BY GENE A. BUDIG
and ALAN HEAPS
We continue to receive good news about the economy. But one part of the story has not received the attention it deserves. That part is charitable giving.
The year 2007 set a new record high for contributions. But the recession brought the trend to a halt. In 2008, charitable giving experienced the largest decline in more than 50 years.
But the good news is that trend has been reversed and we are now in a period of steady growth. And that bodes well for the nation. In 2013, individuals in the U.S. gave $241 billion to charity. Add $50 billion from foundations, $27 billion from bequests, $17 billion from corporations, and the sub-total is $335 billion. Add another $163 billion worth of volunteer time — more than 25 percent of adults in America do volunteer work — and the total is $498 billion.
This number — almost half a trillion dollars — is so big that comprehension requires perspective. Two comparisons help make the point. The half trillion is larger than the 2013 Gross Domestic Product of 166 of the 192 countries listed by the World Bank. The half trillion is larger than the annual combined budgets of California, Florida, New York and Texas.
America also stacks up well when compared to other countries. In 2013, the U.S. tied for first place in the “World Giving Index” list of 135 countries. This index, created by the Charities Aid Foundation, is tabulated by a combination of monetary donations, volunteer time, and helping a stranger.
Why is charity so important? Here are four reasons:
1) Charity annually provides more than $70 billion in human and health services that support, among others, the more than 45 million people who live below the poverty line ($23,550 for a family of four).
2) Charity annually provides more than $50 billion to our K-12 and higher education systems, engines of our economy and democracy. Two thirds of the money goes to higher education, which leads the world in almost every kind of research.
3) Charity gives us some choice and control in a world run by institutions we distrust. In descending order, fewer than 50 percent have a “great deal/quite a lot of faith” in organized religion, the medical system, the U.S. Supreme Court, the presidency, public schools, banks, the criminal justice system, newspapers, organized labor, big business, Internet and TV news, and Congress.
4) Giving, including to charity, makes people happy. In a 2013 article in the Harvard Business Review, researchers reported that “In a series of experiments, we’ve found that asking people to spend money on others — from giving to charity to buying gifts for friends and families — reliably makes them happier than spending the same money on themselves.”
The one part of charitable giving that has received attention in the last few years is the part focused on the nation’s wealthy, how much they give and who benefits most. Widely covered stories of 2013 and 2014 included two $1 billion gifts (one each from Mark Zuckerberg and Ralph Wilson, Jr.) and the ongoing work of foundations funded by Michael Bloomberg, Bill Gates, and George Soros.
But research shows that America’s commitment to giving extends far beyond the wealthy. Several studies show that rich people give smaller percentages of their incomes to charity. A recent article from The Atlantic tells us that “in 2011, the wealthiest Americans — those with earnings in the top 20 percent — contributed on average 1.3 percent of their income to charity. By comparison, Americans at the base of the income pyramid — those in the bottom 20 percent — donated 3.2 percent of their income.”
Charity can neither solve the world’s problems nor take the place of government services. But it can and does have a positive impact on millions of people, on both those who give and those who receive. As the economy continues to improve, we would do well to remember this and share the dividends of our prosperity.
Gene A. Budig is past president/chancellor of Illinois State University, West Virginia University and the University of Kansas. Alan Heaps is a former vice president of the College Board in New York City.