Tax Burden, Government Spending Don’t Affect Giving, Study Finds

With the apparent exception of employer social security charges, there is no significant correlation between how much people in a country give to charity and levels of taxation and government spending, a study by the UK-based Charities Aid Foundation finds.

The report, Gross Domestic Philanthropy: An International Analysis of GDP, Tax and Giving (16 pages, PDF), analyzed giving data from twenty-four countries and found no correlation with the overall tax burden on people in those countries, top tax rates, average income tax rate, corporate taxes, or government expenditure as a percentage of GDP. According to the analysis — which did not examine the effects of specific tax policies on the treatment of charitable donations — only the level of social security contributions paid by employers correlated negatively with individual giving.

In the countries analyzed, which account for about 75 percent of global GDP and 53 percent of the global population, giving by individuals as a percentage of GDP was highest in the United States (1.44 percent), followed by New Zealand (0.79 percent), Canada (0.77 percent), the United Kingdom (0.54 percent), South Korea (0.5 percent), Singapore (0.39 percent), India (0.37 percent), and the Russian Federation (0.34 percent). In addition, CAF, which produces the annual World Giving Index, found that there were positive correlations between giving and volunteering and helping a stranger. The report's recommendations for increasing giving include ensuring that nonprofit organizations are transparent and regulated in a fair, consistent, and open manner.

"This suggests the relationship between the amount of taxes people pay and the amount they give to charity is not as clear-cut as some may have thought," said CAF international policy manager Adam Pickering. "The factors which motivate people to give, and influence how much they give, are incredibly complex."