Over the past 20-odd years, popular reports on giving have celebrated the generosity of the poor while criticizing those at the opposite end of the wealth spectrum. By these accounts, A Christmas Carol’s Scrooge, it would appear, is alive and well on the American landscape.
The studies come from a number of sources, but each shares a common method and conclusion. They calculate charitable giving as a percent of household income, which usually shows that households making less that $20,000 a year give, on average, a larger percentage of their income to charity than households whose combined incomes are between $100,000 and $140,000 per year.
There is a raging debate, however, about what this statistic really means, and about the value of the methods used to obtain it. Here are several of the disputed questions:
Who Counts? Independent Sector has done many of these studies, and their results are most often cited by news media. Interestingly, Independent Sector surveys emphasize differences among households that make charitable contributions. Boston College professor Paul Schervish has challenged this approach, arguing that all members of an income bracket, including those who contribute nothing to charity, should be counted. This method of counting donations reveals that low-income households not only give less frequently, but in smaller average percentages than households with higher incomes. This fact has since been substantiated by a number of other groups.
Where Do Contributions Go? Another interesting twist appears when one breaks out where contributions are going. More of the poor give exclusively to religious causes, presumably their churches, than those who are better off. By the time one reaches the $100,000 income bracket, the percentage of those giving exclusively to religious causes is virtually nil. Looking at donations by charitable cause also illustrates the critical role of high-income households in the support of non-religious giving—that is, to those organizations that promote education, health, human services, arts, culture, and the environment.
Whom Do the Studies Benefit? The “giving as a percentage of household income” statistic interests sociologists. Fundraisers, economists, and charitable organizations are more interested in the number of actual dollars given. Schervish reminds Philanthropy that almost half of all charitable dollars come from households whose income puts them in the wealthiest 5 percent of the nation.
What About High-income Households? NewTithing, a San Francisco nonprofit whose mission is to boost charitable giving, is one of the few groups to study high-income households—homes with incomes in excess of $200,000. Their findings support Schervish’s conclusion that, as a group, the wealthy give more dollars and a greater proportion of their income than the nonwealthy. In addition, NewTithing finds that the very rich give very much more to charity. Households whose income exceeds $10 million a year, for example, give in excess of 7 percent of their income to charity, compared with households with incomes of $100,000 to $200,000, who give on average only 2.5 percent to charity.
Yuppies vs. Entrepreneurs Among high-income givers, NewTithing found that those households earning between $200,000 and $500,000 are the least generous, giving just 2.7 percent of their income to charity, on average. Observers speculate that households in this relatively ungenerous group are often two-income professionals, whereas the highest-income earners, who give the most, are more likely to be entrepreneurs.
Measuring generosity, in short, is no simple matter. No one suggests we should do away with our copies of Dickens, but it’s time to recognize that Scrooge’s heart may be considerably larger than previously thought.
A note on sources
Chart 1 comes from research originally compiled by Paul Schervish of the Center on Wealth and Philanthropy at Boston College in the 1990s. The data are calculated from the 1990 Survey of Giving and Volunteering in the United States, collected by the Gallup Organization for the Independent Sector. Professor Schervish has found the same pattern in the data for more recent years.
The source of Chart 2 is NewTithing, a nonprofit research group. Data are calculated from IRS statistics for the tax year 2001, the most recent available. Charitable bequests are not included, but the data do include estimates of giving both by filers who itemized their charitable gifts and by those who made gifts but did not itemize them on their tax returns.
Peter Feldman was an intern at The Philanthropy Roundtable and now works on the staff of a U.S. Senator.