Americans are the most generous people in the world.
Last week’s “Giving Tuesday” kicked off the hottest time of the year for charitable giving. Some nonprofit organizations receive as much as 50% of their annual contributions during “The Giving Season,” between Thanksgiving and New Year’s Day.
Americans give more to charity than the citizens of any other Western country. In 2016, individual Americans’ donations totaled nearly $3 billion (the sum does not include corporate and foundation giving).
Today some in the nonprofit world worry that the new tax bill will diminish our traditional American generosity.
Although the new tax bill retains the tax break for charitable deductions, other changes may reduce the incentive to give. Since the standard deductions will be doubled and other deductions have been eliminated, some argue, fewer people will itemize – which is the only way to take advantage of the deduction for charitable contributions.
To consider that argument we need to look at why people give their money away in the first place.
When asked by researchers why they donated, people gave the following reasons:
Someone asked them to give.
To help the needy – out of compassion – to make a difference.
To make themselves feel good about themselves.
To look good (i.e., generous) to others – social pressure.
The cause mattered to someone they know, e.g., an illness that afflicted a friend or relative.
These are reasons for giving, but they are not equally persuasive for everyone. Not everyone donates at all, or contributes at the same rate.
The facts about who gives to charity may surprise you.
The poor give more. Not only do the poor donate more per capita than individuals in higher income brackets, but their generosity tends to remain higher during economic downturns, according to a McClatchy Newspaper report.
It seems counterintuitive that those who can least afford to give their money away are more generous. Perhaps the poor are more compassionate toward others in need, because they know what “need” feels like. Another factor may be the over-representation of women among the poor. Women are more charitable. Women are more likely to donate – both money and time as volunteers – than are men in similar circumstances. In addition, the working poor – a disproportionate number of whom are recent immigrants – are America’s most generous group, according to Arthur Brooks, author of “Who Really Cares” and president of the American Enterprise Institute for Public Policy Research, a conservative think tank.
Religious people are another group of generous givers. The more important religion is to a person, the more likely that person is to give to a charity of any kind, a recent study reported.
Among Americans who claim a religious affiliation, 65 percent give to charity. Among those who do not identify a religious creed, 56 percent make charitable gifts. The difference is even wider between people who not only claim a religious affiliation, but practice it.
About 75 percent of people who frequently attend religious services gave to congregations, and 60 percent also gave to other charities, religious and nonreligious.
African Americans are another generous demographic group. They give away higher percentages of their incomes than white donors. Nearly two-thirds of black households make charitable donations, worth a total of about $11 billion a year, according to a recent report.
Giving tends to be habit-forming.
It remains to be seen whether the new tax bill will change American giving habits. For right now, though, in this season, tax incentives for donating are still with us. As are the needy. So follow your generous impulses, and give wisely.
Just as in any other field, there are scam artists hiding in the field of charity. Do your homework before donating. Here are some tools to help you make effective charitable contributions:
Charity Navigator - rates charities based on their financial health, accountability, and transparency to help donors make informed decisions about their contributions. Charity Navigator has evaluated over 8,000 tax-exempt charities. If your chosen organization is not included, find out why.
The IRS Nonprofit Charities Database - has a tool called “The Exempt Organizations Select Check Tool”. This tool allows you to enter the name of an organization and see if the organization is exempt or not. It is important to verify that an organization that claims to have a 501(c)(3) tax exemption is actually exempt. If the organization is not exempt, your donation will not be tax-deductible.
Guidestar - maintains information on 501(c)(3) nonprofits. Financial documents, such as the 990, help you evaluate the legitimacy of an organization. The 990 reveals where and how an organization’s donations are spent, including the earnings of top officers. All nonprofits are required to have up-to-date 990’s available to the public. If an organization does not have this information readily available or is not forthcoming if you request it from them, give your donation elsewhere.