INDEPENDENT SECTOR Report Details Influence of Tax Itemizing Status on Giving; Itemizers Give Significantly More Than Nonitemizers

4/15/2003

From: Carla Bundy or Patricia Nash, 202-467-6100 both of INDEPENDENT SECTOR Web: www.IndependentSector.org

WASHINGTON, April 15 -- A new report from INDEPENDENT SECTOR shows that the ability to take a tax deduction for charitable contributions plays a major role in donor decisions-at every income level-about how much to give. The Senate just passed legislation to change the tax code to encourage charitable giving, and the House is poised to take action next. By tax time next year, the IRS may be allowing more Americans to claim charitable tax deductions.

The study, Deducting Generosity: The Effect of Charitable Tax Incentives on Giving, sheds light on the giving patterns of itemizers and nonitemizers and reveals that in every income group examined, households that itemize their deductions give significantly more than households that do not itemize.

United States tax law permits itemizers to deduct their charitable contributions but the majority of taxpayers (approximately two-thirds) cannot itemize their charitable contributions because they take the standard deduction.

Deducting Generosity examines the differences in giving patterns between these two groups and demonstrates that tax status has a major impact on the amount of money people give to charity. Since giving tendencies are closely linked to income, the report removes the effect of income within each income category and calculates adjusted means to study the "itemizer effect."

"This report illustrates the connection between tax policy and philanthropy. Indeed, it is evident that tax policy is a powerful tool to encourage giving," said Diana Aviv, president and CEO, INDEPENDENT SECTOR. "Now that the Senate has passed the CARE Act legislation to encourage greater charitable giving through the use of tax incentives, we urge the House of Representatives to move expeditiously with the same legislation, so the president can receive a bill on his desk as soon as possible."

Key findings of the report include:

-- Itemizing households give 37 percent more in contributions than nonitemizing households ($1,800 vs. $1,310); -- Itemizers give nearly two-thirds more to religion than nonitemizers; -- Homeowners who itemize their tax deductions give more than homeowners who do not itemize; and -- In every income group examined, itemizing households give at least 40 percent more than nonitemizing households.

Deducting Generosity: The Effect of Charitable Tax Incentives on Giving is the fourth report in the Giving and Volunteering Signature Series and is made possible by the generous support of MetLife Foundation. The report is based on analysis from INDEPENDENT SECTOR's Giving and Volunteering in the United States, 2001 national telephone survey of more than 4,000 adults.

Tax Status and Giving to Religion Itemizing status has a strong impact on giving to religion. Religious giving comprises about one-half of all household giving, and households that itemize are responsible for the majority of that giving. Itemizers give 61 percent more to religion than do nonitemizers ($1,030 vs. $640). In every income category studied (excluding the wealthiest), the difference in giving between itemizers and nonitemizers for households earning less than $100,000 is greater than 70 percent.

Homeownership and Charitable Giving The report also analyzed the "itemizer effect" on charitable giving by homeowners, and found that at every income level itemizing homeowners give more than homeowners who do not itemize.

"Deducting Generosity provides much-needed insight into the giving patterns of nonitemizers, a group whose giving is not captured by the IRS," said Gordon Green, vice president of research, INDEPENDENT SECTOR. "The findings from this report offer a more complete picture of the universe of charitable giving."

Deducting Generosity is available for $11.95 for IS members and $15.95 for nonmembers, plus shipping and handling, from the INDEPENDENT SECTOR publications center at 1-888-860-8118. Members may also download the report for free by logging onto the members-only section of the INDEPENDENT SECTOR website at www.IndependentSector.org. Complimentary copies are available to the media.

------ INDEPENDENT SECTOR is a nonprofit, nonpartisan coalition of more than 700 national nonprofit organizations, foundations, and corporate philanthropy programs, collectively representing tens of thousands of charitable groups in every state across the nation. Our mission is to promote, strengthen, and advance the nonprofit and philanthropic community to foster private initiative for the public good.