In Giving are Self-made Millionaires or America’s Poor More Generous?

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June 26, 2013; Forbes

Howard Husock, a contributor to Forbes.com and the director of the Social Entrepreneurship Initiative at the Manhattan Institute for Policy Research, recently posted data about the charitable giving habits of the 400 wealthiest individuals in the United States. He argues these individuals are extraordinarily generous when you look not at the percentage of their wealth, but at the total dollars given. For example, combined, the wealthiest 400 individuals pledged $328.7 million, significantly more than what he identifies as the total $300 million in charitable contributions made by Americans in a typical year. He further demonstrates that the self-made billionaires are more generous (donating approximately 6 percent of their riches) than their peers who came by wealth through inheritance, who typically donate 3.7 percent of their net worth.

As further proof of their generosity, many of the Forbes 400 have signed Bill Gates and Warren Buffet’s Giving Pledge to donate at least half of their wealth before they die or shortly after. The list boasts the likes of Mark Zuckerberg (Facebook), Jeff Skoll (eBay), David Rockefeller, and Joan and Irwin Jacobs (Qualcomm).

Husock, sharing research completed by his colleague Claire Rogers, identified the 786 causes that received funds donated by the wealthy of the Forbes 400. This information was broken down into the various subsectors. Out of 786 causes identified, approximately 27 percent were higher education and another 27 percent arts, cultural, and other institutions (including museums, historical preservation, and non-health scientific research). Only 6 percent provided basic needs, 5 percent worked with youth/family services, and 5 percent were engaged in environmental and/or animal concerns. Even fewer gifts went to international or religious organizations. (To be clear, these represent numbers of causes, not percentages of funds given. It would be good to know the percentage of dollars given to each subsector, but the data doesn’t say.)

Ken Stern argues that Americans at the bottom of the income pyramid give a higher percentage of their income (3.7 percent) than the wealthy overall (1.3 percent). However, only the wealthy itemize. Without the benefit of itemization, those of low income are actually donating 100 percent of every dollar they hand over—unlike the wealthy, who receive a percentage back at tax season. Stern argues this distinction increases the relative generosity of the low-income.

Why are the poor so generous? It is possible, and many have argued, that living through challenges encourages empathy. Empathy lends itself easily to philanthropy. Some suggest this affects how we give. The wealthy often give to higher education (their alma mater, perhaps?), and nonprofits in the arts, cultural, and humanities subsector. The poor on the other hand are more likely to give to religious organizations or to human service nonprofits, also known as poverty-fighting charities.

Regardless, it is important to recognize that the number of charitable dollars donated in the United States doesn’t fluctuate significantly. Indiana University’s Giving USA study indicates that philanthropy hovers between 2 and 2.2 percent of the country’s GDP. As generous as we would like to believe we are, there seems to be a limit. The question is, with that money, that 2 percent of GDP, how “charitable” do we want to be?—Jennifer Amanda Jones

  • Ann

    Poor households that give high percentages of their income to charities tend to be high-net-worth poor. That is, they are living on assets, not income alone. For example, retirees may fall into this category or a household with one parent taking temporary leave that causes the household income to fall temporarily. Also, the standard deduction includes an estimate for charitable giving. Allowing those who do not itemize to claim charitable gifts separately would double count their charitable gifts on their tax returns. Non-itemizers are assumed to be giving to charity, and that presumed amount is part of the standard deduction. Plus, if the household contributes enough, that alone will put it into the itemizing category. If a low-income tax return is itemized, it is likely that there are assets as well as income supporting the household. This “poor giving more than the rich” story appears in cycles in the news. In fact, generosity is evenly distributed along the income spectrum. Those with wealth *and* income tend to give more than those living on income alone, whether they are high- or low-income. Income is a poor measure of affluence. And giving as a percentage of income is therefore a poor measure of generosity.

  • Catherine A. Peila

    I come from a mid-to high income family and learned to give of both my time and money. As an arts administrator and artist in NYC by most standards my income is high but for New York to live here with little luxury, I reflect something close to minimum wages in other cities; I am poor and the poorer or closer to poverty I get the more I seem to give. Empathy is most definitely learned through distress and challenge.

    I run Dance New Amsterdam and the organization is challenged financially and it has pushed me to give more regularly and widespread. I donate monthly to artist kickstarters, purchase young fashion designers clothes when possible, buy local, support local galleries, help the poor sod who needs food on the street – even if they are drunk, give if a person is performing on the streets, give to arts organizations, drop cat/dog food off at the local animal shelter, etc… and it seems I can’t stop giving.

    It’s hell in NYC and if we can’t give both in time and money modern society will well – it s already changing and looking like it did when the flood of immigrants came to New York – up to 6 people live in a 3 bedroom apartment – couples in their 40’s and older, 4-8 young college students to an apartment, sharing bunk beds – must live in NYC! we’re back to fancy tenement building living…just sayin’ and now they want to create mini apartments so we can pay only $1200 for that…not so good for anyone’s mental, spiritual or physical health…

    should everyone have a moment they are starving…and someone generously helps them? it’s a relief when help is offered.

  • Diana

    Who’s kidding who?? Seriously??? There is a lot of talk about charities and all the help they do. Where?? In countries out side the USA. Last month my daughter ,her husband and their 3 children lost their home to arson!!! They did not have insurance sadly. But you would think that they could get some kind of help from Habitat For Humanity, That’s what you would think right , well no and their reason is because you do not live in the right county, not right country but not the right county. Ain’t that a kick in the face!!!!!! Please don’t get me wrong helping unfortunate countries with food ,housing, and water is great but I think we need to help our own first. I have looked for over a month trying to find some help for my daughter but there is NOTHING . Thank God for the Red Cross. These are just my thoughts and personal experiences.

  • just me

    try asking for donations from people for help… maybe that will help. but also make it worth there while by offering a honest heartfelt jester or deed.

  • Ellis Rucker jr

    hello.is there anyone out there that can tell me .who I can contact for help paying for my dental work.