Sums Donated Through Retirement Accounts Are Modest, Report Finds

The new edition of Giving USA, which reports that donors provided more than $300-billion to charity last year,

also published an estimate of how much was donated to charity through individual retirement accounts over the past two years.

The small sums donated through the accounts are prompting some fund raisers to reconsider nonprofit organizations’ recent efforts to promote such gifts.

In both 2006 and 2007, a federal provision allowed donors aged 70 to give up to $100,000 annually from their IRA’s tax free to charities. (The measure expired last year, and attempts by organizations representing charities to persuade Congress to revive and expand it have so far been unsuccessful.)

Using statistics on the number of IRA’s, their value, and other data, Giving USA estimates that during 2006 and 2007, donors contributed at least $600-million from their retirement accounts and no more than $1.2-billion. Another estimate by a planned-giving consulting firm, using a different method of calculation, found a similar range, projecting that IRA gifts totaled $500-million to $1-billion.

The typical IRA gift has been relatively small, according to statistics collected by the National Committee on Planned Giving, which asked organizations to self-report those gifts by completing an online survey on its Web site. Out of more than 8,500 IRA gifts reported by 900 charities, the most frequently reported donation size was $5,000, Giving USA found.

Advocacy Questioned

Because the $1.2-billion maximum figure estimated by Giving USA is so small — less than one-half of 1 percent of all contributions last year — some experts question the time and effort organizations such as the Association of Fundraising Professionals and Independent Sector, a coalition of nonprofit organizations, have poured into lobbying and other advocacy efforts to persuade Congress to extend the IRA provision.

Michael Nilsen, a spokesman for the fund raisers’ association, says that the IRA legislation has been the top priority of his organization’s government-relations work and that it will continue to be. The rate of giving from retirement accounts, he says, “has shown good progress given that it has been in existence for just a year and a half. We would expect to see continued growth if it were in existence.”

But “it is disappointing to see these modest figures” from Giving USA, says Leo Arnoult, a Memphis fund-raising consultant and a board member of the Giving Institute, which publishes the annual estimates on giving.

“The nonprofit community needs to pull back and see what other actions they could advocate for to increase giving.”

A tax break for people who don’t itemize their donations — which was in place before the federal tax code was overhauled in 1986 — or increasing the write-off that donors can take for making a large gift might do more to stimulate giving, Mr. Arnoult says.

Indeed, the estimated total of IRA gifts is dwarfed by donations made because of other federal giving incentives, such as a law passed in response to Hurricane Katrina that gave donors generous tax write-offs for charitable gifts in the final months of 2005.

That law, which allowed donors to write off the full value of their gift rather than limiting the deduction to 50 percent of their adjusted gross income, raised $11-billion for charity in just four months.