Will Obama's Plan Hurt Charities?

New survey suggests most people will continue to give, regardless of tax deductions.

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When President Obama announced his proposal to reduce the amount that taxpayers can deduct for charitable donations (for those earning over $250,000 a year, the deduction rate would go from 33 or 35 percent to 28 percent), charities protested that they would suffer from decreased giving.

But a new survey conducted for Bank of America by the Center on Philanthropy at Indiana University finds that most donors won't let that kind of change stop them from being generous. Even if they received zero deductions -- and Obama's proposal would only reduce the deduction rate -- 52 percent of wealthy households said their contributions would not change. Only one in ten said that their contributions would "dramatically decrease" if they were able to take no deductions.

As for potential increases to the estate tax, the survey against found that most wealthy people -- 54 percent - -would not change their donations if their estates were not taxed. In other words, it seems that most people do not base much of their giving decisions on their tax liabilities.

But charities still have plenty to worry about. Giving typically declines during recessions as corporate and individual donors tighten their belts. Wealthy donors, which were the focus of this survey, are responsible for 65 to 70 percent of all individual giving, so their choices can have a big impact. The survey found that donors often stop giving to organizations because they no longer feel connected to it, they decided to support other causes, or they felt they were being asked for money too often.

A charity intent on raising more money might want to encourage wealthy donors to volunteer their time, as well. The survey found that those who volunteered time tended to give more money. Those who volunteered between one and 50 hours gave an average of $45,318, while those who volunteered over 200 hours gave an average of $132,315.

  • For more, read "Three Ways to Give Thanks Through Charity."