

Eric: Yes, and I’m glad you made that point.

I think we should celebrate the fact that we live in a time and place where the United States has some remarkable charitable tax provisions.

When the government provides incentives that encourage people to support charitable causes, I think it’s worth understanding those opportunities and considering how we can put them to work for the benefit of our communities and the kingdom of God.

But sometimes people seem hesitant to admit that they’re motivated by tax savings.

They don’t necessarily want that to be their primary motivation.

I wonder if part of that discomfort comes from a concern that tax savings might be a selfish motivation. Maybe we’re worried that we’re simply trying to save money so we can spend more on ourselves rather than genuinely seeking to benefit the charity.

Perhaps that’s part of what makes people uncomfortable with the conversation.

Katie: I think that’s a great point.

I also know people who will say, “I don’t want my giving to feel transactional.”

At the same time, they don’t want to ignore practical realities. Maybe they’ve experienced an unusual increase in income, like the example I mentioned earlier, and they need to consider how that affects their financial decisions.

Sometimes people talk about those considerations almost apologetically.

But I don’t think they need to.

There’s wisdom in understanding your options and approaching those decisions with a stewardship mindset.

So I’m wondering if you could talk about that tension. How do we approach the practical realities of charitable giving without allowing generosity to become merely transactional?

Eric: Absolutely. Those practical realities matter.

Think about someone who owns a business and is preparing to sell it. Depending on the circumstances, they could be facing a significant tax liability, potentially 40 percent or more when considering the various taxes involved.

That’s painful, but it can also limit their options.

God has made us stewards over certain resources. He expects us to live responsibly with what He’s entrusted to us, and we have to consider the kind of lifestyle He’s calling us to live.

But if a substantial portion of those resources is going toward taxes, that affects what’s available for other purposes.

Now imagine that some of those resources could instead be redirected toward kingdom purposes through appropriate charitable planning.

That creates additional opportunities.

It broadens the horizon of what you can consider as a steward.

Instead of working with only a portion of the harvest, you may have opportunities to direct more of the resources God has entrusted to you toward the things He’s calling you to do.

Katie: So what I’m hearing you say is that considering tax incentives in our giving can absolutely be part of good stewardship.

Is that a fair way to summarize what you’ve been saying?

Eric: Yes, that’s right.

Katie: I want to change direction a little because we attend a lot of events where we’re talking with very generous, charitably minded people.

These people aren’t attending because they’re looking for tax incentives. They’re there because they love Cru, they love the different ministries they’re supporting, and they genuinely want to give.

For many of them, the tax benefits are nice, but they’re not the primary motivation.

So is the more important question whether tax benefits exist, or how those benefits shape our motivation for giving?

Eric: I would say it’s much more about how they shape our motivation.

If you’ve paid attention to politics and public policy over the years, you recognize that tax policy is often designed to influence behavior.

There’s an old saying: If you want less of something, tax it. If you want more of something, reduce the tax on it.

Policymakers have understood for a long time that they can influence public behavior through tax policy.

I think it’s helpful to recognize that because it gives us another lens through which to evaluate our decisions.

We can ask, “What kind of behavior is this policy trying to encourage in me? And how does that compare with what the Lord is calling His people to do in Scripture?”

Ideally, those things work together.

In many cases, charitable tax policies in the United States are designed to encourage giving to charitable organizations, including ministries.

That’s a good thing.

But I think we should also be aware that there are different influences in the world trying to shape our behavior and form us into certain kinds of people.

As Christians, we’ve already decided whom we want to follow.

We want to follow Jesus. We want to become more like Him. We want to become the kind of people He desires us to be.

And to the extent that tax policy helps us pursue those purposes, I think it can serve as a legitimate consideration in our giving.

Katie: That’s a great transition into my next question.

How do you think about the difference between generosity as worship and generosity as strategy?

Can it be both, or are those separate things?

Eric: Help me understand what you mean by generosity as strategy.

Katie: I mean using tax incentives as part of my charitable giving.

There may be financial benefits to giving, and I’m factoring those benefits into my decisions.

So generosity can become part of a tax strategy, which isn’t necessarily bad.

I agree with what you’ve said about being aware of how tax policy shapes our decisions while also recognizing the opportunities available to us in the time and place where we live.

But when all of those considerations come together in the heart of a steward, how do generosity as worship and generosity as strategy relate to one another?

Is there an intersection where those two things overlap?

Eric: I absolutely think there is.

They don’t necessarily have to be separate. They can work together.

Fundamentally, I think what we all want is to live in close communion with God, in fellowship with Him, walking in step with the Holy Spirit.

We want the gospel to be real and fresh to us every day, recognizing that His mercies are new every morning.

And from that place, we want to look forward to generously sharing the abundance God has given us with our friends, neighbors, families, churches, and the broader kingdom.

We want to do that freely, trusting that God will take care of us because He owns the cattle on a thousand hills, as the psalm says.

In that sense, our generosity reflects what we really believe about God.

Is He generous? Can He be trusted? Is He faithful?

If we genuinely believe those things, that belief will be reflected in how we live and how we give.

And that’s another way of saying we’re worshiping Him. We’re living out our calling as people made in His image.

Along with that, God has given us minds. He’s given us intelligence and the ability to think, reason, and plan.

He also knows that governments need resources to fund their operations through taxes.

But when the law provides legitimate opportunities to direct resources toward charitable purposes, it’s entirely appropriate to consider those opportunities thoughtfully.

We can ask, “How can I use the provisions available to me to direct more resources toward the things that honor God?”

That’s where wisdom and worship can work together.

Katie: What would you say to a donor who comes to you and says, “There’s that verse about rendering to Caesar what is Caesar’s and to God what is God’s. I don’t like the idea of using tax strategies when it comes to supporting ministry”?

Eric: That question does come up occasionally, and I think it’s important to be very clear about our intentions.

Our desire is to be fully obedient to the governing authorities.

Nothing we’re discussing today, or anywhere on this podcast, is intended to suggest that people should bend the law or find ways around it.

In fact, it’s exactly the opposite.

What we’re encouraging people to do is understand and responsibly use the laws that have been established.

In the United States, those laws provide significant opportunities for people who want to support charitable causes.

We have a long tradition of generosity in this country, going back even before the Constitution was ratified and before the Declaration of Independence.

Supporting our communities and participating in voluntary efforts have long been part of the fabric of American life.

As we celebrate America’s 250th anniversary this year, I think we can be grateful that this tradition has continued.

So when we talk about charitable giving strategies, we’re talking about using provisions that our elected representatives have established specifically to encourage charitable activity.

We’re talking about working within the law, respecting the law, and understanding how those provisions can help us steward resources faithfully.

Katie: I like what you said earlier about holding wisdom and worship together in generosity.

I think that’s a helpful way to think about this entire conversation.

All right, one last question.

If someone takes only one thing away from this conversation, what would you want it to be?

Eric: I think I’d want to return to this idea that our behaviors around stewardship and generosity are shaping us and preparing us.

We need to recognize that there are other people and other agendas in the world that also want to shape us into certain kinds of people.

There are influences that want us to be consumers. There are influences that encourage us to be savers. And as we’ve discussed, there are also policies and laws designed to influence our behavior.

But I think we need to step back from all of that, spend time in the Word, and remember that we’re people of the gospel.

We take our principles of spiritual formation from the Lord first.

Katie: Thank you, Eric.

Eric: Thank you, Katie.

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This transcript has been edited for clarity and readability. Verbal fillers, repetitions, and recording interruptions have been removed.

This content is provided for educational purposes only and should not be considered legal or tax advice. Please consult your professional advisor regarding your specific situation.