Americans are pretty charitable, and we’re not just talking about the rich. Generally, Americans give away between 3% and 4% of adjusted gross income per year, across all income levels, though giving tends to be a little higher at the lowest end of the income spectrum. Interestingly, isolating giving to just donors, instead of the entire population, totals are about one percentage point higher. So in the population of “donors only”, at the $100,000 income level, donations run about $4200. For all taxpayers at that level, donations are around $3700. Further, amounts given as a percent of adjusted gross income have remained very stable over the years.
Keep in mind that if you stray much higher than these figures, or outside the realm of any ‘norms’ tax-wise, you essentially flag yourself as an audit candidate. That’s not a reason to be stingy, but it is a reason to keep meticulous records if you have large charitable contributions.
What if you are asset-rich but don’t have much income? Maybe you own real estate or a large portfolio of lower yielding stocks and municipal bonds that don’t generate a high taxable income. It’s harder to find figures that correspond to how much is normal or even appropriate to give away where assets are high but income is low. However, we found an old study that investigated lifetime giving as a percentage of total wealth, using later-filed estate tax returns. Turns out that people give away about 0.4% to 0.5% of wealth per year, then upon death, charitable giving via estate planning spikes. People clearly have a preference for retaining wealth while alive, even when it cannot be consumed; then being generous at death.
Finally, a note on the new tax bill: the bill hikes the amount of AGI that a person can give away and still deduct to 60% from 50%. It’s hard to imagine giving away that much income, of course.