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Altruism refers to doing good without an expectation of rewards, because doing good makes sense. However, economists have studied motivations behind altruistic giving and found that selfish implicit factors might influence people who claim to donate out of altruism.

Various studies have found that social concerns tend to be at the root of altruistic donations, when controlling for social distance (Bohnet and Frey, 1999) or communications among donors (Andreoni & Rao, 2011; Xiao & Houser, 2005). Andreoni and Bernheim (2009) argue that some claim they donate for altruistic reasons while seeking to be perceived as generous, thus trying to cultivate their social image. Some economists argue that altruistic contributions tend to decrease when people become aware of the existence of other contributions that are designated to social concerns that they would financially support (Kingma, 1989). However, subsequent studies found no objective evidence of that occurrence (Kropf & Knack, 2003; Marcuello & Salas, 2001).


Some people donate because of their social, cultural, political, religious, or family values (Bennett & Savani, 2003). For example, for some people, charitable giving is doing God's will. Their donation is a spiritual devotion. For others, donation to charitable organizations is their way to give back to the community that contributed directly or indirectly to their success (Weerts & Ronca, 2007). For others, donation may be part of a family tradition. Some studies found that some individuals are motivated to donate because they want to contribute to make the world a better place to live (Schuyt, Smit, & Bekkers, 2004).

Tax Deductibility

As Box 12.1 illustrates, charitable donations are tax deductible. This encourages people to donate to nonprofit organizations to claim their tax deductions.

Box 12.1 Deductibility of Charitable Contributions

You may deduct a charitable contribution made to, or for the use of, any of the following organizations that otherwise are qualified under section 170(c) of the Internal Revenue Code:

1. A state or U.S. possession (or political subdivision thereof), or the United States or the District of Columbia, if made exclusively for public purposes

2. A community chest, corporation, trust, fund, or foundation, organized or created in the United States or its possessions, or under the laws of the United States, any state, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals

3. A church, synagogue, or other religious organization

4. A war veterans' organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions

5. A nonprofit volunteer fire company

6. A civil defense organization created under federal, state, or local law (this includes unreimbursed expenses of civil defense volunteers that are directly connected with and solely attributable to their volunteer services)

7. A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes

8. A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt


Contributions must actually be paid in cash or other property before the close of your tax year to be deductible, whether you use the cash or accrual method.


If you donate property other than cash to a qualified organization, you may generally deduct the fair market value of the property. If the property has appreciated in value, however, some adjustments may have to be made.

The rules relating to how to determine fair market value are discussed in Publication 561, Determining the Value of Donated Property.


In general, contributions to charitable organizations may be deducted up to 50% of adjusted gross income computed without regard to net operating loss carrybacks. Contributions to certain private foundations, veterans organizations, fraternal societies, and cemetery organizations are limited to 30% of adjusted gross income (computed without regard to net operating loss carrybacks), however. Exempt Organizations Select Check uses deductibility status codes to indicate these limitations.

The 50% limitation applies to (1) all public charities (code PC), (2) all private operating foundations (code POF), (3) certain private foundations that distribute the contributions they receive to public charities and private operating foundations within 21/2 months following the year of receipt, and (4) certain private foundations the contributions to which are pooled in a common fund and the income and corpus of which are paid to public charities.

The 30% limitation applies to private foundations (code PF), other than those previously mentioned that qualify for a 50% limitation, and to other organizations described in section 170(c) that do not qualify for the 50% limitation, such as domestic fraternal societies (code LODGE).

A special limitation applies to certain gifts of long-term capital gain property. A discussion of that special limitation may be found in Publication 526, Income Tax Deduction for Contributions.


The organizations listed in this publication with foreign addresses are generally not foreign organizations but are domestically formed organizations carrying on activities in foreign countries. These organizations are treated the same as any other domestic organization with regard to deductibility limitations.

Certain organizations with Canadian addresses listed may be foreign organizations to which contributions are deductible only because of a tax treaty. For these organizations, in addition to the limitations on the amount of the deduction allowed by section 170 of the Code, the deduction may not exceed the amount allowed as a deduction under Canadian law computed as though the taxable income (in the case of a corporation) or adjusted gross income (in the case of an individual) from sources in Canada is the aggregate income. A deduction for a contribution to a Canadian organization listed in this publication is unallowable if the contributor reports no taxable income from Canadian sources on the U.S. income tax return.

Except as indicated above, contributions to a foreign organization are not deductible.


Revenue Procedure 2011-33, 2011-25 I.R.B. 887 describes the extent to which grantors and contributors may rely on the listing of an organization in electronic Publication 78 and the 1RS Business Master File extract in determining the deductibility of contributions to such an organization. Grantors and contributors may continue to rely on the Publication 78 data contained in Exempt Organizations Select Check to the same extent provided for in Revenue Procedure 2011-33.

Similar reliance provisions apply to an organization's foundation classification as it appears in the list. See also Revenue Procedure 89-23.

Source: Internal Revenue Service (2013).

Corporate Social Responsibility

Some businesses donate because doing "good" is good business within the spirit of corporate social responsibility. The term "corporate social responsibility" refers to the good will of corporations to conduct business in a manner that is consistent with the law and ethical standards, and to contribute to social good in communities where they do business. According to the Committee Encouraging Corporate Philanthropy (Phillips, 2013), total corporate donations have increased from $3.67 billion 30 years ago to more than $18 billion in 2012. Some employers or corporations encourage their employees to donate and they match their contributions. However, Stern (2013) argues that on a dollar-for-dollar basis, companies donate less than they used to when adjusting for inflation.


Stewardship is a significant driver of charitable donations. Some people like to donate to organizations that will be good stewards of their money. They want to make donations that contribute to reverse negative social outcomes in their communities (Duncan, 2004; Smith & McSweeney, 2007). People who condition their donation with stewardship like to have evidence that their contributions will be used for a designated purpose. These are the types of donors who will attempt to hold leaders and managers of nonprofit organizations accountable in relation to fund-raising or contributions received. Usually, such contributors donate based on their level of trust in the efficiency and effectiveness of a nonprofit organization. Various surveys have found that donors do not like their contributions to be spent on fund-raising strategies, but on program expenditures (Bennett & Savani, 2003; Sargent & Woodliffe, 2007). The willingness of such donors to contribute increases with their trust in the leadership and management of a nonprofit organization (Sargeant & Lee, 2004). Some people are not sold on the message, or the vision and mission of a nonprofit organization, but on the extent to which the organization is efficient, effective, accountable, and shows evidence of good stewardship of its resources.


Some people donate because someone asked for a contribution. Solicitation to these people can take various forms, such as a personal request, fund-raising letter, or e-mail. Individuals who are sensitive to solicitation tend to act relatively quickly on nonprofit organizations requests (Bekkers, 2010). The advantage of solicitation has unflattering implications as well. Given the efficacy of personal solicitation, potential donors may receive more requests than necessary, and may have no other choice than to turn some of them down. Therefore, solicitation may be effective for some nonprofit organizations, and not so effective for others.

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