Author Topic: Less Wealthy Are More Generous  (Read 1296 times)

Michael Slusser

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Less Wealthy Are More Generous
« on: October 06, 2014, 02:40:13 PM »
The Chronicle of Philanthropy has done its periodic study of voluntary giving by Americans. Lower income Americans gave a higher percentage of their incomes to charity than did those with incomes at the high end.  All types of causes are included in this study, apparently.  People who used the standard deduction are not included. "The data were for gifts to charity among taxpayers who itemize deductions on their tax forms." http://philanthropy.com/article/As-Wealthy-Give-Smaller-Share/149191/

Any theories about why, statistically at least, the rich are giving less?

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Michael
Fr. Michael Slusser
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Steverem

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Re: Less Wealthy Are More Generous
« Reply #1 on: October 06, 2014, 03:27:20 PM »
Sure.  Those who are of lesser means often have more day-to-day dealings with those who have great needs.  In some cases, they have friends and family members who require assistance.  In other cases, they themselves have been the beneficiaries of such largesse.  Whatever the case, it is more likely that they have seen first-hand the benefits of charity, or the absolute need of the same.  Those of higher station don't have such regular contact with the reality of poverty - it isn't first and foremost on their minds at all time, and as a result, they don't often think to give, unless they see some tear-jerking story on YouTube, a natural disaster that forces its way into their collective conscience, or hear a moving presentation at church on Sunday.

I work for a ministry for prisoners and their families, and a sizable number of our supporters are those who either served time themselves, or have a loved one currently behind bars.  Such are typically not in the higher echelons of society.  And they tend to give sacrificially - not with an eye toward what tax benefit they might get.  Not disparaging of those in higher tax brackets who also give generously - our ministry wouldn't exist without them - just pointing out that proximity to the issues has an impact on giving.

Michael Slusser

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Re: Less Wealthy Are More Generous
« Reply #2 on: October 06, 2014, 03:35:45 PM »
Sure.  Those who are of lesser means often have more day-to-day dealings with those who have great needs.  In some cases, they have friends and family members who require assistance.  In other cases, they themselves have been the beneficiaries of such largesse.  Whatever the case, it is more likely that they have seen first-hand the benefits of charity, or the absolute need of the same.  Those of higher station don't have such regular contact with the reality of poverty - it isn't first and foremost on their minds at all time, and as a result, they don't often think to give, unless they see some tear-jerking story on YouTube, a natural disaster that forces its way into their collective conscience, or hear a moving presentation at church on Sunday.

I work for a ministry for prisoners and their families, and a sizable number of our supporters are those who either served time themselves, or have a loved one currently behind bars.  Such are typically not in the higher echelons of society.  And they tend to give sacrificially - not with an eye toward what tax benefit they might get.  Not disparaging of those in higher tax brackets who also give generously - our ministry wouldn't exist without them - just pointing out that proximity to the issues has an impact on giving.
I concur with your observation about the living contact that those with lesser means have with others in need.

One difficulty in this context is that person-to-person direct support is not tax-deductible, so the kind of giving to friends, family, and neighbors that you describe is in addition to the generosity being counted by the Council on Philanthropy.

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Michael
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Mike Bennett

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Re: Less Wealthy Are More Generous
« Reply #3 on: October 06, 2014, 03:42:37 PM »
A couple of thoughts:

1. The omission of those who do not itemize tax deductions omits so much of the population to make the results less meaningful than they might appear on the surface. Of course the publicly available data regarding itemized deductions are the only really accessible data in this area, so I'm not criticizing the method at all.

2. The really, really wealthy are likely to make their most significant donations through a family foundation or similar entity which, of course, required a large one-time donation to establish.

Just ruminating. The results on their face are interesting and thought-provoking.
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Michael Slusser

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Re: Less Wealthy Are More Generous
« Reply #4 on: October 06, 2014, 03:47:40 PM »
.  Not disparaging of those in higher tax brackets who also give generously - our ministry wouldn't exist without them - just pointing out that proximity to the issues has an impact on giving.
"who also give generously"--but less generously, apparently.

