Several groups have done research to address the question of how changes in the tax code for 2018 might impact charitable giving. Much of this research has focused on the fact that only 30% of Americans itemize their deductions. Some have gone further to include demographic splits by wealth or region.
At Analytical Ones, we believe the most predictive measure of future donor behavior is how they have given in the past. This perspective informs all our statistical models, analytics reporting, and strategy recommendations.
In the case of 2018 tax reform, segmenting donors in our national survey by their past giving levels reveals an important piece of the story.
While less than a third of Americans itemize their deductions, our most valuable charitable donors itemize at a much higher rate. As many as 75% of donors who give $1,000 or more to charity each year itemize their charitable deductions.
General donors (Under $1k annual) and Major donors ($10k+) are mostly immune to the changes to the tax code for 2018. However, nine percent of Mid-level donors ($1,000 to $9,999 annual) report that they will have a significant decrease in giving next year in response to the change.
Because this group typically makes up a large portion of revenue for non-profits, it is more important than ever to have a specific strategy to cultivate and upgrade mid-level donors. See the infographic below for more details.