May 2005

Congress's renewed focus on charity reform has led some to revive proposals for extending charitable deductions to donors who cannot itemize on their federal income tax. With the April 15 deadline for individual filers approaching last month, we decided to find out whether the deduction affects giving. If the results of our totally unscientific survey are any indication, the answer is "tremendously."

Question and Results

April's Question of the Month asked, "Did you/will you take charitable deductions on your federal income tax due on April 15, 2005?" A sizable majority—89 percent—of participants responded, "Yes." Only 11 percent said, "No." We then asked respondents in both groups for more information.

Donors Who Take the Deduction

We asked the "Yes" group, "Does the ability to deduct your contributions affect your charitable giving?" Over half—59 percent—replied, "Yes." Some 59 percent of those respondents said, "I give more than I would otherwise," and 46 percent stated, "I'm more likely to give." (Participants were able to choose both options, which is why their responses add up to 105 percent.)

"It makes it affordable to give," explained one anonymous participant. "I give more than I COULD otherwise afford," another anonymous reader elaborated. "If I know I can afford $100, but it's tax deductible, I'll give $125, knowing I'll get the $25 back."

Donors Who Do Not Take the Deduction

Some 70 percent of participants who do not take charitable deductions reported that they do not itemize on their returns. "Our standard deductions exceed what we would have by itemizing," said an anonymous member of this group.

Another 13 percent either do not or would not take the deduction on principle. "I don't itemize, and even if I did, I don't want to be given a benefit for helping others. Sort of defeats the purpose for me," Jana L. Sheeder of Palmetto Bay Dog Park wrote. An anonymous reader agreed: "Unless it is something unbelievably large, I feel a tax deduction would be unnecessary—I give solely because I enjoy the results."

Nearly half—48 percent—of the non-itemizers, however, said they would give more if they could itemize or could deduct charitable contributions as non-itemizers. "We were able to deduct charitable donations on the short form but that option was removed several years ago. I hope they make it available again," commented Jayne L. Wilson of the United Way of Suwannee Valley. An anonymous reader speculated, "I believe that many people would become more generous" if they were allowed to deduct their contributions.

Conclusion

If these results reflect the behavior and sentiments of the taxpaying population as a whole, then the charitable deduction does make a difference in giving. A substantial number of donors who itemize on their taxes are more inclined to give, and a majority of itemizers who take the deduction give more than they would otherwise. Nearly half of non-itemizers would increase their giving if they could declare the amount on their taxes.

Of course, for most people, the deduction is a fringe benefit of giving. As an anonymous itemizer who takes the deduction stated, "My giving is based on my commitment to the need presented. I would give with or without tax deduction. I give because I believe I should and I can."

Suzanne E. Coffman, May 2005
© 2005, Philanthropic Research, Inc. (GuideStar)

Suzanne Coffman is GuideStar's director of communications and editor of the Newsletter.