Many of America’s leading charitable organizations were created and funded because of generous outright gifts, bequests and life income gifts, long before the modern federal income tax was created in 1913, the estate tax in 1917 and the federal gift tax in 1935. While our tax system continues to include incentives to encourage philanthropy, we should remember that charitable giving in America preceded all of our current tax systems!
Fundraisers should understand that there are many factors that motivate philanthropy in addition to tax benefits, such as:
- A donor’s emotional attachment to the charity.
- A desire to leave a legacy to the community.
- A sense of duty based on religious beliefs.
- A host of other reasons or combinations of them.
Of course, taxes can, and do, affect the size, form and timing of charitable gifts. With the success of the stock market in recent years, more people are making gifts of appreciated securities due to the additional tax advantages associated with such gifts. QCDs and DAFs have grown tremendously in popularity (and grown in value because of the rise in the stock market).
There’s been a lot written about the recent tax law changes that go into effect in January reducing the tax savings of charitable giving for some high-income taxpayers. However, even with fewer tax incentives (or even if there were no tax incentives at all) history proves that Americans will continue to generously support their favorite charitable organizations. ■
As Sharpe Group’s general counsel, Barlow Mann consults with some of the country’s most successful gift planning programs. He is recognized as an industry expert and is on the editorial board of Planned Giving Today.
