The voices of Urban Institute's researchers and staff
December 30, 2016

Should nonprofit leaders rethink the relationship between political and charitable giving?

December 30, 2016

As 2016 comes to an end, many Americans are making final decisions about their tax-deductible charitable contributions. At the same time, in a year of record-breaking political giving, some nonprofit leaders are worried about meeting their year-end goals.

Their concern stems from the conventional wisdom that political campaigns steal support from charitable causes. Such claims, though largely anecdotal, rest on two assumptions: that there is a fixed pool of donation resources and that donors view charitable and political giving as distinct activities.

But the 2016 election and its aftermath might give us reason to rethink the relationship between these two realms of giving.

A new study by the Mastercard Center for Inclusive Growth charts the share of total donations directed to charitable and political organizations, measured quarterly from 2004 to 2016. 

The 2016 patterns show that political giving as early as July was already at its highest levels since 2004 and that political giving in the typical peak month of October was on track to outpace 2012 levels.

But a postelection spike in charitable giving—what some have called “rage donations”—further calls into question the conventional wisdom. The politically motivated charitable giving we’ve witnessed shows that donors just might not be viewing charitable and political giving so separately.  

Evidence from previous presidential election years supports the idea that charitable and political giving serve as a complement to—not a substitute for—the other. A Blackbaud study of the 2012 election results indicates that political contributions did not detract from charitable giving. An Indiana University study found that charitable giving increased in seven of the past eight presidential election years. And a study by a researcher at the University at Albany using data from 1990 to 2001 indicates that political and charitable contributions are complementary.

The interesting and unspoken dynamic at play here is that the economics of the two forms of giving are different. Because charitable contributions are tax deductible, a taxpayer at a 28 percent tax rate only pays $0.72 for a $1 charitable donation, while a political donation costs the donor the full dollar. How this dynamic played out in 2016 will become clearer as we begin to gather evidence and look back.  

From the current vantage point, however, it may be time for nonprofit leaders to question their assumptions and find ways to tap into the common motivations underlying both forms of giving. What seems clear is that donors view both political and charitable giving as ways to support who and what they believe in.

Illustration by Marcus Butt/Getty Images.

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