Everybody knows Americans are big givers. But their charitable impulses keep generating surprises. Consider just a few conclusions from recent research: Charitable giving plays an even larger role in the economy than is suggested by some $260 billion in annual contributions. Demand for nonprofit services gets proportionately bigger, not smaller, as a locality's income rises. The philanthropy of the wealthy may not hinge on tax incentives to the degree many believe. In one new survey, a majority of wealthy givers say they would contribute the same amount if the estate tax were abolished.
These disparate studies are shedding light not just on who gives but also on why they give and what their actions mean to society. Experts say that by understanding charity better, Americans can learn how to encourage more giving. The result would probably be a healthier and wealthier society.
One thing that's long been known: The US leads the world in levels of charitable activity. The pattern runs from the rich, steeped in long tradition of philanthropy, to the poor. Those making $20,000 or less a year give away more, as a share of their income, than do higher income groups.
Americans donate their time as well as money, some $150 billion worth annually. Some experts see charity as a defining trait of the US, more than consumerism or business. But those forces may be intertwined. For one thing, many nonprofits, from healthcare to classical music, are selling services in a marketplace alongside for-profit rivals. By many measures, they are successful. As personal incomes rise in a given county, the income of nonprofits seems to rise even faster, says an associate economists call a “superior good” something people want to buy more of or donate more to as their incomes rise.
Yet ties between charitable ventures and the economy hardly end there. Dr. Brooks points to evidence that charity is no mere peripheral activity. It pays off for society in ways that may transcend the rates of return on many traditional investments. Why? First, it’s not just that charity helps those on the receiving end, says Brooks, an economist at Syracuse University in New York. It also strengthens the cohesion of society at large. Moreover, it appears to make the givers themselves more successful, possibly because the activity transforms them somewhat into better or happier people. Whatever the reasons, he finds that higher income tends to push up charity, and that greater charity tends to push up income.
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