Estimating charitable giving by will bequest for Giving USA

Abstract

In a typical year since 2000, Giving USA has estimated that living individuals contributed 75 percent of total charitable gifts and that estates contributed about 7 or 8 percent, with institutional donors donating the balance. The estimating procedure used for estate contributions relies extensively on amounts claimed by estate tax returns as deductions for charitable contributions. Giving USA supplements the tax return data with an estimate of giving by estates that fall below the tax filing threshold. As the estate tax filing threshold began increasing and tax rates began decreasing in 2001, a number of authors (Joulfaian 2000; Gale & Bakija; Greene and McClelland) predict declining charitable contributions from bequest gifts. With fewer estates tax returns filed, and the possibility that none will be filed after 2010, the impact of the reduced tax rates must be measured using new methods that do not rely so extensively on tax return data. Giving USA has been investigating and continues to investigate alternative methods to estimate charitable bequests that do not rely so heavily on estate tax return data. This paper reports the results of this effort and describes the bequest estimating procedure adopted for use in Giving USA beginning with the 2005 edition. This procedure incorporates survey results showing bequest amounts received at higher educational institutions and estimates charitable bequests made by estates below the federal filing threshold. The paper concludes that to track changes resulting from lowered tax rates and higher filing thresholds adequately, alternative data sources will need to be developed.