A new study by the GG+A Survey Lab finds that only 13% of potential major gift donors say that taxes are an important part of their giving decisions. Two-thirds of respondents say tax implications play little or no role in their decision to give.
The survey of 2,003 households was conducted in October and November 2017, during the height of negotiations on new US tax laws, which included numerous changes to rules related to charitable giving. The respondents, all donors or potential donors to a private research university in New England, were rated as capable of making a single gift of at least $100,000. Details of the findings are shown in the table below.
The survey asked respondents to rate each of 12 possible motivators for giving on a ten-point scale. “Giving as a way to reduce my taxes” ranked 10th on the list, with an average score of just 4.86 (13% saying it is very important). On a percentage basis, taxes ranked 11th of the 12 factors. The top-ranked reason for giving is “helping those less fortunate” (average of 8.54) and the second-ranked reason is “giving back to an organization or cause that is part of my life” (average of 8.28). The lowest-ranked reason is “limiting the amount of money my heirs will inherit” (average of 2.34).
“Major donors and potential major donors make charitable gifts to make a difference, not because of taxes,” said Suzanne Hilser-Wiles, President of GG+A. “Organizations need to illustrate impact and show donors how their organizations are uniquely positioned to make a difference in order to attract gifts.”
Even among those for whom tax considerations are very important, helping those less fortunate and giving back to an organization are ranked just as highly, while investing in the future of a cause and being generous are also ranked as very important.
Analysts reviewing the tax law’s potential harm to non-profit organizations have commented that major donors may not be influenced by the financial implications to their wealth, but that lower level donors may choose not to give if their ability to itemize deductions is curtailed. The survey results suggest otherwise: only 10% of donors who have given $1,000 or less say that tax considerations are important in their giving decisions.
According to the Urban-Brookings Tax Policy Center, only 20% of tax filers itemize their deductions. If only 10% to 15% feel tax implications are important to giving as found in the survey results, just 2% of all donors may adjust their giving based on a decrease in filers that itemize. That number will likely be much lower given that few donors will stop giving entirely and may still be motivated to give for other reasons.
Overall, the survey’s results are consistent with the 2016 study by U.S. Trust High Net Worth Philanthropy: Charitable Practices and Preferences of Wealthy Households which found at the time that 5% of high net worth donors would decrease their giving if there was no tax benefit. The difference between that study and GG+A’s may be because the GG+A study surveyed donors to a university rather than all charitable sectors.
“More study is required,” added Pat Watson, GG+A Senior Vice President and former head of advancement at Brown University, “but it appears that the sky is not falling.”
To learn more about how the GG+A Survey Lab can help your organization find out more about alumni, donors, or members, email us at firstname.lastname@example.org.