There's still some time to combine donations and deductions

Christmas is, of course, a time for giving. Just as retail stores depend on the holiday season for a major portion of their annual sales and profits, foundations and charities look for a flood of donations now to help see them through next year. But this year, a new tax law and a sudden slump in the stock market have combined to make the fund-raising job more difficult. Fortunately for those who like to combine their donations and deductions, there are still a few days left to take advantage of current tax rates.

``If an individual was considering giving this year or next year, there are more incentives to give this year, because the rate will be going down,'' says James Joseph, president and chief executive officer of the Council on Foundations.

Last year, up to half of every dollar given to charity was deductible. This year, the deduction fell to 38.5 percent, and next year, it will fall again, to 28 percent. So upper-income donors who saved $500 on every $1,000 gift last year saw their savings cut to $385 this year and will have those savings cut again in 1988 to $280. Put another way, the tax deduction on a charitable contribution made now will be 27 percent greater for taxpayers who itemize than it will be after New Year's Day.

But how many people give just because of the deduction? Probably very few, and many of those who do make contributions probably don't qualify for any deduction at all.

About $87.2 billion went to charities, foundations, churches, and nonprofit organizations last year, says John Thomas, vice-president of Independent Sector, the nation's largest coalition of foundations, nonprofits, and corporate donors.

Of that $87 billion, $5.17 billion, or 5.9 percent of the total, came from foundations. Corporations gave $4.5 billion, or 5.2 percent, and bequests and wills accounted for $5.8 billion, or 6.7 percent.

All the rest, some $71.7 billion, or 82.2 percent of all the money donated last year, came from individual, living donors.

``And about half of that came from people whose family incomes were $30,000 or less,'' Mr. Thomas said. Americans are ``incredibly generous,'' he observed.

Still, the stock market's slide has hit the charities hard this year. While a great deal of money comes in around Christmas in coins, small bills, and checks, huge amounts have also usually come from people who donated stock that had appreciated in value or who sold stock at a profit and donated part of those profits to a charity or foundation.

On top of this, changes in the tax laws have altered strategies for some people who gave property, including stocks, bonds, land, buildings, or works of art. Donors in the uppermost income levels may face alternative minimum tax problems if they try to claim a lot of tax deductions and tax preferences.

People in this situation may find they can deduct only the original cost of the property, not the amount of any gain or appreciation. For them, it may work out better to sell the appreciated property and donate some of the profits to the charity.

``The 1986 Tax Reform Act placed disincentives on large gifts,'' says Mr. Joseph at the Council on Foundations. ``Usually when you're talking about gifts of stocks and bonds to community foundations, you're talking about large gifts.

``Most people give for reasons other than tax incentives,'' he adds. ``But for the wealthy, when they seek to determine how much to give, their advisers usually advise them on the basis of tax incentives.''

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