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September 27, 2021
 
Less than Half of all American Households Now Give to Charity

July 30, 2021 — A new report that documents a steady decline in charitable support by American households since the Great Recession—with less than half now giving—may influence the debate on allowing Massachusetts taxpayers to deduct charitable contributions on their state tax returns.

According to The Giving Environment, a report developed by the Indiana University Lilly Family School of Philanthropy, based on a number of surveys involving tens of thousands of respondents, 49.6% of American households donated to charity 2018, down from 66.2% in 2000.

Giving rates declined for all racial groups (Black, white, Hispanic, other), but giving amounts only declined for Blacks, whites, and Hispanics.

Just over one-third of the decline in giving participation can be attributed to changes in income and wealth, the analysis found.

Overall, both the share of American households who donate to charity and the average donation to charity has declined steadily since the Great Recession, the report noted.

While greater numbers of American households are refraining from making charitable contributions, the report said those who donate are increasing the amount they give: “This phenomenon, called ‘Dollars Up, Donors Down,’ is why total charitable giving in the United States has continued to increase according to Giving USA.”

Why fewer households are supporting charitable organizations is due to a host of factors, according to the report. They include possible changes in motivation and changing concepts of “community,” including the growth of virtual communities.

Also possibly driving the decline in total household giving may be shifts in trust.

“Trust and giving rates both decreased among both younger and older Americans; in addition, both decreased more among younger Americans than older Americans. These similar trends suggest that changes in interpersonal trust may be linked to changes in giving rates,” according to the report.

Debate Heats Up on Benefits of Charitable Deductions

The findings come as debate is increasing over perceived benefits of allowing individuals to deduct charitable contributions on their Massachusetts tax returns.

Earlier this month, Gov. Charlie Baker vetoed a provision to delay implementation of the state’s charitable deduction, which will allow Massachusetts taxpayers ton deduct charitable contributions (except for household goods and clothing) from their adjusted gross income on state tax returns – unless the legislature overrides the veto.

The state legislature this week overrode Baker’s veto, effectively pushing back the deduction’s start date to January 2023.

The new charitable deduction would be available to all Bay State taxpayers for contributions made to any eligible U.S. nonprofit, whether based in Massachusetts or elsewhere.

Jim Klocke, CEO of the Massachusetts Nonprofit Network (MNN), a trade association representing about 700 Massachusetts nonprofits, lauded Baker’s veto, saying, “It will promote charitable giving, and will benefit donors across Massachusetts. most of whom are low- and middle-income residents.”

However, Kurt Wise, a senior analyst with the Massachusetts Budget and Policy Center, a Boston-based nonprofit think tank, writing in The Boston Globe on Wednesday, questioned the impact the deduction would have on charitable giving to Massachusetts nonprofits, arguing that the federal deduction, which is much larger than the state deduction, is what influences charitable giving decisions.

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