We all know the character Scrooge from the fabled story, A Christmas Carol. I grew up watching his kid-friendly version Scrooge McDuck on the Walt Disney cartoon Ducktails and the less-palatable, animated cousin Montgomery Burns on the Simpsons. Television and movies have a penchant for painting super wealthy people as cold and ungenerous tightwads, who laugh at the misery of others while they swim in their fortunes.
These characterization are hyperbolic but new research into the giving patterns of wealthy Americans seems to confirm the Scrooge McDuck/Montgomery Burns view of wealthy Americans.
According to a new report, the wealthy have cut back their giving over the past few years and as a share of income give less than the poor and middle class in our nation. Other factors also affect giving as well such as church attendance, city/state/region of residency, and philosophy about the role of private charity.
The Chronicle of Philanthropy has examined IRS data filed by Americans who itemize their deductions from 2006 to 2012 and compiled the ranking by state and cities. Americans who earned $200,000 or more reduced the share of their income they gave to charity by 4.6 percent, while those earning less than $100,000 donated 4.5 percent more of their income.
The least generous area of the nation is the northeast, where in major cities like New York, Philadelphia, and Buffalo the percentage of income that residents donated dropped notably.
To find the biggest givers, you have to head west to Utah, which is the most generous state due in large part to the high concentration of Mormons who adhere to the church practice of tithing (giving at least 10 percent of their income to charity). Mormons are not the only people of faith who require tithing. Imagine what giving would look like if all Christians actually tithed.
The Washington Post reports:
According to the report, changes in giving patterns were most pronounced in major cities, where the percentage of income that residents donated dropped markedly between 2006 and 2012. In Philadelphia and Buffalo, New York, the share of income given to charity fell by more than 10 percent; there was a 9 percent drop in Los Angeles, Minneapolis-St. Paul and Washington, D.C.
Tami Phillips of the Midnight Mission, a Los Angeles charity serving homeless people, credited gifts from low- and moderate-income people, for helping sustain its programs during the recession.
“It hits closer to home,” said Phillips. “Any day, they too could become homeless.”
The Chronicle’s editor, Stacy Palmer, noted that wealthy donors, overall, were more oriented toward support of the arts and higher education than lower-income donors, and less oriented toward support of social-service charities.
At the state level, residents of Utah were the nation’s most generous, donating $65.60 to charity for every $1,000 they earned.
Mississippi, Alabama and Tennessee — also with high proportions of loyal churchgoers — were next in the rankings.
At the bottom of the list was New Hampshire, where residents gave $17.40 for every $1,000 they earned. Its neighbors, Maine and Vermont, were the next lowest.
Palmer suggested that the low rankings for northern New England stemmed in part from low rates of church attendance, but also from residents’ ”independent streak” and a tradition of self-reliance.
This report doesn’t give us much insight into the reasoning behind these giving patterns other than that when you’re closer to the problem you’re moved to give to help out.
Turning to why wealthier donors are giving less, do tax burdens play a role? It may be that wealthier Americans have less income to donate because it’s been taxed away compared to those who earn less. If we were to map the tax burdens onto the least generous cities and states, there’s likely some correlation.
It may also be that ultra wealthy Americans give based on their investments more than they do their income. For them, their wealth is tied up in investments and shares in business, so their annual income is smaller and thereby, the share of their giving based on their income might paint a picture of lower giving.
It’s important to remember that Americans are not all Scrooge McDucks. Americans are in fact the wealthiest people on the planet giving away hundreds of billions each year to the causes they care about.
Government has crowded out philanthropy unfortunately, as the public sector has taken over care for the poor in or nation and pushed policies that incentivize people to get into “the system,” but not to get out. We explore this in the newly released book, Lean Together, as well as ideas for government to scale back.