March 03, 2009
Half of Wealthy Americans Say Taxes Don't Affect Their Giving, Study Finds
A majority of affluent Americans say their charitable giving would be unaffected by the elimination of federal tax provisions designed, in part, to encourage philanthropy, according to a new study by Bank of America and Center on Philanthropy at Indiana University.
Nearly 52 percent of wealthy donors said their giving would remain the same if they no longer received any income-tax deduction for their donations, while 54 percent said their level of philanthropy would remain unchanged if the estate tax were repealed.
That said, a significant minority (47 percent) of people in the survey reported that they would give less if they could no longer claim a deduction for their charitable gifts. Of those respondents, 37 percent said their contributions would “somewhat decrease,” while 10 percent said their gifts would “dramatically decrease.”
With respect to the estate tax, 10 percent said they would donate less money if that provision were eliminated, while 37 percent said they would give more.
“There are so many considerations that go into not only why you give, but also how and where you give,” said Claire Costello, a Bank of America executive who works with wealthy donors. Tax incentives are “one among many.”
The study was based on responses from 700 households that earned at least $200,000 a year or had liquid assets of $1-million or more. The findings regarding donors’ opinions on tax provisions were similar to those in a 2006 survey, also commissioned by Bank of America and conducted by researchers with the Center on Philanthropy.
The recent study took place in July and August of last year, and asked donors about gifts they made in 2007, before the recession.
Additional information from the survey, The 2008 Bank of America Study of High Net Worth Philanthropy, will be released on Wednesday.
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Every wealthy person I know wants to be known for their generosity and caring. Of course half won’t admit that they are motivated by tax breaks as well.
— Kevin D. Feldman Mar 3, 09:01 PM #
Note that the administration has not proposed “eliminating” the charitable deduction, which is what the survey question asks. I would expect the net effect would be even less if the question was whether the deduction was limited to a value of 28% of the donation, as opposed to 35%.
— sj Mar 4, 03:59 PM #
I’ll be very interested to read the report. On one hand, it supports earlier studies (and the anecdotal experience of many fundraisers) that suggest tax savings are low on the list of factors influencing giving. On the other hand, the story suggests that the study lumped together high-earners with asset wealthy individuals, two groups of people who are not necessarily the same in terms of experience or behavior, under the banner of “wealthy Americans.” As dedicated philanthropy watchers know well, what you have (assets vs. income) and when you have it (age/lifecyle) are very important in determining how you behave. My biggest question is this: How will discussion of this change in tax law influence middle donors, even though they will not be affected by the proposed change, and fundraisers, who are already modifying their activities out of concern, perhaps not entirely justified, that wealthy individuals are as flat busted broke as the rest of the population?
— Jay Frost Mar 4, 06:29 PM #
Does anyone else think it’s ironic that it is the Bank of American study?
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