NCPA - National Center for Policy Analysis

TAX LAW AND CHARITABLE DONATIONS

November 1, 2006

In a recent study on charitable donations, high net-worth households indicated that their charitable giving would mostly stay the same if the estate tax were repealed and would stay the same or somewhat decrease if they received zero income tax deductions for their charitable contributions.

The study, conducted by the Center on Philanthropy at Indiana University, asked several questions regarding the charitable practices of the 3.1 percent of the population with incomes greater than $200,000 or assets in excess of $1,000,000.  Among the most interesting results are the effects of possible tax law changes and their impact on charitable giving.

If the estate tax were repealed, for example, results show:

  • Some 56.1 percent of donors' contributions would stay the same.
  • Another 15.8 percent said their donations to charity would somewhat increase, and 13.7 percent indicated that their giving would dramatically increase.
  • Only 3.9 percent said their donations would decrease somewhat, and 1.6 percent would dramatically decrease their contributions.

However, while many reported that receiving zero income tax deductions would not affect their giving, the overall change is significantly greater than an Estate tax repeal:

  • Some 51.7 percent said their giving would stay the same.
  • Another 38.1 percent indicated that their contributions would somewhat decrease, and 7 percent said it would dramatically decrease.
  • Only 0.9 and 0.2 said their giving would somewhat increase and dramatically increase, respectively.  

Source: "Bank of America Study of High Net-Worth Philanthropy," Center on Philanthropy at Indiana University, October 2006.

 

Browse more articles on Tax and Spending Issues