Fundraising Research

Rick Dunham on the wisdom of the charitable tax deduction

Dunham responds to economist’s recent criticism of the charitable tax deduction

Rick Dunham, President+CEO of Dunham+Company, responds to a recent op-ed published in The New York Times:

Bruce Bartlett recently published an opinion piece in The New York Times regarding the charitable tax deduction. His position is that it does little to impact charitable giving. His article reveals a cynicism about donor motivation and a personal prejudice regarding what motivates donors to give.

Obviously, Mr. Bartlett has never been a fundraising practitioner. Clearly, he has never had the experience those of us in the profession have had of sitting across from a donor working out the amount of her contribution based on tax considerations.

He also fails to understand that over 60% of donations are given by the top 3% of earners, according to Giving USA. So Mr. Bartlett’s point regarding those who do not itemize has little relevance to the argument of the importance of the deduction. It is these top earners – those who give the majority of charitable gifts – who rely on the deduction to maximize their contributions.

As any fundraiser can attest, the charitable tax deduction is not the primary motivator driving a major donor to give her gift, but it does directly affect the amount she gives. And it shouldn’t be lost that the entire value of planned giving is built off the power of the charitable tax deduction.

Those in the fundraising profession know firsthand that any limiting – or the elimination – of the deduction will have a direct impact on how much major donors are able to give.

There’s a reason why charitable giving in America is far greater than any other country in the world. It is due, at least in part, to the commitment of the U.S. Government to providing the charitable tax deduction as an encouragement of private philanthropy.

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