‘Giving USA’ Revises Donation Figures Downward to Correct Past Flaws

Americans are not necessarily as generous as they have been previously portrayed in Giving USA, the widely cited annual report on charitable giving.

This year’s edition, released last week by the American Association of Fund-Raising Counsel Trust for Philanthropy, says that in each year of the past decade, the report has overestimated by 9 to 15 per cent the amount donated by individuals. The revisions mean that $114-billion in contributions were overestimated from 1987 to 1996.

Ann E. Kaplan, Giving USA’s editor, said that she and her advisers found flaws in the way they had been estimating gifts from people who do not itemize deductions on their federal tax returns. She said they were now using new measures to more accurately determine how much such people give. This year’s report includes revised giving figures going back to 1985.

About three out of four taxpayers do not itemize deductions. Giving USA estimates that gifts from such people account for 20 to 30 per cent of all donations from individuals. Each year, gifts from individuals make up about 80 per cent of the total amount given to charity, with money from corporations, foundations, and bequests accounting for the rest.

Some scholars were not impressed with the revisions and said they thought the new methods had led to a serious underestimation of how much is donated by people who do not itemize deductions. But some charity leaders welcomed the new approach — especially those who are trying to persuade Congress to allow taxpayers who do not itemize to take a write-off for a portion of their charitable donations.

Matthew W. Hamill, vice-president for government relations at Independent Sector, a coalition of charities and grant makers that is lobbying for such a deduction, said the new figures released by Giving USA “are another example of why you have to level the playing field and give everyone the same incentive.”

Rep. Philip M. Crane, a Republican from Illinois who is sponsoring the tax-deduction bill in the House, HR 2499, said the revised figures in Giving USA “support the need for passage of my legislation.”

Ms. Kaplan, the Giving USA editor, said that the revisions had nothing to do with the proposed legislation. The fund-raising consultants’ association, which operates the trust as its research arm, signed a letter written to lawmakers by Independent Sector in favor of the legislation, but the trust itself has taken no stand on the matter.

As a researcher, Ms. Kaplan said, her only interest in the legislation is that if it does pass, more information about the giving habits of non-itemizers might become available.

While Ms. Kaplan said the new way to estimate giving by people who don’t itemize has improved the accuracy of her book’s statistics, she and her colleagues are candid about the fact that most of Giving USA’s figures are little more than educated guesses.

“We consider the numbers as evolving,” said Ms. Kaplan. “We look for the best methodology and the best data, the best information we can find. We review our methods constantly and make changes if it means being more accurate.”

Each year, Giving USA estimates how much money was given to charity the previous year. To estimate how much individuals contributed, Giving USA starts with the previous year’s total and then adds or subtracts from it based on personal-income data from the Commerce Department and the recent performance of the stock market. If the economy is good, for example, the giving estimate is adjusted upward.

Also each year, the report revises its estimates of the two previous years based on data collected from the Internal Revenue Service on how much taxpayers claimed in charitable deductions. It also figures in an estimate of how much people who did not itemize or who did not file returns might have given.

In the past, the researchers had assumed that some people itemized deductions in some years but not others. Those people, they said, gave more each year than taxpayers who never itemized.

Under the old method, for example, Giving USA estimated that in 1994 11.5 million taxpayers were occasional itemizers and that they contributed nearly $1,500 each, accounting for roughly $17-billion in gifts.

With the new method, all non-itemizers are treated the same. The 11.5 million taxpayers in 1994 who were thought to itemize occasionally were lumped in with all the people who do not itemize. Giving USA estimated that each of those non-itemizers gave about $338. A group that was worth $17-billion in gifts under the old system accounted for only about $4-billion in donations under the new.

Ms. Kaplan of Giving USA said that previously there was not a clear rationale for how the non-itemizers were categorized. And she and her colleagues believed that the number of people who itemized occasionally was probably overstated. Many people, she noted, itemize to take deductions for payments on a home mortgage. And, she said, homeowners are likely to continue itemizing each year.

Giving USA made other changes in methodology this year. In the past, Giving USA had reduced the total contributions figure for people who itemize by 7.2 per cent to account for taxpayers who had claimed deductions for amounts greater than what they contributed.

But Ms. Kaplan says that cutting the contributions figures by 7.2 per cent across the board did not take into account the varying levels of exaggeration by people in different income brackets or cases in which taxpayers did not claim deductions for the full amount they contributed.

The new edition of Giving USA recalculated giving figures without making the 7.2-per-cent adjustment. In 1994, for example, that meant that an additional $5.08-billion was included in the revised totals.

Charity researchers and observers applaud Giving USA’s attempts to refine its figures and its willingness to announce the changes. But many experts are worried that Giving USA’s research is still not on target.

Paul G. Schervish, director of Boston University’s Social Welfare Research Institute, believes that the new figures grossly underestimate personal giving.

“There’s integrity to the numbers because they follow a methodology,” said Mr. Schervish, who has advised Ms. Kaplan on Giving USA’s changes, “but I maintain that the numbers for non-itemizers are way too low.”

Murray S. Weitzman, a consultant to Independent Sector, which publishes its own research on how much Americans give, also believes that Giving USA is underestimating gifts from non-itemizers. His studies show, for example, that Americans who did not take write-offs gave $25.8-billion to charity in 1995. Giving USA estimates that those Americans gave $20.7-billion for that year.

“We and Giving USA have agreed to disagree,” Mr. Weitzman said, noting that the two groups even count the number of people who don’t itemize differently. Independent Sector includes in its study information based on every tax return. Giving USA’s research considers giving by household, even if more than one person in each household files a tax return.

Said Patrice Flynn, a former researcher at Independent Sector who now runs her own research company in Harper’s Ferry, W.Va., Flynn Research: “Information about non-itemizers has been a blind spot for all of us. I admire Giving USA for revisiting the subject. They have done a good job to flag the issues, but so much more must still be learned about non-itemizers to come to estimates that we can all feel good about.”