The level and diversity of the charitable habits of Americans is truly astounding, and drives the success of so many public efforts—including this one—which work to improve communities and individual lives.
A Nation of Givers
By Arthur C. Brooks From the March/April 2008 Issue
Americans are remarkably charitable. But what sorts of people give the most? And how do we compare with the Europeans?
Q. How much do Americans give? Is the amount we give going up?
A. In 2006, Americans gave about $295 billion to charity. This was up 4.2 percent over 2005 levels, and charitable giving has generally risen faster than the growth of the American economy for more than half a century. Correcting for inflation and population changes, GDP per person in America has risen over the past 50 years by about 150 percent, while charitable giving per person has risen by about 190 percent. That is, the average American family has gotten much richer in real terms over the past half century, and charitable giving has more than kept pace with this trend.
Q. So where do the donations go?
A. A large majority of U.S. citizens donate money each year to houses of worship and charitable organizations. Most estimates place the percentage of American households that make monetary contributions each year at 70 to 80 percent, and the average American household contributes more than $1,000 annually. But it is not the case that American giving goes entirely—or even mostly—to religious institutions. About a third of individual gifts go toward sacramental activities, primarily supporting houses of worship. The rest goes to secular activities, such as education, health, and social welfare.
Q. Are Americans more or less charitable than citizens of other countries?
A. No developed country approaches American giving. For example, in 1995 (the most recent year for which data are available), Americans gave, per capita, three and a half times as much to causes and charities as the French, seven times as much as the Germans, and 14 times as much as the Italians. Similarly, in 1998, Americans were 15 percent more likely to volunteer their time than the Dutch, 21 percent more likely than the Swiss, and 32 percent more likely than the Germans. These differences are not attributable to demographic characteristics such as education, income, age, sex, or marital status. On the contrary, if we look at two people who are identical in all these ways except that one is European and the other American, the probability is still far lower that the European will volunteer than the American.
Q. Do Americans mostly give because our tax system rewards it?
A. The U.S. federal government and state governments make monetary gifts to public charities tax deductible. So if a taxpayer gives $1,000 and pays a tax rate of 35 percent on her last dollar of income, her donation saves her $350 in taxes.
The amount of taxes not paid because of donations is huge: it represents the single largest government “matching grant” program ever. The Internal Revenue Service estimates that in 2002, individuals donated and deducted $142.4 billion in monetary and in-kind gifts. Breaking this figure down by income class and applying 2002 marginal tax rates for these classes, we can estimate that this represents foregone income tax revenues—and hence a government subsidy to nonprofit organizations—of about $37.2 billion.
Still, tax deductibility is actually irrelevant for most people. IRS records show that only about a third of people who file tax returns itemize their deductions—which means that most Americans (particularly middle- and lower-income citizens) don’t even claim the deductions to which they are entitled. Even among households earning over $120,000 per year, only about 40 percent itemize their deductions. Furthermore, research shows that virtually no one is motivated meaningfully to give only because of our tax system.
Q. Monetary giving doesn’t tell us much about total charity, does it? People who don’t give money probably tend to give in other ways instead, right?
A. Wrong. First of all, there is a bright line between people who give and people who don’t give. People who do give time and money tend to give a lot of it. According to the Center on Philanthropy, the percentage of givers donating less than $50 to charity in 2000 was the same as the percentage giving more than $5,000. Similarly, the same percentage of people who only volunteered once volunteered on 36 or more occasions in 2000.
Second, people who give away their time and money to established charities are far more likely than non-givers to act generously in informal ways as well. For example, one nationwide survey from 2002 tells us that monetary donors are nearly three times as likely as non-donors to give money informally to friends and strangers. People who give to charity at least once per year are twice as likely to donate blood as people who don’t give money. They are also significantly more likely to give food or money to a homeless person, or to give up their seat to someone on a bus.
