DoNation

Which Americans give most to charity?

The small-scale philanthropy that unfolds every day in nearly all American communities—from Alaskan bush villages to Manhattan’s Central Park—will be sketched for you, in a kind of tour across America, in the cover story in this issue of Philanthropy. At first glance this modest, unsplashy, omnipresent giving may seem mundane. Yet such micro-philanthropy leaves deep imprints in almost every corner of American life, due to its sheer density and the intimate ways in which it is delivered.

The fireworks show that delighted your town this week. The children’s hospital where the burned girl from down the street was saved. The Rotary scholarship that allowed you to become dear friends with a visiting Indonesian graduate student. The church-organized handyman service that keeps your elderly mother in her home. The park that adds so much to your family life. These gifts, many of them products of small offerings from thousands of everyday residents, accumulate in powerful ways to make our daily existences safer, sweeter, and more interesting.

It is easy to think of philanthropy as something done by the very wealthy, or big foundations, or prosperous companies. Actually, of the more than $300 billion that Americans give to charity every year, only 15 percent comes from foundation grants. Just 6 percent comes from corporations. The rest comes from individuals.

And among individual givers in the U.S., while the wealthy do their part (as you’ll see later in this article), the vast predominance of offerings comes from average citizens of moderate income. Between 70 and 90 percent of all U.S. households donate to charity in a given year, and the typical household’s annual gifts add up to between two and three thousand dollars.

This is different from the patterns in any other country. Per capita, Americans voluntarily donate something like seven times as much as continental Europeans. Even our kissing cousins the Canadians, whose culture resembles ours in so many other ways, give to charity at substantially lower rates, and at half the total volume of an American household.

There are many reasons for this American distinction. Foremost is the fact that ours is the most religious nation in the industrial world. Religion motivates giving more than any other factor. A second explanation is our deep-rooted tradition of mutual aid, which has impressed observers like Tocqueville since our founding days. Third is the potent entrepreneurial impulse in the U.S., which generates overflowing wealth that can be shared, while simultaneously encouraging a “bootstrap” ethic that says we should help our neighbors pull themselves up (partly because, in our freewheeling economy, we could be the ones who need help next time).

You will see all of these fascinating—and heartening—quirks of American generosity illustrated in the state-by-state tour that fills the middle of this magazine. But before you begin that anecdotal road trip, we thought you might like to have a few hard facts in front of you. What exactly do we know about who gives in America, and what motivates them? Dissecting who is generous and who is not can be controversial, and not all of the research agrees. But in our country giving is a vital cultural phenomenon that needs to be understood.

So we have methodically waded through heaps of studies and drawn out for you the clearest findings. You’re about to learn what today’s best social science has to say about the geography, demography, and economics of generosity and giving. Some of it will surprise you.

How U.S. regions vary

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There have been several attempts to compare the charitable giving of different U.S. states and regions. The most straightforward measures match the itemized charitable donations of local taxpayers to their incomes (both pulled from official IRS figures). The Fraser Institute and the Catalogue for Philanthropy have each used variations of this method to reveal what fraction of their annual resources residents are giving away to philanthropic causes, versus consuming or saving for themselves.

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These “giving ratios” reveal a consistent pattern. Measured by how much they share out of what they have available, the most generous Americans are not generally those in high-income, urban, liberal states like California or Massachusetts. Rather, people living in areas that are more rural, conservative, religious, and moderate in income are our most generous givers.

This same pattern is seen in data very different from the IRS returns. The Panel Study of Income Dynamics is a high-quality micro study of several thousand U.S. households that are representative of the national population, and whose characteristics have been tracked in detail by researchers over a period of years. When income and charitable giving are compared among this carefully documented group, the willingness to “give until it hurts” can be seen to vary sharply by locale.

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In the PSID statistics, the top regions for donations as a percent of income are the Mountain West, the East South Central states (Tennessee, Alabama, Mississippi, Kentucky), the West North Central states (South Dakota, North Dakota, Iowa, Kansas, Minnesota, Missouri, Nebraska), and the West South Central states (Arkansas, Texas, Oklahoma, Louisiana). The least giving region was New England, closely trailed by the Middle Atlantic states (New Jersey, Pennsylvania, New York). The variations are not trivial: the top group of Utah, Idaho, Wyoming, Arizona, Colorado, Montana, Nevada, and New Mexico were more than twice as generous as the residents of New England or the Mid-Atlantic region.

Major study released in 2012

A third take on this topic was assembled in 2012 by the Chronicle of Philanthropy. Its study “How America Gives” analyzed IRS income and giving data right down to the level of each individual ZIP code in the U.S. The researchers incorporated extensive manipulations of the numbers in response to some New England foundations and academics who had complained that earlier studies using the straight IRS data made high-income states look bad because they do not take into account the elevated living costs in predominantly urban states. The Chronicle study thus began with the latest (2008) IRS returns, but then subtracted estimates of the local costs of housing, food, health care, child care, clothing, and household supplies, plus all taxes paid, before comparing “living-cost adjusted” income levels to charitable donations.

