Smaller Share of Taxpayers Giving to Charity, Study Finds

Smaller Share of Taxpayers Giving to Charity, Study Finds

A shrinking percentage of U.S. taxpayers is giving to charity, and many nonprofit organizations increasingly are relying on the wealthy for support, the Chronicle of Philanthropy reports.

According to a Chronicle analysis of Internal Revenue Service data, 24 percent of taxpayers reported a charitable donation among their itemized deductions in 2015, down from 30 percent to 31 percent on an annual basis between 2000 and 2006. And while total itemized donations have broken records in four of the last five years, those made by taxpayers earning at least $100,000 accounted for 75 percent of itemized donations in 2015 — up from 57 percent in 2000 — while itemized donations from taxpayers earning at least $200,000 accounted for more than half the total.

Although economists caution that the number of people who itemize and report charitable giving can vary for many reasons, the Indiana University Lilly Family School of Philanthropy estimates that the share of households giving to charity has dropped from 67 percent in 2004 to 59 percent in 2012. While this "narrowing" of support can be attributed in part to the effects of the Great Recession, the well-publicized struggles of the middle class, and widening income disparity, the trend could accelerate under the Republicans' proposed tax plan, which would roughly double the standard deduction taken by taxpayers who do not itemize and reduce charitable giving by as much as $13.1 billion a year, a report from the Lilly Family School of Philanthropy suggests. Other possible factors in the narrowing of support for charitable causes include "engagement fatigue" and the fact that millennials, now the largest generational cohort, don't necessarily embrace traditional forms of giving.

The Chronicle also calculated the average percentage of income donated by taxpayers who earn at least $50,000 and itemize their giving in each state, metropolitan area, and county and found that in thirty-six of the largest metro areas, including Provo (Utah), Atlanta (Georgia), and Grand Rapids (Michigan), residents gave at rates above the national average. Other metro areas, however, were more likely to be characterized by a "giving opportunity" — the possibility of additional dollars for charity if giving rates rose to the national average at each income level. In Boston, for example, itemized donations would jump from the current $342 million to $617 million if that gap were closed.

"We're for sure seeing fewer middle-class Americans with the ability to give," said Brian Gallagher, CEO of United Way Worldwide, which relies on small donations from average Americans and has seen revenue fall in recent years. "They have way less discretionary income, and charitable giving is the most elastic gift anyone will make; it's completely driven by discretionary income. If you don't have ways for average Americans to be involved [in the work of nonprofits,] it threatens civil society."