Changes in the tax code have wealthy donors making sure they give to their favorite charities before year's end, and experts expect donations will rise compared to previous years.
Charitable giving in December tends to make up about 30 percent of the $300 billion in annual donations. However, financial advisers predict that donations will increase this year, and it could be the biggest donation year since the recession began,
Politico reports.
One of the motivations for the increase in giving is the tax hikes included in the fiscal cliff deal passed last January such as higher tax rates on investment income.
"You have a sort of social, political and taxational push coming together at once at the end of the year with giving," Steve McLaughlin of Blackbaud Idea Lab, a nonprofit advising group told Politico. "People are altruistic, but they're also planning."
Taxpayers will have to pay up to 20 percent on their capital gains, and income tax rates for individuals who earned more than $400,000 and couples that made more than $450,000 in 2013 had a rate increase from 35 percent to 39.6 percent. Both changes make it advisable for them to offset their income with charitable giving.
"Higher capital gains and marginal rates, combined with an investment market that has been red hot for the year," are key motivating factors for taxpayers to increase their giving, said Benjamin Pierce, president of the charitable endowment at Vanguard, the largest mutual fund company in the world.
According to Vanguard, there was a 75 percent increase in giving in the first week of December compared to last year.
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