Independent Sector - Statement to Ways and Means Committee

Since Congress permitted the charitable tax deduction for nonitemizers to sunset in 1986, seven of ten taxpayers, the nonitemizers, can no longer deduct their charitable contributions and the resulting loss in charitable giving has been substantial. This becomes obvious when a comparison is made of the amount contributed by itemizers and nonitemizers who are in the same income groups (based on 1997 giving).

Income Group	Average Amount Contributed by Itemizers	Average Amount Contributed by Nonitemizers	Average Charitable Contribution as % of Income Contributed by Itemizers	% of Income Contributed by Nonitemizers
$1 < $5,000	$308	$29	10.6%	1.1%
$5,000 < $10,000	$738	$138	9.3%	1.8%
$10,000 < $15,000	$941	$216	7.4%	1.7%
$15,000 < $20,000	$1,186	$285	6.8%	1.7%
$20,000 < $25,000	$1,150	$330	5.1%	1.5%
$25,000 < $30,000	$1,333	$364	4.8%	1.3%
$30,000 < $40,000	$1,349	$465	3.9%	1.3%
$40,000 < $50,000	$1,425	$654	3.2%	1.5%
$50,000 < $75,000	$1,740	$965	2.8%	1.6%
$75,000 < $100,000	$2,357	$1,333	2.7%	1.6%
$100,000 < $200,000	$3,466	$1,254	2.6%	1.0%
$200,000 < $500,000	$7,694	$2,934	2.7%	1.0%
$500,000 < $1 million	$19,651	$6,876	2.9%	1.0%
$1 million or more	$140,972	$21,015	4.7%	1.0%

The average annual amount contributed per tax return for itemizers is $2,708; the average for nonitemizers is $328.

Eighty-seven million tax filers are nonitemizers. It is clear that if all nonitemizers raised their contributions to the amount given by itemizers, giving would increase greatly. In fact, charitable contributions by nonitemizers increased by 40% or $4 billion from 1985 to 1986, according to Internal Revenue Service data. Nonitemizers were permitted to deduct only 50% of their charitable contributions and they gave $9.5 billion that year. In 1986, they could deduct a full 100% and, according to the IRS, they gave $13.4 billion�an increase of 40%. The message from that experience is apparent. Charitable tax deductions do stimulate substantially increased giving from middle income Americans.

Nonitemizers are low- to middle-income American households (70 million have incomes under $30,000 a year) who support services such as the Red Cross and the American Cancer Society. They give to churches and synagogues, environmental organizations, schools, colleges, hospitals, food programs for the homeless, and the Boy Scouts and Girl Scouts. They give to advocacy organizations, health research, the arts, international development, and myriad activities in the public interest that enrich our society and protect its people. Congress should enact a legislation that will permit these moderate income Americans to take a deduction for their contributions to charity.

Source: Data prepared for The New Nonprofit Almanac and Desk Reference by INDEPENDENT SECTOR (Jossey-Bass, 2001) using data from the IRS Statistics of Income Bulletin, Spring 2000.