Charitable giving in America has never been just for rich people. Throughout our history, Americans of all walks of life have voluntarily given their time and money to help others, support cherished private institutions, and solve problems in their communities. Some of the most generous people, proportionate to their income, have been the working poor.
This charitable tradition across income levels has been central to our can-do spirit as a free society. Broad-based private giving has sustained the independence of our churches and synagogues, colleges and universities, and other institutions of civil society. And, as seen most recently in Houston’s response to Hurricane Harvey, neighbor-helping-neighbor assistance has been central to the resilience of countless communities hurt by economic distress and natural disasters.
But the broad-based character of American charity is now in jeopardy. Three recent studies show an alarming decline in the number of givers over the past decade.
Research by the Lilly Family School of Philanthropy at Indiana University found that in 2006, 66 percent of American households gave to charity. In 2014, that number had dropped to just 56 percent. Of special concern is the much lower giving rate among younger people. The giving rate has remained steady in homes where the head of household is 65 or over—73 percent in 2014. But the percentage of givers has plummeted in homes where the head of household is between 41 and 64—from 70 percent to 57 percent. And charitable givers are now a minority where the head of household is 40 or under—as the giving rate has fallen from 52 percent to 38 percent.
A study of IRS data by the Chronicle of Philanthropy found that only 24 percent of taxpayers itemized charitable deductions on their tax returns in 2015. That number is down from over 30 percent just ten years prior.
A National Bureau of Economic Research study by Jonathan Meer, David Miller, and Elisa Wulfsberg of Texas A&M University similarly detected “sharp declines in overall donative behavior,” beginning with the Great Recession, but continuing even as the economy recovered—suggesting that the recession led to a change in attitudes about giving, with possible “serious long-term negative consequences for philanthropic behavior.”
Charitable giving is closely associated with strong families and with religious participation and affiliation. Lilly School research finds that people with religious affiliations give twice as much as those without them, and giving rates are twice as high when heads of household are married as opposed to separated or never married. The decline in marriage and religiosity in recent years has likely had a strong impact on the decline in charitable givers. Charitable giving depends on confidence that one can make a difference, and it is endangered by the sense of hopelessness manifest in the opioid epidemic and rising suicide rates. Similarly, with the increasing popularity of socialism, growing numbers of young people are looking to government for solutions to society’s challenges, rather than to their own power as active citizens.
The decline in givers is likely to be exacerbated by the doubling of the standard deduction in last year’s tax-reform legislation. The Tax Policy Center estimates that 21 million fewer taxpayers will itemize deductions in 2018 compared with last year—from 37 million to 16 million. The overwhelming majority of Americans will be ineligible for the charitable deduction, possibly resulting in even fewer Americans making gifts to charities.
One approach to reverse this trend is the universal charitable deduction, which would allow all taxpayers to claim a charitable deduction regardless of whether they itemize. The Universal Charitable Giving Act of 2017, introduced by Representative Mark Walker (R-North Carolina) and Senator James Lankford (R-Oklahoma), would expand the charitable deduction to all taxpayers. Senators Debbie Stabenow (D-Michigan) and Ron Wyden (D-Oregon) offered an amendment last year along similar lines.
Charitable giving as a whole remains robust. In 2016, the last year for which we have figures, Americans voluntarily gave an amazing $390 billion to charitable causes—2.1 percent of GDP. And if economic growth accelerates, we may even see a boost in overall giving this year. But charitable giving is increasingly driven by the wealthy. The health of smaller, community-based charities that depend on broad-based giving is especially at risk.
We should be looking for ways to encourage more giving by more Americans. To strengthen our character as a self-governing people, it is important not only to unlock additional charitable giving, but to embolden those Americans who have fallen out of the habit of giving to give once again.