Modeling Geneva charitable deductions: regular giving and future trends

Area of Science:

• Economics
• Public Finance
• Philanthropy Studies

Background:

• Tax incentives are a common policy tool to encourage charitable giving.
• Understanding donor behavior and the impact of tax policies is crucial for effective philanthropy.
• Switzerland's tax system offers deductions for charitable donations, but their impact on donor behavior requires detailed analysis.

Purpose of the Study:

• To conduct the first large-scale analysis of tax incentives for charitable giving in Switzerland.
• To examine the relationship between income tax deductions, donation frequency, and donor characteristics.
• To forecast future trends in charitable deductions and donor populations.

Main Methods:

• Utilized unique panel data from Geneva taxpayers (2001-2011).
• Employed statistical forecasting models, including time-series analysis.
• Validated forecasts with cumulative data from Geneva authorities and employed linear regression.

Main Results:

• 71% of donors made multiple deductions, indicating a core group of regular givers.
• Regular donors' giving increased over time and was not significantly limited by tax deduction ceilings.
• Wealth was identified as a significant predictor of donation frequency.
• Forecasts predicted total charitable deductions reaching CHF135 million and the donor population growing to 72,349 by 2022.

Conclusions:

• Tax incentives can foster consistent charitable giving, particularly among regular donors.
• Wealth significantly influences the frequency of charitable donations.
• Policy recommendations are suggested to optimize tax incentives for enhanced charitable giving in line with legislative reforms.