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The results? Not much different from the portraits above. Using four large regional groupings, “How America Gives” reported that southerners are America’s most sacrificial givers, while northeasterners are substantially less generous.

The chart below shows the top and bottom ten states for giving, using the Chronicle technique of first factoring out living costs and taxes.

Once again, the biggest givers are found to be concentrated in “Bible belt” states in the south or where Mormons make up a large portion of the population. On the other hand, scant-giving households are heavily concentrated in relatively wealthy New England.

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This effect holds up not only across states but also in major cities. For instance, denizens of Salt Lake City, Birmingham, Memphis, Nashville, and Atlanta donate from 6 to 9 percent of their discretionary income to charity, while counterparts in Boston and Providence average 2.8 percent. Silicon Valley is legendary for its wealth, yet lags badly in charity—even after making allowances for the area’s heavy housing costs and taxes, the Chronicle data show San Jose and San Francisco falling near the bottom of our 50 biggest cities, giving just 3.5 percent and 3.9 percent, respectively, of “discretionary” income.

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There are about the same number of people in urban, high-education San Francisco County as there are in the rural, religious state of South Dakota, economist Arthur Brooks once noted. And families in these two regions give almost exactly the same amount to charity every year. Yet because the average family income is about $45,000 in South Dakota compared to $81,000 in San Francisco, the typical South Dakota household is actually giving away 75 percent more of its income every year than a San Fran counterpart.

Struggling to explain New England’s lag

A few years ago, some Bostonians chagrined by these findings created a study which tried to further “rebalance” the national statistics, which they felt did not fully reflect the willingness to give in their region. They used their own methods for adjusting income downward to compensate for high taxes and living costs, and they created estimates of additional giving by persons who don’t itemize their contributions on their taxes. Their results are quite different from all other measures.

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In this more synthetic data, evidence of scant giving in New England remains, but the top and bottom groups are otherwise much more jumbled and difficult to see patterns in.

The Boston data have not been widely embraced, for a variety of reasons. According to Giving USA, about 80 percent of all charitable dollars are captured in the itemized giving data from the IRS (which provide the backbone for the “Generosity Index” and “How America Gives” studies cited earlier). Moreover, the lower-income householders who don’t itemize on their taxes yet give at substantial levels include many “lower-income religious conservatives—who donate at extremely high rates,” notes economist Brooks (more on this later). These factors leave many observers skeptical of statistical manipulations that reorder the clear trends seen in the IRS data—which are hard measures, not extrapolations or statistical models like the Boston numbers.

One intriguing pattern that emerges from the Boston data is a class stratification in New England when it comes to charitable giving. Among people making $100,000 or more in 2003, New Englanders were actually more generous than the national average. Yet among people in the middle-income band ($25,000 to $99,999), New Englanders fell below the national average in giving. And among the low-income (less than $25,000 of annual income in 2003), New Englanders were notoriously skin-flinty, giving at less than half the national average for that income group. This may reflect the region’s lower level of religious belief, a factor which, as we’ll see, dramatically lifts giving, even among the comparatively poor.

Red state versus blue state

A strong pattern that makes some commentators uneasy is the fact that, as Brooks put it, “the electoral map and the charity map are remarkably similar.” Or to quote the Chronicle of Philanthropy’s 2012 summary of its giving research, “the eight states that ranked highest voted for John McCain in the last presidential contest...while the seven lowest-ranking states supported Barack Obama.”

In addition to this political tinge, there are many other fascinating demographic and cultural patterns in the national giving statistics. For instance, the PSID survey shows that while New Englanders rank dead last in percentage of income donated to charity, their participation rate (fraction of the population who give something) is actually higher than in any other region. New Englanders reflect, and indeed may lead, the extraordinary American propensity to donate to others. They just don’t give as much as residents of other regions.

Some other results emerging from statistical regression of the PSID data: All other things being equal, the self-employed give less to charity. So do people who have moved residences more than the norm. Residents of rural areas and small towns, on the other hand, donate at higher levels.

The demographic factor most likely to increase giving to charitable causes is marriage. Compared to the unmarried, married households were 62 percent more giving in 2011. This was after all other factors like income, race, region, etc. were statistically adjusted for, using base data from the government’s Consumer Expenditure Survey.

Surprisingly, people who volunteer at secular organizations are a bit undergiving, in regressions of the PSID statistics. Meanwhile, persons who volunteer at religious organizations are dramatically bigger donors of money.

Religious practice is the behavioral variable most consistently associated with generous giving. Charitable effort correlates with the frequency with which a person attends religious services. Evangelical Protestants and Mormons in particular are strong givers. Compared to Protestant affiliation, both Catholic affiliation and Jewish affiliation reduce the scope of average giving, when other influences are held constant.

