Research on giving shows importance of charitable deduction

August 27, 2012 at 12:10 pm Leave a comment

The Chronicle of Philanthropy’s new study, How America Gives, sheds new light on and offers some surprises about how much of their income Americans and Ohioans donate to charity.

 First, the surprises.

The Chronicle’s data analysis is incredibly complex: it started with comprehensive 2008 tax records for itemizers who reported income over $50,000 or more. Then, the researchers used a variety of other data sources, including the Census Bureau and the Bureau of Labor Statistics, to determine discretionary income levels that subtract housing and living costs. Using the discretionary income figure, they calculated the giving levels for the U.S., states, cities and regions of the country. This is the first time I’ve seen this methodology for calculating charitable giving levels; I’m used to seeing data that show the level of charitable giving as a percentage of adjusted gross income.

Another surprise:

It’s not just the wealthiest Americans who utilize the charitable deduction provided in the federal tax code. In Ohio, in 2008 63% of the 1.3 million itemizers who made charitable donations had incomes between $50,000 and $99,999 a year and just over 29% made between $100,000 and $199,999. That leaves about 8% of itemizers in the category of income over $200,000 – the category of wealthy Americans that has been the focus in current discussions around eliminating or reducing the charitable deduction.

The study shows that Ohio ranked 36th in giving, with 4.1% of income donated to charities; that’s over half a point lower than the 4.7% U.S. rate and lower than the Midwest’s  4.3%.  Many of the states with higher percentages had higher contributions going to religious organizations and some of them have state tax incentives – such as credits for gifts to community foundations – for charitable giving, which Ohio lacks.

Here’s how Ohio’s major cities stacked up:

City         % of income given 
Dayton                  4.6%
Canton                 4.5%
Columbus           4.3%
Akron                    4.1%
Cincinnati            4.0%
Cleveland            3.9%
Toledo                  3.9%
Youngstown        3.9%

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Entry filed under: Commentaries, OGF News.

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