Cover Story

God loves a cheerful giver (but Uncle Sam is not so picky)

"God loves a cheerful giver (but Uncle Sam is not so picky)" Continued...

Issue: "Tinkering with the tax code," April 6, 1996

A 1994 Independent Sector survey suggested the main motivating factors among those who donate either money, goods, or time and service to charities is not to get a deduction. The study, titled "Giving and Volunteering," revealed: 88 percent say they give because of personal door-to-door solicitation; 87 percent because of their own past volunteer work experience; 85 percent because they frequent religious services; 81 percent because a friend asked; 80 percent because others have helped them; 79 percent in order to make a significant social change; and 63 percent because a clergy member asked.

As for Mrs. Gibson, she doesn't seem terribly concerned one way or the other about her donation receipt. "We don't give so much for the tax deductions, we try to give what's needed. Like those heavy winter coats, I feel like somebody around here can use those. A change in the tax laws wouldn't matter that much to me."

For 38-year-old Kim Wendowski, however, the current opportunity to get a charitable deduction is, literally, a Godsend; for people like her, taking it away would certainly matter. Mrs. Wendowski is in her garage-dressed in her Mickey Mouse flannel pajamas-pushing boxes and bags out into the driveway when Mr. Brown arrives.

Yet he can't find a pick-up slip for her; the Salvation Army office must have forgotten to list her on his schedule, so he can't write her a receipt, which she definitely wants. He assures her they'll mail a receipt.

Getting a tax deduction for her charitable contributions is important, Mrs. Wendowski notes. Her husband has a factory job and she waitresses at Red Lobster, so the Wendowskis watch their money carefully. But at the same time, they don't just give to get a deduction. "I've got five girls, and I know I can't afford to buy brand-new clothing, so I feel like it's helping someone. We also give to Goodwill and we give at church, of course. I don't think a new tax law would make that much difference. We do it either because it's biblical or because we just feel like we should because we've been blessed."

Christian CPA Daniel Busby, author of the yearly Zondervan Church and Nonprofit Organization Tax & Financial Guide and the Minister's Tax & Financial Guide, says taking deductions is good stewardship: "The only person that doesn't get their money out of it is the federal government."

Yet deducting for charitable giving under the current system can be a jumble of confusion for plain folk, and has definite legal limits that don't coincide with the full biblical charge for issuing charity. Charlie Germany, CPA with Ronald Blue and Company in Atlanta, and a former IRS agent, notes some of the complications currently involved with deducting charitable gifts: (1) individuals giving time or services can't get a deduction, except for out-of-pocket expenses; (2) cash contributions require proof via a receipt, canceled check, or other written evidence; (3) other kinds of contributions require a written record from the charity listing the date, location, and description of the contribution; (4) if a contribution exceeds $500, another form must be filled out; (5) if it exceeds $5,000, yet another must be filed.

Furthermore, notes Mr. Germany,

"under ... new law, ... canceled checks are no longer considered substantiation for each and every donation of $250 or more"; a specific written record from the charitable organization is necessary. Moreover, while charities such as the Salvation Army are required by law to give donors a receipt listing the items they donated, law says charities don't have to estimate value; givers alone must provide the IRS a value estimate of a gift they deduct; when a gift is thought to exceed $5,000 in value, donors also must provide a certified appraisal.

Given such technicalities, and the greater value that deductions have as incomes (and marginal tax rates) increase, it is easy to understand why some people see charitable deductions as of greatest interest to the wealthy. IRS figures show that while those with low incomes ($10,000 to $15,000) in theory have no limit on what they can deduct, in practice they would have to give away almost half their income before they could itemize their deductions. Upper incomers ($100,000 to $200,000), by contrast, can deduct between $20,000 and $40,000, and the rich ($1 million and up) can deduct more than $100,000 in charitable giving.

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