Could American Donors Be More Generous?

Chronicle of Philanthropy looks at ‘the stubborn 2% giving rate’

Americans give more to charity as a percentage of GDP than their counterparts in many other major industrial countries, but advocates would like to push this rate higher.

Giving has hovered around 2% for the past 40 years, with the occasional up or down blip, according to a recent analysis in The Chronicle of Philanthropy.

In 2012, American donors contributed some $316 billion, 2% of the country’s GDP, unchanged from the previous year, according to the annual Giving USA report.

“We’re stuck” at the 2% rate, John List, head of the University of Chicago’s Science of Philanthropy Initiative,” told The Chronicle.

“There’s a lot of money on the charity sidelines, and the charitable community needs to build a better mousetrap.”

But Paul Schervish at Boston College’s Center on Wealth and Philanthropy argued that the GDP share reflected only donations to nonprofit groups and not informal types of giving, such as contributions to political groups.

Still, advocates try to get donors to dig deeper in their pockets, according to The Chronicle. Adam Meyerson, president of the Philanthropy Roundtable, for example, proposes a “3% solution.” The extra money would provide a philanthropic alternative to failed or distressed government programs.

Others argue that wealthy people, who are already the biggest donors, have an ethical obligation to increase their giving — and can do so without materially affecting their lifestyle.

But the Chronicle analysis noted that organized initiatives to get people to be more generous have foundered. In the late 1980s and early 1990s, Independent Sector mounted an aggressive ad campaign urging Americans to increase their giving to 5% of gross income from an average of about 2%.

The campaign went nowhere. An Independent Sector employee at the time speculated that because of the personal nature of charitable donations, people didn’t like to told how much to give.

In another effort in Wisconsin, founders of the One Percent Club urged wealthy people to contribute 1% of their net assets to charity each year or 5% of their income, whichever was larger. Initially promising, with membership growing to 1,000, this effort also petered out.

A founder told The Chronicle that most contributors were already major philanthropists, so the club was “preaching to the choir.”

Some take hope in the Giving Pledge inaugurated by Warren Buffett and Bill and Melinda Gates, which encourages billionaires to give away half their fortunes.

The Philanthropy Roundtable’s Meyerson said more favorable tax treatment for charitable gifts could help push the giving rate higher. He can only hope. Tax reformers on Capitol Hill are currently taking a hard look the charitable deduction.

Meyerson also said nonprofits could do a better job of appealing to “the philanthropic imagination of the American people,” taking their cue from colleges and universities and from houses of worship that “appeal to Americans’ highest values and aspirations, not their guilt.”

And fundraising consultant Penelope Burk told The Chronicle her surveys had showed that around 10% of people said they had put bequests to charity in their wills, but more than 30% said they would do so or consider doing so if asked.

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