$1,765.
All adjusted gross income groups with incomes above $100,000 reported increases in deducted noncash contributions. The largest increase was by taxpayers in the $5 million–under $10 million group, who contributed $5.5 billion in value in 2016, an increase over the prior year of 37.9 percent. Taxpayers in the $10 million-or-more income group contributed 38.1 percent of all noncash gifts, or $28.1 billion.
Private foundations received the largest share of these contributions, in the amount of $18.4 billion (25.1 percent of the total). The average of these gifts is $213,661 (the highest average gift amount for all types of charities). The next-largest type of charitable recipient was “large organizations”; they received $16.6 billion in noncash gifts.
Donors aged 65 and over contributed the most, giving $27.8 billion (37.7 percent of the total); this is an average of $16,030 per return. Contributions of stock, mutual funds, and other investments by these taxpayers (the largest type of gift for this group) were $17.9 billion, representing 48 percent of the total amount.
Here are some other perspectives on the nonprofit sector: it (1) has more civilian employees than the federal government and the 50 state governments combined; (2) employs more people than any of the following industries: agriculture; mining; construction; transportation, communications and other public utilities; and finance, insurance, and real estate; and (3) generates revenue that exceeds the gross domestic product of all but six foreign countries: China, France, Germany, Italy, Japan, and the United Kingdom.129
Statistics, of course, cannot provide the entire nonprofit sector picture. As the Commission on Private Philanthropy and Public Needs observed (albeit nearly 50 years ago), the “arithmetic of the nonprofit sector finds much of its significance in less quantifiable and even less precise dimensions—in the human measurements of who is served, who is affected by nonprofit groups and activities.” The Commission added:
In some sense, everybody is [served or affected by the sector]: the contributions of voluntary organizations to broadscale social and scientific advances have been widely and frequently extolled. Charitable groups were in the forefront of ridding society of child labor, abolitionist groups in tearing down the institution of slavery, civic-minded groups in purging the spoils system from public office. The benefits of non-profit scientific and technological research include the great reduction of scourges such as tuberculosis and polio, malaria, typhus, influenza, rabies, yaws, bilharziasis, syphilis and amoebic dysentery. These are among the myriad products of the nonprofit sector that have at least indirectly affected all Americans and much of the rest of the world besides.
Perhaps the nonprofit activity that most directly touches the lives of most Americans today is noncommercial “public” television. A bare concept twenty-five years ago, its development was underwritten mainly by foundations. Today it comprises a network of some 240 stations valued at billions of dollars, is increasingly supported by small, “subscriber” contributions and has broadened and enriched a medium that occupies hours of the average American's day.
More particularly benefited by voluntary organizations are the one-quarter of all college and university students who attend private institutions of higher education. For hundreds of millions of Americans, private community hospitals, accounting for half of all hospitals in the United States, have been, as one Commission study puts it, “the primary site for handling the most dramatic of human experiences—birth, death, and the alleviation of personal suffering.” In this secular age, too, it is worth noting that the largest category in the nonprofit sector is still very large indeed; nearly two out of three Americans belong to and evidently find comfort and inspiration in the nation's hundreds of thousands of religious organizations. All told, it would be hard to imagine American life without voluntary nonprofit organizations and associations, so entwined are they in the very fabric of our society, from massive national organizations to the local Girl Scouts, the parent-teacher association, or the bottle recycling group.130
§ 1.5 HISTORY OF CHARITABLE CONTRIBUTION DEDUCTION
The federal income tax charitable contribution deduction is now more than 100 years of age. Enacted in 1917, it has evolved significantly, with changes in its contours ranging from major to minor over the ensuing decades. In a remarkable understatement, one observer wrote that, over the years, “[a]lthough the basic premise remains the same,” the charitable deduction has changed from a “short statutory provision into a complex set of rules.”131
The major changes in the charitable deduction for individuals over the period generally entail the limitations on the amount that can be deducted by donors in a year (increasing from 15 to 60 percent), the creation of “preferred” categories of charitable donees, the differing treatment of gifts to public charities and private foundations, the rules concerning the deductibility of property that appreciated in value, the addition of substantiation and appraisal rules, and codification of the concept of the donor-advised fund.132 This aspect of the law is also informed by the breadth of the range of organizations that are considered charitable entities for purposes of the deduction.133
The federal income tax charitable contribution deduction was enacted as part of the War Income Tax Revenue Act of 1917.134 That body of law increased federal income tax rates for the purpose of paying for the United States' involvement in World War I. This deduction, however, was not enacted for lofty purposes such as incentivizing giving for charitable and like causes. Rather, it was created to “offset the potential negative effects of increased income taxes on charitable giving among the wealthy.”135 Some legislators “feared that the [tax] increase would reduce individuals' income ‘surplus’ from which they supported charity,” in that “[i]t was thought that a decrease in private support would create an increased need for public support and even higher tax rates, so the [charitable] deduction was offered as a compromise.”136 In short, “some policymakers were concerned that without the charitable deduction, wealthy taxpayers subjected to these higher tax rates would no longer contribute to charities or institutions of higher education (or would contribute less).”137 The overall amount of giving that could be deducted was set at 15 percent of a donor's net taxable income.
The Individual Income Tax Act of 1944138 revised the maximum amount that could be deducted, by changing the measuring base from net taxable income to adjusted gross income, and introduced the standard deduction. The maximum amount deductible was increased in 1952 when the percentage limitation on deductible giving was upped to 20 percent.139 In 1954, Congress raised this limitation to 30 percent but only for certain specified categories of eligible organizations.140 A commentator stated that this was the “first time that Congress encouraged certain charitable giving by granting more generous deductions for donations to certain charitable organizations than to others . . . [to] encourage additional contributions to these organizations to offset their rising costs and modest returns on endowment funds.”141 This list was expanded by the Revenue Act of 1964,142
