The giving time of year
íTis the season for giving. And not just giving wrapped gifts to children and others, but giving to those much more in need than ourselves.
This fiscal cliff discussion is bringing out the worst in many on Capitol Hill. It seems nothing is sacred in an effort to find compromise. Washington is looking everywhere for new revenue.
In 2010, about $170 billion in charitable deductions were claimed on itemized tax returns. Think of all the tax revenue our nationís coffers could amass if there was no deduction for charitable giving. The truth is, given the way we spend money, taxes on $170 billion would probably not last very long, but at this point even the sacred loopholes are being taken out and shown the light of day.
Some argue the tax break does not increase giving. One study says charitable giving tends to hover around 2 percent of our gross national product. And that figure does not change no matter what the incentive.
Others say the tax deduction does get people to give and give more than they otherwise would.
Still, one fact is a certain: Approximately 70 percent of all Americans receive no tax benefit for their giving because they donít exceed the standard deduction and they file the short form.
So what is the reason many Americans give and give generously, and are only the nationís wealthy making charitable donations anyway?
The second question is a bit easier to answer. While we know that $170 billion was contributed to charities in 2010, that figure only reflects who gave and took advantage of the charitable deduction. We also know that total charitable giving just from individuals was just under $211 billion in 2010. Where did the rest come from? From people who just gave.
Why do people give? According to a national study, the top reasons people give are because they are presented with a giving opportunity that motivates them to give. People give because they hate to say ďnoĒ person to person. (The chance for success doubles when a donor is asked by someone he or she knows well.)
People often give in order to control where their money goes and how it is used. People support what they believe in. They truly want to make a positive difference. They give because someone made it easy or convenient to give.
The other reason people give, according to this study: ďGiving is often enhanced because tax laws make it advantageous to do so.Ē
Congress and the president will have to figure out what stays and what goes when it comes to deductions and taxes. There are 2,633 nonprofit charitable organizations in Vermont. We all give for different reasons and we all have charitable causes with which we have a personal connection.
In this season of giving, please give what you can. Happy holidays and happy New Year!
Karen Paul is a financial consultant in Burlington.