Finer-grain numbers from the PSID show that the faithful don’t just give to religious causes; they are also much more likely to give to secular causes than the non-religious. Among Americans who report that they “never” attend religious services, less than half give any money at all to secular causes. People who attend services 27-52 times per year, though, give money to secular charities in two-thirds of all cases.

Sociologist Robert Putnam has chronicled the many pro-social and philanthropic overflow effects of religious practice. Not only is half of all American personal philanthropy and half of all volunteering religious in character, but nearly half of all associational membership in the U.S. is church-related. Religious practice links us in webs of mutual knowledge and support like no other influence.

Indeed, faith is as important as basic financial success in increasing giving. And religious conviction is often what separates one sub-group from another when it comes to charitable practice. For instance, African Americans, who are generally more religious than whites, are 18 percent bigger givers when households of the same income, region, education, and so forth are compared.

Giving by income level

The curve charting charitable generosity by income takes on an unexpected U-shape largely thanks to the faith factor described above. People with means, as you might expect, are substantial givers. Middle-class Americans donate a little less. But the lower-income population surprises by giving more than the middle—and in some measures even more than the top. (As a percentage of available income, that is. In absolute dollars, those in higher income groups give much more.)

The graph below combines results from six different studies of how giving varies as income changes. Each study uses somewhat different definitions of income, different universes of households, measured in different years, so they are not strictly comparable, but I have made some basic standardizations and converted results to present-day dollars so readers can observe the general trend uncovered by each of these analyses: If you measure charitable donations as a fraction of the donor’s income, giving is most robust at the top and bottom of the earnings spectrum.2013_Summer_Zinsmeister_Photo9

People are generally more philanthropic toward the end of their lives, when they tend to have more savings, time, and motivation to help others. (Giving peaks at ages 61-75, when 77 percent of households donate, compared to just over 60 percent among those headed by someone 26-45 years old.) Some of the low-income givers charted above are undoubtedly retirees who, while their annual incomes are modest, have accumulated wealth that allows them to be generous donors.

The other factor accounting for the high level of donations among low-income Americans is that a significant minority of them are religious tithers who powerfully push up the group average through sacrificial giving. If you look at what fraction of each group gives, various studies show that the rate of donation among low-income persons is actually half or less of what it is for the rest of the population. Only about a third of low-income individuals give any money at all in a year. But those who are givers tend to be extremely generous, with a third or half of them giving at least 5 percent of their income. These sacrificial givers motivated heavily by religion are found much more among what might be called the working class (households making $25,000-$45,000 in current dollars) than among the truly poor.

The 1 percent

High-income households provide an outsized share of all philanthropic giving. Those in the top 1 percent of the income distribution (any family making $380,000 or more in 2012) provide about a third of all charitable dollars given in the U.S. When it comes to bequests, the rich are even more important: the wealthiest 1.4 percent of Americans are responsible for 86 percent of the charitable donations made at death, according to one study.

At the top of the income spectrum, charitable giving bumps upward both in dollars and as a fraction of income. The fullest study of wealthy donors is done every two years by the Lilly Family School of Philanthropy at Indiana University. The adjoining chart averages findings from three of its recent reports.

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The very wealthy, this shows, give away a much larger chunk of their earnings than others. Note, however, that their robust rates of giving are elevated by the extreme generosity of a subset of the rich. While donations to charity are almost universal among wealthy households (more than 97 percent make some annual gift, according to the Indiana data), many of those gifts are comparatively modest. Others are extraordinarily copious—and these push up the donation average.

If instead of the average percentage of income given away by wealthy households, we look at the median percentage (meaning that half gave more than this amount, and half gave less), the wealthy appear less magnanimous. From 2007-2011, the median wealthy household (having annual income of $200,000+ or assets of $1 million+) gave away 3.4 percent of its income.

Interestingly, when rich people live in separate enclaves they are not as generous as when they live interspersed in normal communities. The “How America Gives” study showed that when households earning $200,000 a year make up more than 40 percent of the residents of a particular ZIP code, they give just 2.8 percent of their discretionary income to charity. If they live in more mixed neighborhoods and towns, though, they give an average of closer to 5 percent.

Physical separation and economic stratification corrode social cooperation and generosity. In towns, villages, and cities where Americans of differing fortunes live in more traditional combinations, though, generosity flourishes. And for many Americans, the resulting generosity seems to be deeply connected to satisfaction in life.

“Making a lot of money and spending it on yourself is not a lot of fun,” successful oil businessman Jim Calaway told the Chronicle of Philanthropy last year. “What is a lot of fun is to live modestly so that you can give to the common good. That’s where happiness really lies.”

Karl Zinsmeister is a vice president at The Philanthropy Roundtable, and is creating the forthcoming Almanac of American Philanthropy.