Rise in Giving Tracks Growth in Americans’ Income, IRS Data Show

By HARVY LIPMAN

The $10-billion rise in charitable giving from 1997 to 1998 reflects the growing incomes of Americans who itemized their tax returns rather than any increase in their generosity,

a Chronicle analysis of new Internal Revenue Service data shows.

On average, those taxpayers continued to give a little more than 3 percent of their earnings to charity, claiming a total of $107.4-billion in deductions.

The percentage of earnings that Americans gave to charity varied widely by both their income bracket and their geographic location. As previous I.R.S. data have shown, people in the lowest income bracket gave the highest percentage to charity. Among returns of taxpayers with adjusted gross incomes of less than $20,000 a year, those who itemized donated an average of nearly 11 percent. It is impossible to tell from the data whether most low-income people are that generous, however, because only about 5 percent of taxpayers in that income bracket file itemized returns.

Among Americans with the highest incomes — those earning $200,000 or more — the average charitable deduction was 3.5 percent of their earnings (virtually unchanged from the year before). That’s a more reliable measure of giving, because more than 90 percent of taxpayers in that tax bracket itemize their deductions.

Comparing actual giving in middle-income tax brackets and among states is difficult because the percentage of taxpayers who itemize varies widely. That is important because tax experts believe that people who don’t itemize give less — both in terms of total dollars and as a percentage of income — than those who do itemize. Residents of a state with a high percentage of taxpayers who do not itemize, therefore, appear to be more generous as a group than they actually are.

As has long been the case, however, taxpayers in Utah gave by far the largest share of their earnings to charity, donating nearly 7 percent. That state’s numbers were not skewed upwards by a low proportion of itemizers, either, since it had the fifth-highest percentage of itemizers in the nation.

Utah’s consistently high ranking stems from the fact that a large percentage of its residents are members of the Mormon Church, say charity executives and researchers who have studied patterns of giving and charity. Mormons are expected to tithe by donating at least 10 percent of their earnings directly to the church.

“That is the driving force,” says Deborah Bayle, chief executive officer of the United Way of the Great Salt Lake Area, in Salt Lake City. But Ms. Bayle adds that Utah’s reputation for generosity is somewhat misleading. “Our United Way campaign is always at least half or a third only of what comparable cities of our size are around the country,’’ she says. “You would find with almost any charitable organization that their numbers are approximately the same.”

She says that’s because once Mormons, who make up about half the residents in the Salt Lake City area, give their 10 percent to the church, “there’s not a whole lot left over for other charitable giving.”

In eight other states, taxpayers who itemized deductions also gave more than 4 percent of their income to charity. But in each case the percentage of people who itemized was well below the national average, making it difficult to gauge the overall generosity of the states’ residents.

Generosity in Washington

The only jurisdiction outside Utah where both a high percentage of taxpayers’ earnings went to charity and a higher-than-average proportion of residents itemized their deductions was the District of Columbia. Washington taxpayers in every income bracket gave more than the national average to charity.

Charity officials attribute at least some of that result to the effectiveness of the Combined Federal Campaign for the National Capital Area, which raises money among federal government employees.

“This is a region where there’s an unusual concentration of people who are committed not only to the country but to this city,” says Elizabeth Miller, director of the New Ventures in Philanthropy project at the Washington Regional Association of Grantmakers. Among the goals of the project, in which community foundations around the country are participating, is to increase charitable donations by developing a clearer picture of regional giving patterns.

Toward that end, the Washington association has hired the Urban Institute to analyze the I.R.S. data and other information on charitable giving.

But that effort is also highlighting the weaknesses of the I.R.S. state data. To develop a clear picture of giving patterns, Ms. Miller and others note, charities need to be able to tease out distinctions that may exist within states: Do residents of metropolitan areas and rural communities differ in the percentages they give to charity? Are there significant differences in the giving cultures between metropolitan areas of the same state?

“State data don’t do us a whole lot of good,” Ms. Miller says.

Linda Lampkin, manager of the Urban Institute’s National Center for Charitable Statistics, in Washington, says her organization gets frequent requests for analyses of the I.R.S. state statistics, despite the data’s shortcomings. “The people who ask me all the time are people who want to exhort their folks in New England or whatever to give more,” she explains. “Everybody’s always interested in saying I live in a generous state or I do not.”

Whether the I.R.S. data allow anyone to draw such conclusions is questionable, Ms. Lampkin adds. Aside from the problems caused by the fact that so many taxpayers don’t itemize their returns, she notes that several sociologists have surmised that other factors affect the data significantly.

“There are sociologists who have said it has to do with the level of services provided by governments,” she says.

In states where governments provide relatively generous benefits to the poor, those scholars contend, residents feel less need to donate to charity. Thus, the consistently lower rates of giving in Northeastern states like Connecticut, Massachusetts, New Jersey, and New York could be explained by the fact that those state governments offer more services than most others do.

Despite weaknesses in the state data, however, most researchers see a value in continuing to use it.

“At least you have some trends,” says Ann E. Kaplan, editor of Giving USA, an annual publication that estimates the nation’s total charitable giving. “You could see which regions of the country are faring better.”

But Ms. Kaplan adds that charities should not make the mistake of assuming that understanding regional trends is everything they need to know about patterns of giving.

“Ultimately, you want to get to your organization level,’’ she says. “You’re the organization you are, and where you’re located is never going to be quite as useful as knowing your own constituency. In the end, that’s what you really need to know.”