The stock market has risen 5% year to date, and that helps drive philanthropic giving more than fears over ending the charitable deduction discourage it, a U.S. Trust wealth strategies advisor told AdvisorOne.
With a slew of tax law changes taking effect in the new year, and lingering questions about ending tax expenditures like the charitable deduction as Washington comes to grips with its fiscal difficulties, many discussions about philanthropy focus on the tax angle.
But U.S. Trust managing director Ramsay Slugg (below right) says tax matters are subordinate to the performance of stocks and the health of the overall economy.
"Charitable giving is not as tax-motivated as we conventionally think it is," Slugg says. "We know that 65% of Americans give to charity each year, which is a lot more people than pay taxes or itemize deductions.
"Of people who make a half-million dollars on average or above, 95% of that group give to charity each year," he continued. "Not all of them take itemized deductions or pay taxes.
"For people who don't itemize, they don't get any tax benefit for giving. Even for people who do itemize, it makes it a little cheaper, but you don't come out with more money in the end.
"People give because they're charitable first," Slugg says. 
The motivation for giving has policy implications, of course, but it also may serve as a signal of investor sentiment about the economy.
Slugg cites a biannual survey that Bank of America (owner of U.S. Trust) conducts with Indiana University's Center on Philanthropy. The 2012 survey, released in November, suggested bullishness about the economy, since 76% of high-net-worth investors intended to maintain or increase their charitable giving through 2016.
"These [high-net-worth] people drive charitable giving. They feel bullish about the economy overall," Slugg says.
Just under a third of the 700 wealthy donors surveyed viewed the favorable tax treatment of donations as a primary motivator for giving, and 50% said they would maintain or increase their donations if tax deductions were eliminated.
While the U.S. Trust executive sees the stock market and economy as having more impact than taxes on high-net-worth giving, he says increased taxes — not the tax deduction — have a large impact on middle-class donors.
Slugg says the restoration of the Social Security payroll tax, which is now taking 6.2% of workers' paychecks, up two percentage points from last year, will likely have a negative impact on charities.
