Giving to secular nonprofits is more susceptible to changing conditions than giving to religious organizations, according to a new study by Arthur C. Brooks of the American Enterprise Institute.
The study focused on the effects of income and tax changes on charitable giving during the 2008-09 recession and found them "notably different than the typical findings from before the recession."
"Most importantly, price elasticity is much higher (in absolute terms) and income elasticity is lower," Brooks wrote — in other words, tax policy changes will have an unusually heavy impact on giving. "These unusual patterns are much more pronounced for secular giving than for religious giving, and the effects are much more muted when only considering itemizers."
Brooks predicted the impact of a 28 percent charitable deductions cap — which he said President Obama proposed in his FY 2013 and previous budgets — as follows:
|Type of giving||Percentage reduction in giving|
|Top 1 percent of earners||24.05|
Based on the Giving USA estimate that individual giving came to approximately $218 billion in 2011, the total loss of giving from such a cap would be about $9.4 billion in its first year, Brooks said.
Brooks said the enacted 2013 tax increases should have a small positive impact on giving, and the contemplated deduction cap would have a relatively large negative impact on giving.