CFA Vol II, p245 (charitable gifts) first, care, understand, represents, relative

SFoyil

I feel stupid….I don’t understand the formula (8) they give for the relative value of charitable gifts. The first term in the numerator and the denominator are straightforward, but what the heck is the second term in the numerator???`It says in the text that it represents the value created by the tax-free status of a charitable organization, but that doesn’t explain the formula.
Anyone care to elaborate?