Wealthy Donating Smaller Share of Income to Charity, Study Finds

In the wake of the Great Recession, the wealthiest Americans are giving less of their income to charity, while poor and middle-income households are giving more, a study by the Chronicle of Philanthropy finds.

Based on an analysis of IRS data on the 30 percent of taxpayers who itemize their deductions — a group that accounts for 80 percent of all individual donations — the study found that households earning at least $200,000 a year donated 4.5 percent less to charity as a share of adjusted gross income in 2012 than they did in 2006, even as total donations by the group increased $4.6 billion, to $77.5 billion. In contrast, those earning less than $100,000 donated 4.5 percent more of their income in 2012 than before the Great Recession — and as much as 16.6 percent more among those earning less than $25,000 — for a total of $57.3 billion.

The report also ranks states by giving rate, which it calculates as the share of income residents give to charity. As in previous studies, Utah topped the list while New Hampshire was at the bottom. Nevada had the fastest-growing rate of giving, up nearly 13 percent between 2006 and 2012, with the rate in Las Vegas up 14.9 percent. And North Dakota experienced the largest decline in giving rate, down nearly 16 percent even as an oil boom has led to an influx of job seekers who lack housing and other essentials, driving up demand for services.

Among the fifty largest metropolitan areas, thirty-six saw the share of income given to charity decline since 2006, with drops of more than 10 percent in Buffalo and Philadelphia — and more than 9 percent in Los Angeles, Minneapolis-St. Paul, and Washington, D.C. Salt Lake City had the highest giving rate — in part due to the Mormon practice of tithing — followed by Memphis, Birmingham, Atlanta, Nashville, and Jacksonville, where nonprofit leaders told the Chronicle that while religious donations continue to propel high rates of giving, fundraising campaigns for education and other non-religious causes have increased support. In Jacksonville, the share of income given to charity increased more than 8.8 percent between 2006 and 2012 — second only to Las Vegas — primarily due to a high-profile effort to improve local public schools that brought in $40 million in donations.

Boosting donations from affluent families to human services organizations remains a challenge, however, the Chronicle reports. The United Way of Northern New Jersey, for example, raised $14.5 million in 2013, compared with $25 million in 2000. John Franklin, the organization's CEO, has found that donors are willing to give more when presented with data that highlight the difficulties the working poor face than a campaign focused on extreme poverty.

It's harder for wealthy donors to see progress in human services than it is when giving to an opera or a school, Franklin told the Chronicle, but "[w]hen you tell them that [the beneficiaries] are working people who are paying taxes, who are your children coming out of college, and they’re the people fixing your car, all of a sudden people realize that these are people they know, who are part of the social fabric. There's more sympathy for them."

Alex Daniels, Anu Narayanswamy. "The Income-Inequality Divide Hits Generosity." Chronicle of Philanthropy 10/05/2014.