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Tax Deductible Charitable Giving Up Again in 2006 in N.D.

For North Dakota, individual federal income tax returns with contributions as itemized deductions showed contributions averaging $4,148 per return in 2006.

Donations North Dakotans reported as itemized deductions on individual federal tax returns to charities, humanitarian causes and public/private institutions, including religious organizations, totaled $206 million in 2006 (latest figures available). That is an increase of $10 million (5 percent) from $196 million in 2005.

This growth follows a similar increase of $19 million (11 percent) the year before ($177 million in 2004 to $196 million in 2005).

“We have seen a consistent rise in charitable giving in North Dakota since 2002, a period in which the state’s economy has been quite robust,” says Richard Rathge, North Dakota State Data Center director. The center is at North Dakota State University. “As the economy starts to soften because of the economic crisis, many nonprofit organizations are fearful that charitable giving will decline.”

This month’s “Economic Brief,” a monthly publication from the State Data Center, focuses on the charitable nature of North Dakotans by looking at charitable contributions reported as itemized deductions on federal individual income tax returns.

The Internal Revenue Service publishes aggregate state data (including tax-deductible contributions or donations) from individual tax returns filed the previous calendar year. There are important limitations to consider when using IRS data to explore trends in donations or charitable giving within North Dakota.

First, only a small number of North Dakotans itemize their deductions on their federal individual income tax return. According to 2006 tax data, 20 percent of North Dakota taxpayers chose to itemize deductions on their tax returns (second lowest percentage in the nation). A mortgage is one of the primary reasons for itemizing deductions and 32 percent of households in North Dakota are owner-occupied with a mortgage, the third lowest proportion in the nation.

Second, itemized deductions only capture giving that is tax deductible. Because of these limitations, one should be cautious in using IRS data to draw conclusions about how much North Dakotans donate and how our state compares with other states. However, the IRS database is one of the few uniform means of tracking contributions during a time period and by state.

For North Dakota, individual federal income tax returns with contributions as itemized deductions showed contributions averaging $4,148 per return in 2006, a 3 percent increase from $4,045 in 2005. Nationally, average charitable contributions increased slightly to $4,403 in 2006, which is up from $4,388 in 2005.


NDSU Agriculture Communications

Source:Richard Rathge, (701) 231-8621, richard.rathge@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu

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