August 29, 2012

Giving by the Rich Dropped $30-Billion During Recession

Many fundraisers say they still can't raise as much as they did before the economy soured in  2008. Particularly difficult to come by, they say, are gifts from affluent donors.

Now newly released IRS data support that assertion. Giving by people with incomes of $200,000 or more fell by $31-billion from 2007 to 2009. People who earned much less than that, under $100,000, dropped their giving by a total of $4-billion. Altogether, the IRS reported that people of every income level wrote off $158-billion in charitable donations in 2009 and $172-billion in 2008.  [Editor's note: The previous sentence has been corrected to fix an inaccuracy in the total deducted.]

As the nation is about to mark the fourth year since the collapse of the financial markets, many fundraisers had expected gifts from the wealthy to have recovered by now, especially given the gains in the stock market that have helped many affluent people rebuild their net worth.

But that isn't happening, some experts say, because donors feel so shaky about the economy and uncertain whether Congress will raise tax rates or limit charitable deductions.

Policy makers debating how the tax code should be changed to meet the nation's challenges need to be aware that charitable giving by wealthy people is particularly sensitive to losses in disposable income, says Robert Sharpe, a Memphis fundraising consultant. "We are looking to people making $200,000 and up to get more than $30-billion back into the nonprofit sector."

The recession's effect on total charitable giving may never be fully known because many donors don't itemize contributions on their tax returns. Still, the economic downturn caused a bigger drop in total giving than was previously estimated, according to figures released this week by "Giving USA," the annual tally of American philanthropy.

The most recent report, which is based on estimates, came out in June. It said that total contributions fell by 13.4 percentage points in 2008 and 2009, the two worst years of the economic crisis. But now, due to a clerical error in its estimates for charitable bequests, "Giving USA" says that giving fell by an estimated 15.2 percent when declines for those two years are added together.

Send an e-mail to Holly Hall.