Cutting the Deduction?
A growing group of charitable donors believe eliminating the charitable deduction from taxes would not harm giving in the US
Very few American donors want to see the charitable deduction completely eliminated. But many are open to some limits on deductions. These are the results of a national study of 1,000 American charitable donors.
The Donor Mindset Study was conducted by Grey Matter Research. Half of all donors believe donations should be fully tax deductible for those who itemize. One-third believe there should be limits. These people are almost equally divided between wanting contributions deductible up to a certain amount and feeling the limit should be for certain income levels. Only 10% want the charitable deduction eliminated, while 7% are uncertain.
No Difference by Politics
Opinions vary substantially by age. Donors 65+ are almost twice as likely as those under age 35 to advise full deductibility (67% to 39%). Surprisingly, perceptions on this issue do not vary according to political perspective. There is no difference according to whether donors itemize on their tax returns.
A majority predict an overall drop in giving if contributions are no longer tax deductible. Six out of ten feel donations in the US will drop. (One-third feel the decrease will be substantial.) However, 18% feel giving will actually increase if contributions are no longer tax deductible. This belief is held almost exclusively by donors under age 50, and particularly by donors under age 35.
The Belief Is Increasing
Grey Matter asked this same question in a 2012 study among a national sample of 553 donors. The proportion who believe cutting the charitable deduction will mean increased giving has tripled in the past five years, from 6% to 18%. Believing their own giving will rise if contributions are no longer tax deductible has more than quadrupled, from 5% to 22%.
Ron Sellers is president of Grey Matter Research. He notes these findings fly in the face of what many non-profit organizations believe. “There is widespread concern in the industry that reducing or eliminating the charitable deduction will have a chilling effect on giving,” Sellers said. “The surge in the proportion of donors who think giving will actually increase may surprise many.”
He continued, “It may be some people see this as an overall attempt to reduce taxes or income disparity, leaving many Americans with more to give. T \hey may also believe a theory which has been previously advanced regarding cuts to government services, which is that Americans will be more generous to non-profits in order to make up the difference. Or it could be simple confusion.”
Sellers points out that if charitable organizations want the federal government to keep the charitable deduction in place long term, they need to start communicating more effectively with the American public (including their own donors) – not just the government.
Please e-mail ron@greymatterresearch.com for a free copy of the full report.
About Grey Matter Research
Grey Matter Research is a marketing research and consumer insights company. We have extensive experience in research for non-profit organizations. We have served scores of donor-supported organizations as clients. Grey Matter works directly with donor-supported organizations and in partnership with the fundraising, branding, and marketing services agencies that support them.
