Big Gifts Do Little to Change National Giving Averages

By THOMAS J. BILLITTERI

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Read the headlines, and you'd think that Microsoft mogul Bill Gates could single-handedly raise the national averages for per-capita giving to charity. This year alone, Mr. Gates and his wife have poured $16-billion into the Bill & Melinda Gates Foundation, more money than any other U.S. donors have given to charity by far.

But big gifts are one thing. Moving the national averages are another. Even the Gateses' breathtaking largesse won't make a significant difference in the level of giving when expressed as a share of personal income or gross domestic product.

That's because national giving averages rely largely on information that donors report to the Internal Revenue Service -- specifically, the amount of charitable deductions that donors are allowed to claim each year on their income taxes. And not even the Gateses -- the world's wealthiest couple -- make enough to let them write off their donations all at once.

Under federal tax law, donors can never claim a charitable deduction for gifts that total more than 50 per cent of their adjusted gross income. Write-offs on contributions to private foundations are limited even more -- to 30 per cent of the donors' annual income for gifts of cash, 20 per cent for gifts of property such as stock.

Because the Gateses' gifts have been in Microsoft stock, to claim a deduction on the $16-billion all in one shot, they would need a combined adjusted gross income of about $80-billion this year. Mr. Gates's compensation from Microsoft in 1999? $623,373.

Even if the Gateses could claim a deduction for, say, $5-billion of this year's $16-billion in donations, personal U.S. giving as a percentage of gross domestic product would remain virtually unchanged, at about 1.6 per cent, based on data from Giving USA, a statistical almanac published by the American Association of Fund-Raising Counsel.

In fact, big gifts never seem to have much of an effect on national average-giving figures. A look back at another heyday of philanthropy -- the Roaring '20s -- underscores the point.

In 1928, donors made 500 lump-sum gifts of $1-million or more to charity, Ohio State University professor emeritus Robert H. Bremner wrote in his book, American Philanthropy. Yet even those gifts -- huge for America's pre-Depression economy -- failed to raise the overall level of giving in the nation.

Charitable gifts claimed by taxpayers on their I.R.S. returns totaled $533-million in 1928, $25-million more than in the year before. But giving as a share of Americans' income? It dropped in 1928 -- to 1.84 per cent, from 1.94 per cent the year before.