As Congress and the President mull over how to make up ground against the burgeoning U.S. deficit, one idea that frequently comes up is eliminating tax deductibility for charitable donations.
The demographically representative study found that most Americans think that would lead to fewer donations to charitable causes. The survey, from Grey Matter Research of Phoenix, found:
- 30% feel there would be no real change in giving in the U.S.
- Six percent believe charitable donations would rise.
- “Almost two-thirds of Americans say charitable giving in the U.S. would decrease, including 29% who believe it would decrease a little, and 36% who believe it would decrease a lot,” the survey found.
“Sixty-three percent of Republicans, 68% of independents, and 61% of Democrats believe charitable giving in this country will decrease if contributions are no longer tax deductible. Similarly, this is the perspective among 62% of those who identify themselves as politically conservative, 62% of self-described moderates, and 72% of political liberals. Whether they feel giving will decrease a lot or a little also shows no variation by party or perspective.”
How then to reconcile the seemingly contradictory finding that those surveyed think their contributions would remain consistent, while they think other Americans would give markedly less?
Says Ron Sellers, president of Grey Matter Research, “It’s fascinating that so many people believe their own giving will remain stable even without the deduction, but that other people will give less. Obviously, both perspectives can’t be right for everyone. People are either being unnecessarily pessimistic about what other donors will do, or unreasonably optimistic about their own behavior.”
I suspect the pessimists are right about their peers and wrong about themselves.
Across the globe, the countries that allow a tax deduction for charitable donations have a more robust and healthy Third Sector than the countries that don’t.
Tax deductibility would have a severe effect on the charities in the United States if it was taken away or limited.