In North Dakota, itemized deductions on individual federal tax returns included $226 million in donations to charities, humanitarian causes and public/private institutions, including religious organizations, in 2008 (latest figures available). That is an increase of $6 million (3 percent) in 2007.

This growth follows a slightly larger increase of $14 million (7 percent) the year before from $206 million in 2006.

“North Dakota’s charitable giving continued to rise through 2008 in spite of the recession that was occurring,” says Richard Rathge, North Dakota State Data Center director. The center is at North Dakota State University. “Nationally, the average contribution started declining in 2007.”

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.

For North Dakota, individual federal income tax returns with contributions as itemized deductions showed contributions averaging $4,632 per return in 2008, a 7 percent increase from $4,316 in 2007.

Nationally, average charitable contributions decreased to $4,343 in 2008, which is down from $4,623 in 2007.

The Internal Revenue Service (IRS) publishes aggregate state data (including tax-deductible contributions or donations) from individual tax returns filed the previous calendar year.

There are two important limitations to consider when using IRS data to explore trends in donations or charitable giving in North Dakota. First, only a small number of North Dakotans itemize their deductions on their federal individual income tax return. According to 2008 tax data, 20 percent of North Dakota taxpayers chose to itemize deductions on their tax returns (third lowest percentage among states). A mortgage is one of the primary reasons for itemizing deductions, and 37 percent of households in North Dakota were owner-occupied with a mortgage in 2008, 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 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.

NDSU Agriculture Communication