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The More You Make, The Less You Give?
/ September 24, 2015
 
By Dr. Thomas Bruce, professor emeritus, University of Arkansas Clinton School of Public Service and University of Arkansas for Medical Sciences Fay W. Boozman College of Public Health


 
One of my interests over the years has been to explore other people’s giving habits. What I’d really like to know is why people give, but analyses about the reasons for giving always wind up being speculative. How people give is an easier question to answer, since records are kept broadly to document donations.


In some instances the results of giving studies do reflect indirectly on the why question. For example, it is simple logic that financial giving is related to income: the more money you make, the larger donations you can afford to give.

But if one moves away from the actual dollar amount that’s donated, an interesting thing can be seen. As a percentage of income, the more you make, the less you give. For example, IRS records document the contributions of all Americans. One can take a standard deduction or itemize the deductions if desired. This discretionary income and charitable giving data is available here in an interactive tool created by the Chronicle of Philanthropy.

Consider just the data for Arkansas... family households in 2012 with less than $25,000 in annual discretionary income (that portion left after paying taxes and basic food/housing costs) gave 12.36 percent for charitable purposes. Those with more than $200,000 in annual discretionary income gave 3.50 percent for charity. So it isn’t just a modest aberration, it’s big!
And at income levels in between, one finds gradations of the same sort:
  • $25,000-$50,000 (6.68% contributions)
  • $50,000-$75,000 (5.34%)
  • $75,000- $100,000 (4.63%)
  • $100,000-$200,000 (4.00%)
What was, perhaps, most intriguing about the study was its geographic analysis. Percentage giving at every income level was higher in the poorest areas of the state (South Central, South East, and East Central regions) than in the wealthiest areas of the state (North West, North Central, West Central). The Central metro area fell somewhere in the middle. The three most generous regions are rural agricultural or forestry zones with sizable African-American populations and some of the state’s most challenging social problems, i.e. high poverty, low educational achievement, and poor health.

This study suggests that giving patterns are socially driven, in considerable part. If one sees needy individuals around on a regular basis there’s a tendency to try to respond, whereas those who live in more affluent neighborhoods seem to spend discretionary income more for personal uses, “keeping up with the Joneses,” if you will, rather than helping others.

This also may also explain why Arkansas is commonly rated as one of the most generous states (the “generosity index”), along with other low-income states such as Mississippi, Alabama, and Louisiana (Utah was rated most generous last year).

To protect privacy, the IRS does not provide information about the specific charities that people supported, so what is known about beneficiaries has to be drawn from other studies. Giving to churches and other faith groups is very high, usually about two-thirds of all donations, and this may be another reason why Arkansas and other Bible Belt states rate high in the” generosity index.” An analysis by New York Times Economics reporter Catherine Rampell, however, showed that religious giving also varies a good bit with income, dropping to 17 percent with higher incomes. Arkansas Community Foundation fund holders gave more for educational and health purposes in 2013 than they did for religion.

Bottom line: understanding better why people give of their time, talent, and resources remains an intriguing interest, and is at the heart of why studies on the nature of benevolence have such important policy implications for Arkansas and the nation.


  In our latest edition of ENGAGE, we highlight programs that make a difference for older Arkansans.
  Read More  
   

  Our Aspire report provides a county-by-county look at the quality of life in Arkansas. 
  See where your county stands 
   
    Are you interested in how we can partner together to create a better Arkansas? 
  Learn more about our funds.
   
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