June 22, 2004

Tax Cuts Allow Americans To Be More Charitable

Americans' charitable giving rose in 2003 over 2002, and marks only the fifth time since 1971 that charitable giving in America topped 2 percent of gross domestic product, reports today's New York Times:

Americans gave an estimated $240.72 billion in 2003, a slight increase from the previous year, according to Giving U.S.A., an annual survey of charitable contributions published by the A.A.F.R.C. Trust for Philanthropy, a unit of the American Association of Fundraising Counsel, and compiled by the Center on Philanthropy at Indiana University.

Estimated giving in 2003 equaled roughly 2.2 percent of the nation's gross domestic product, the fifth year since 1971 that charitable contributions exceeded 2 percent of the total output of goods and services.

"This occurs despite rather unsettling times," said Henry Goldstein, chairman of the Giving U.S.A. Foundation, which released the survey. "The economy is in what I would call partial recovery; there's a war, there's a threat of violence, there's a political campaign that is nasty, and yet philanthropy is really quite robust."

Think about it. Reduced taxes not only helps the economy grow, it puts more money in people's pockets that they can give to charities and good causes. Charitable giving soared during the 1980s, the last time the economy enjoyed a boom fueled by broad tax cuts. According to the Chronicle of Philanthropy, giving to charitable causes more than doubled from $48.7 billion in 1980, the final year of the President Carter-induced national "malaise," to $99.3 billion in 1988, Reagan's last year in the White House. Factoring in inflation, that's an increase of more than 25 percent in charitable giving during the Reagan years - twice the growth rate in the 1970s - and during an era liberals widely derided as an era of greed.

As Leslie Lenkowsky writes in a commentary in that same publication:

Tax rates were reduced and loopholes closed as well, but in the Reagan years, charitable giving rose by more than 25 percent in inflation-adjusted dollars, twice the rate of the previous decade. During the 1980s, after a period of stagnation, new foundations began to be created again, and corporate giving, as a percentage of pretax profits, reached an all-time high. In the 1990s, tax rates - despite a small increase early in the decade - remained below their pre-Reagan levels, and philanthropy grew even more rapidly as the economy picked up speed.