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Donations to charities decreasing

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By Cornelius Frolik and Rick McCrabb, Staff Writers 8:13 PM Monday, November 7, 2011

The recession caused charitable giving of all types to decrease in Ohio in 2009, but one of the steepest declines was from wealthy donors whose ranks and incomes shrank after the stock market tanked a year earlier.

Charitable contributions reported by taxpayers in Ohio who earned $200,000 or more fell 37.3 percent to $1.21 billion in 2009 from $1.93 billion in 2007, according to a JournalNews analysis of the most recent IRS data available.

The decrease is significant because wealthy Ohioans account for such a large portion of charitable giving in the state.

Almost 18 percent of the $46.6 million in charitable contributions reported by Hamilton taxpayers in 2008 came from those earning $200,000 or more, even though they represented only 1.5 percent of area tax filings, according to tax data.

In 2007, taxpayers living in Hamilton donated $51 million with $11.8 million of that coming from residents who earn $200,000 or more. That means those who earn $200,000 or more represented 23.1 percent of the total, but only 1.6 percent of area tax filings.

But the $200,000 tax returns accounted for 19 percent ($3.4 million) of the $18 million in charitable contributions reported to the IRS.

But representatives of charities and nonprofit groups said giving is slowly rebounding, and the incomes and the investments of the wealthy improving, allowing them to be more generous with their gifts.

Katie Braswell, vice president of the Hamilton Community Foundation, said donations “dipped slightly” in 2009, but have rebounded recently. Compared to this time last year, she said giving is up 50 percent.

She said Butler area donors have “stepped up to the plate to the needs of the community.”

She said the foundation, the oldest and largest in the county, distributed $5.4 million in grants and scholarships last year.

Mitchell Willis, Butler County United Way director of resource development, said the Hamilton United Way is experiencing a 1.5 percent drop in campaign revenue this year compared to 2010. He said last year’s campaign generated $1.875 million and this year’s goal is $2 million. The campaign ends in February.

Individual donors account for more than 80 percent of giving in Ohio, and Ohioans donated 7 percent less in 2009 than in 2008, according to a report by the Ohio Grantmakers Forum.

In 2009, 1.29 million joint and individual tax returns from Ohio reported charitable contributions totaling $4.35 billion, according to the IRS. In 2007, 1.49 million returns reported contributions, totalling $5.28 billion.

Most contributions are modest amounts from individuals to local organizations they care about, such as their religious institutions or the local American Red Cross, said George Espy, the forum’s president.

Ohioans of all income levels contribute money to disaster aid, educational causes, religious organizations, arts organizations and groups committed to helping the poor. Even during the downturn, taxpayers on the low end of the income scale made hundreds of millions of dollars worth of charitable contributions.

“Giving is an emotional response to need, and Ohioans care about their neighbors, and if they see the food pantry needs help or the homeless shelter needs help, they will reach into their pockets and give even though they will not make the larger gifts,” Espy said.

But the larger gifts are important to the budgets of many nonprofit groups and charities, and high-income earners account for much of the giving in the state.

In 2009, Ohio taxpayers who reported earning $200,000 or more accounted for about 1.8 percent of all federal tax returns, according to the IRS. But those tax filers accounted for about 28 percent of the charitable contributions reported to the federal government — about $1.21 billion.

Espy said donors make contributions based on their “pocketbooks,” and the number of high-income taxpayers and their earnings fell considerably during the recession.

As a result of large decreases in their gross adjusted incomes and the overall number of filings, charitable contributions by Ohio taxpayers earning $200,000 or more fell 37 percent from 2007 to 2009, according to tax data. Meanwhile, contributions by taxpayers earning $100,000 or less fell by only 8.5 percent during that time.

Janet Kasler, director of knowledge management with the Grantmakers Forum, said one reason why there were larger decreases in the amount of donations by wealthier individuals was because they rely more on the stock market and their investments to determine how much they give.

The wealthy often contribute appreciated stock or mutual fund shares to charity because they can deduct the contributions on their taxes and do not have to pay capital gains taxes.

A June report by the Giving USA Foundation found that all types of charitable contributions were up about 2.1 percent in 2010 after two years of declines.

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