Americans have remained generous with their donations even with a less than booming economy, according to the annual report from Giving USA (http://www.givingusareports.org/products/GivingUSA_2011_ExecSummary_Print.pdf). The report also reveals how some commonly held ideas about charities may be wrong.
Myth #1 – Most charitable donations go to help the poor.
In 2010, total charitable giving in the US was estimated at about $291 billion, slightly up from 2009, according to Giving USA. Of this total, only 9% went to Human Services charities. These are the charities that have been the first to report greater needs for services and a slower growth in contributions in hard economic times.
The biggest proportion of 2010 contributions – 35% – went to religious organizations. In fact, religious groups have received the biggest share for the past 56 years! The second highest sector receiving contributions was education, at 14% of the total.
So the organizations usually thought of as charities are really getting only a small portion of charitable donations.
Myth #2 – Most charities get grants from foundations.
Individuals contributed 73% of the US total giving in 2010 – about $212 billion. Most charities receive none or only a small proportion of their revenues from foundation and corporations. Looking at the national total of charitable giving, foundations gave 14% ($41 billion) and corporations only 5% ($15 billion). Donations from individuals are the major source of revenue for most charities.
Myth #3 – All charitable donations are tax-deductible.
Maybe. First, the contribution must be to an organization that has been given tax exempt status under Internal Revenue Code 501 (C)(3). Before taking that deduction, the IRS wants you to verify that status. ERI makes the basic information on IRS status and also copies of the Form 990, the information form filed annually by most nonprofits, available at www.eri-nonprofit-salaries.com.
Additionally, only those who itemize deductions, rather than take the standard deduction, can use the deduction, typically only about 30% of US taxpayers. There are different rules for donations other than cash as well as limits on how much of income can be donated and deducted. Plus recordkeeping may be required. Check out IRS Publication 526, Charitable Contributions, available at www.irs.gov.
Make sure your charitable donation is used effectively – check out the Form 990 and the organization web site before you send a check!