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By Neil Munro, National Journal
© National Journal Group Inc.
Friday, Jan. 19, 2007

Americans lead the world in donating their time and income to charitable causes, and the country's myriad charities are a flexible and efficient complement to government programs, experts say.

Charitable giving in the United States rose at an annual rate of 6 percent in 2005 to $260 billion, or 2.8 percent of household spending after deductions for taxes, food, and energy, according to the Giving USA Foundation. Volunteerism has also increased; about 27 percent of adults gave a portion of their time to help others in 2006, according to a December report by the Corporation for National and Community Service.

Key features of American culture -- religious faith, skepticism about government's effectiveness, an emphasis on earning your own way, and the celebration of child-rearing -- help push donations in the United States far above European levels, says Arthur Brooks, director of the Nonprofit Studies Program at Syracuse University's Maxwell School of Citizenship and Public Affairs. Americans donate seven times more money per capita to charitable causes than Germans do, for example, and 14 times more than Italians, he says.

Religious believers make up the largest bloc of charitable givers. In 2005, 35 percent of volunteers worked through religious organizations, and 36 percent of donations, or $93 billion, went to religious organizations and their affiliated charities. Ninety-one percent of those who identify themselves as religious give some of their money away, compared with 66 percent of people who say they are secular, says Brooks, author of the new book Who Really Cares: The Surprising Truth About Compassionate Conservatism. He based his conclusions on surveys of 30,000 people.

More surprising, 71 percent of religious people gave to secular causes, but only 61 percent of secular people gave to such causes, Brooks reports. This trend exists on both sides of the political divide -- religious liberals donated more than secular liberals, and secular conservatives -- mostly young men -- donated the least of all.

Regional and denominational variables complicate the tracing of religion's role in giving. Jews in New York give more than Jews in New England, and Southern Baptists give more than Catholics, according to a November report by Boston College's Center on Wealth and Philanthropy, which ranks states by how much their residents donate after paying taxes and routine household bills.

One way to explain the recent growth in donations, says Paul Schervish, the center's director, is to view charity as a form of consumption. "There's a market for satisfaction... across the economic spectrum," he says, adding that donors want to buy the satisfaction that comes from doing good.

The major trends in giving, Schervish continues, include efforts by wealthy donors to improve their return on investment from donations, to spread their donations to new causes -- such as researching rare diseases, promoting political goals, and solving environmental problems -- and to give away their money before they die. Billionaire George Soros, for example, is funding a wide variety of political activities. Warren Buffet has decided to donate much of his billion-dollar estate to the well-managed charities run by fellow mogul Bill Gates. Gates is spending his software fortune on causes that range from fostering urban Catholic schools to eradicating malaria. "Philanthropy is more agile and efficient" than government programs in addressing some social problems, he has said.

The role of wealthy donors is critical, according to Gates, because the richest 5 percent of donors account for about 40 percent of all donations.

Schervish contends that to make a good situation even better, the federal government should take steps to combat fraud and self-dealing within charities, such as curbing excessive salaries for foundation executives. Government should also allow people who don't itemize on their income-tax return to get a $500 tax credit when they make a well-documented charitable gift worth at least $500, he says. That group -- 70 percent of taxpaying households -- donated $37 billion in 2005, an average of $551 per household, according to the 2006 study by Giving USA.

Broadening the tax break for charitable contributions would be good, but deregulation to simplify giving and volunteering would be even better, Brooks says. Legislators, interest groups, and bureaucrats promote regulations for their own reasons, he argues, but those regulations impose costs and litigation risks that deter people from such worthy activities as adopting kids, coaching Little League teams, and otherwise donating money and time.

Government should lower the barriers, Brooks concludes, because "giving is about culture, not economic incentives." [an error occurred while processing this directive]

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