Today, let’s discuss responsible consumption, which can cut in more directions than one. Let me explain.
A current topic discussed in the news is for consumers to assume responsibility for their purchases, taking steps to be as certain as possible that their purchases don’t support companies committing environmentally harmful acts or companies that may behave in a socially irresponsible manner. These are certainly worthwhile goals. The world could do with less environmental harm and less social irresponsibility, committed by either corporations or individuals.
Of course, one problem that consumers would have in making such decisions would be with the identification of such companies. The problem lies in the semantics; just what does “environmentally harmful” or “socially irresponsible” mean, and who defines such things. If you read the business press regularly, or even if you occasionally read this blog, you’ll know that many of those definitions are set by NGO and activist groups such as Greenpeace, Rainforest Action Network, and Corporate Accountability International. It is these groups, these “semantical gatekeepers,” who have appointed themselves to define what is “environmentally harmful” or what is “socially irresponsible.” I suppose that’s better than no one taking on this task, but such power in the hands of a limited number of groups can be unsettling. Perhaps what is needed here, in addition to more “responsible consumption” of companies, is more responsible consumption of these “semantical gatekeepers,” a “monitoring of the monitors,” if you will. But what’s to motivate the public in taking such an interest? How about a financial interest? The criterion of money usually hits home.
Whether you know it or not, if you are an American taxpayer, you support these semantical gatekeepers, the groups who decide from whom you should buy and from whom you should not.
How so?
In the United States, contributions to most non-profits organizations are tax deductible, meaning that, for example, when I make a donation to a non-profit I get to “write-off” that donation. So, let’s say, for simplicity of explanation, that I donate one dollar and I am in the 25% tax bracket. The impact on my tax liability is that under such a scenario I write-off the entire dollar with the result being that I pay 25 cents less in tax. The government incentivizes Americans to donate to non-profits by giving us a break on our taxes. The government “underwrites” the difference. But, that 25 cents still needs to be paid. Someone, somewhere in the United States needs to fork over that 25 cents to Uncle Sam. That’s the basic idea. Now, let’s scale it up so that we can see the magnitude of this situation and really absorb that duty of responsible consumption of these semantical gatekeepers. Let’s look at one of them.
I recently reviewed Rainforest Action Network’s 2009 Form 990. In the United States, a Form 990 is the tax return that non-profit organizations file with the Internal Revenue Service. And because non-profits are tax exempt, these documents are available for public review. After all, you deserve to see the tax returns of these organizations because, in the end, you are paying for their operations. An easy way to get a look at the these documents is by going to Guidestar.org, an organization that collects this financial information, as well as other information, about non-profit organizations. Simply go to that site, type in the name of your non-profit of interest and have a look at their Form 990.
Per their Form 990, for 2009, Rainforest Action Network (RAN) had total revenue of about $3.88 million of which about $3.7 million was from contributions. RAN is a 501-c3 organization, which means that contributions to that organization are tax deductible by the person or organization making the contribution. This would mean that, using as an average tax rate that 25% figure from above, about $925,000 was deducted from the tax payments of various individuals or groups who made contributions to RAN. ($3.7 million x 25% = $925,000) But, that $925,000 still had to be paid. It must come from somewhere. And it did.
That $925,000 did make it to the Federal government, just from someone else’s pocket. Yours and mine. Every time the people in Washington tinker with the tax code, they take such things into account. And they set everyone’s tax rate accordingly. So, every American taxpayer winds up paying this $925,000 in some way, shape, or form. In other words, all American taxpayers support RAN, as well as every other non-profit, whether or not those taxpayers make a direct contribution.
So, coming back to our theme of responsible consumption, in addition to consumers being encouraged to consume goods and services responsibly, all American taxpayers need to realize that since, through their tax support, they “consume” the “semantic definition” function of these organizations, they need to become more involved with these organizations that tell us from whom it is “right” to purchase and from whom it is “wrong.” Through our support, we are all, ultimately, responsible for the influence these semantic gatekeepers exert on the world of commerce.
Just as with government, such power and influence needs to be monitored. Question their definitions. After all, you’re paying for them.
