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Charity compensation – Fund pays donors to give

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The founder of the National Heritage Foundation, is fueling national debate with his entrepreneurial charity strategy that critics say benefits donors more than recipients, the New York Times reports.

Rejecting the notion that anyone should perform charitable service for free,J.T Houk encourages donors to his foundation to pay themselves for their charitable deeds, the Times reports.

Donors who entrust money to his Virginia-based foundation – one of the nation’s largest charities – are eligible for immediate tax deductions and are encouraged to use their accounts to pay salaries and expenses to themselves and their families, the Times reports.

Observers like Jack Shakely, president of the California Community Foundation, bristle at the thought of donors compensating themselves for their charitable acts. “It’s like paying the Girl Scouts to sell cookies,” he told the Times.

Donors have poured tens of millions of dollars into the National Heritage Foundation. It is unclear what portion of that money will reach charitable causes, the Times says.

Many families dip into their accounts to defray their expenses. For example, one family used their funds to send their son to Mexico for three years – calling it missionary work. Another donor uses his funds to sponsor research on a book he is writing, the Times reports.

Competitors of the National Heritage Foundation want Congress to outlaw the practice of channeling charitable funds back to donors and families. The Clinton administration proposes restricting fund recipients to charities registered with the Internal Revenue Service, the Times reports.

Houck claims his entrepreneurial approach to charity could revolutionize churches, schools, and other nonprofit groups, the Times says.

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