Article
Public Finance Review

How Did the Great Recession Affect Charitable Giving?

Format:Print

Abstract

A great deal of research has studied the effects of income and tax changes on charitable giving. However, little work has focused on how these relationships were affected by the Great Recession. This article estimates the tax and income effects using the 2009 Panel Study of Income Dynamics. The estimates are notably different than the typical findings from before the recession. Most importantly, tax effects are higher and income effects are lower. These unusual patterns are more pronounced for secular giving than for religious giving, and the effects are muted when only considering tax itemizers. The estimates are used to develop policy analytic results, considering the effects of the 2013 personal income tax rate increases and possible tax deduction limits currently under consideration. I find the tax increases to have a moderately stimulative impact on giving but predict a cap on charitable deductions would have a large negative impact.