Donations North Dakotans reported on individual federal tax returns as itemized deductions to charities, humanitarian causes and public/private institutions, including religious organizations, totaled $220 million in 2007 (latest figures available).

That is an increase of $14 million (7 percent) from the $206 million in 2006. This growth follows a similar increase of $10 million (5 percent) the year before ($196 million in 2005).

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

“We have seen a consistent increase in charitable contributions from North Dakotans since 2002,” says Richard Rathge, State Data Center director.

The Internal Revenue Service (IRS) publishes aggregate state data (including tax-deductible contributions or donations) from individual tax returns filed the previous calendar year. However, there are two 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 2007 tax data, 19 percent of North Dakota taxpayers chose to itemize deductions on their tax returns (second lowest percentage in the U.S.).

A mortgage is one of the primary reasons for itemizing deductions. Thirty-two percent of households in North Dakota were owner occupied with a mortgage in 2007, which is the second lowest proportion among all 50 states.

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 the 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 $4,316 per return in 2007, a 4 percent increase from $4,148 in 2006.

Nationally, average charitable contributions increased to $4,623 in 2007, which is up from $4,403 in 2006.

NDSU Agriculture Communication