The tax code allows taxpayers to deduct amounts donated to an extremely broad variety of organizations deemed to create societal benefits—that is, positive externalities. But many organizations that may receive tax-deductible contributions also cause harms. Both the tax code and subsidy theory, one of the most utilized scholarly theories developed to analyze the deduction from an economic and morally neutral perspective, fail to properly account for these negative externalities. In order to do so, one needs to look beyond the economic models utilized by subsidy theorists. For instance, there should be some limit to the types of harms organizations can cause while retaining their subsidy (that is, their ability to receive deductible contributions), something not adequately provided by the tax laws or the Kaldor–Hicks model used by subsidy theorists. As a starting point, this Article suggests the government should not subsidize organizations that impinge on an individual’s ability to live a full and meaningful life as a fair and equal member of society. If this (or some version of this) principle is accepted, taxpayers should not be able to deduct amounts donated to organizations that do so. Additionally, the government should not subsidize the efforts of organizations to promote their views of societal issues upon which there is reasonable disagreement. If one accepts this principle, donors should not be able to deduct amounts given to organizations advancing any particular conception of “the good,” since allowance of the deduction would result in disparate subsidization of certain competing viewpoints over others, often favoring the majority view. If one applies these suggested principles, it seems clear that the current law’s disallowance of deductions made to lobbying organizations and to certain organizations which have race-based exclusion policies is appropriate. However, an application of these same principles would question whether the deduction is appropriate in other situations in which it is currently allowed. For instance, current law allows donors to deduct amounts contributed to certain tax-exempt organizations that engage in limited lobbying; to organizations that are sibling organizations of lobbying groups, which seek to change public opinion through educational efforts; and to groups that have exclusion policies based on criteria other than race. An application of the suggested principles creates questions as to whether this is appropriate. This Article aims to act as a starting point to stimulate further discussion about whether and to what extent donors should be able to deduct amounts donated to charities that not only provide societal benefits but also cause harm.