The Charitable Contribution Deduction: How Tax Policy Influences Donor Behavior

The primary objective of this study was to determine how tax policy impacts donor behavior with respect to the charitable contribution tax deduction. In addition, the study examined the effect on giving to non-profit organizations through various proposals to change the benefit of the charitable contribution tax deduction. The best proposal was determined to be a deduction both advantageous to the taxpayers as an incentive to give financially to qualifying organizations and advantageous as a benefit offered by the government as a result of subsidization through tax policy. Through the use of a survey, I analyzed the motivating factors for individuals to give and the effect on giving expected by taxpayers through the proposed changes to the charitable contribution deduction. The study indicated that there was an overall lack of awareness of tax policy and also demonstrated that the perceptions about why one personally gives differs from what one perceives are the reasons that others give. Furthermore, my evidence supports the notion that tax policy may have some effect on giving, but it is ultimately dependent on the circumstances of the taxpayer.