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Do the Rich Give the Most to Charity?
Jun 7, 2013
How generous are Americans – and who gives most to charitable institutions?
The Chronicle of Philanthropy set out to find out, compiling a comprehensive study “How America Gives” in 2012, examining charitable giving by ZIP code and income level in every city in the United States. The data came from charitable deductions listed on IRS forms of taxpayers earning $50,000 or more who itemized their deductions in 2008.
Some of the results are surprising. While the rich do give the most in dollars, they are not as generous when it comes to the percentage of their income that is donated. Middle-class Americans give a far larger percentage of their income.
Households that earn $50,000 to $75,000 give an average of 7.6 percent of their discretionary income to charity, compared with an average of 4.2 percent for people who make $100,000 or more. Overall, Americans donated 4.7 percent of their discretionary income to charitable causes, giving a total of $135 billion.
Of the top 1,000 ZIP codes that give the biggest percent of their income, only nine are among the nation’s 1,000 richest ZIP codes.
The most generous state in the country by far was Utah, where residents gave an average 10.6 percent of their income. The Mormon Church has a tradition of tithing 10 percent of their income to the church, but the state also led in the percentage of the population who volunteered their time to charities (45 percent).
The top 10 states for charitable giving were located heavily in the South.
- Utah (10.6 percent)
- Mississippi (7.2)
- Alabama (7.1)
- Tennessee (6.6)
- South Carolina (6.4)
- Idaho (6.4)
- Arkansas (6.3)
- Georgia (6.2)
- North Carolina (5.9)
- Maryland (5.7)
Gifts to religious organizations had a huge impact on the results, The Chronicle said, with nine of the 10 states that gave the most being either Mormon or Bible Belt states.
The six New England states were ranked the lowest among the 50 states giving just 3 percent or less each. Interestingly, though, when religious giving was taken out of the picture, the Northeast region had the highest rate of giving to secular causes.
The West came in second when giving to religious organizations was not included. The study found that nearly $1 of every $8 given to charity comes from California.
One ZIP code in Manhattan’s Upper East Side (10021) contributed more money than any other ZIP code in the country – $478 million. Two other Manhattan ZIP codes, on the other hand, were at the low end of contributions, as were wealthy areas of Miami Beach, Teton Village, Wyo., and Houston, Texas.
The study found that people living in wealthy enclaves gave considerably less than wealthy people living in less opulent communities. When wealthy people are heavily clustered in a neighborhood, with at least 40 percent making more than $200,000 a year, they give only 2.8 percent of discretionary income to charity, lower than almost all metropolitan areas.
But wealthy individuals living in economically mixed areas gave a considerably higher percentage, the study found, and postulated that when wealthy people become more insulated from society, the problems of others are more “out of sight, out of mind.”
It’s been a pleasure working with Andreas Alexandrou and his team at Gelman, Rosenberg & Freedman CPAs.
Peter Canine | Director of Finance