Mike Bennett's points are very good. Still, am I wrong in assuming that the wealthy would always deduct qualifying charitable contributions? And that it is those of lesser means who would find that either unnecessary (because the standard deduction covers their gifts) or too complicated, because they don't have professional tax advice?

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Michael
Fr. Michael Slusser
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Pr. Terry Culler

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Re: Less Wealthy Are More Generous
« Reply #5 on: October 06, 2014, 03:48:53 PM »
As I remember the story, the Lord pointed out the old widow and her mite as being superior to the large contributions of the wealthy.  I would be much more impressed with the generosity of the wealthy if it affected their life styles, but that is seldom the case.  The Gates' donations to this and that really mean nothing in terms of sacrifice for them.  They don't have to reconfigure their budgets or put off buying a new car because they give umpty million dollars to some charity.

The findings Fr. Slusser highlights have been consistent across time and express something whole in keeping with the Lord's teachings.
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Mark Brown

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Re: Less Wealthy Are More Generous
« Reply #6 on: October 06, 2014, 03:59:32 PM »
I would be tempted to put forward a mathematical answer.  The only incomes growing in the Obama era are those of the wealthy.  The article states that they have reduced the share of income given.  The total amount given has still increased.  The denominator (income) has grown by more than the numerator (giving).  Likewise as the middle and working classes have been squeezed, they haven't taken it from the charity line item but other places in the budget.  That makes sense for the the middle classes as religious giving (i.e. tithes) makes up the largest part, and reducing the offering isn't a popular choice among religious.   The most generous cities roughly map the most religious.

A second issue would be that taxes have increased on the wealthy, so they have re-balanced their portfolios to taxes away from charity.

A third issue would be the growing merger of the wealthy and big-government.  Official action comes from government entities according to ideology and "I paid my taxes".

All of that mentality is possible when as others have said the wealthy never come into proximity with the poor.  We have sorted into Charles Murray's Fishtown and Belmont.

Richard Gahl

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Re: Less Wealthy Are More Generous
« Reply #7 on: October 06, 2014, 04:32:49 PM »
This phenomenon has been observed for years.  If you examine tax returns of members of congress, you see a lower % of charitable contributions than lower income people.  An exception has been the charitable giving of George W Bush who was a rare tither among elected officials.  The observation about the responsiveness of the poor to needs around them was perhaps confirmed in a strategic planning process for an African American congregation in Cleveland.  Their reported helping those in need as a family was about 4x higher than the data base for LCMS congregations.  Unfortunately the obtaining of a data base for the Faithful Christians-Faithful Congregations project neglected to get a statistically reliable number for African American congregations so there was no way to make any other comparison than this one anecdote.
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Re: Less Wealthy Are More Generous
« Reply #8 on: October 06, 2014, 07:44:18 PM »
The Chronicle study also shows that of the 20 states in which people gave the highest percent of their income to charity, 19 voted for Romney in 2012.  (The exception is Florida, which came 19th.)  By contrast, 17 of the bottom 20 states voted for President Obama.  The bottom seven are the six New England states and New Jersey.  To my surprise, the Upper Midwest (North Dakota, Minnesota, and Wisconsin) also fared poorly.


Here's a Washington Post link.


Aside from the LDS influence in Utah (far and away number 1 on the list), I don't know the explanation for the disparity.

DCharlton

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Re: Less Wealthy Are More Generous
« Reply #9 on: October 06, 2014, 08:27:31 PM »
People who used the standard deduction are not included. "

How many low income people itemize their deductions?  I truly don't know, but I had them impression that people who make less that 50,000 are less likely to do so. 
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Michael Slusser

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Re: Less Wealthy Are More Generous
« Reply #10 on: October 06, 2014, 09:47:52 PM »
People who used the standard deduction are not included. "

How many low income people itemize their deductions?  I truly don't know, but I had them impression that people who make less that 50,000 are less likely to do so.
That's my impression too, as I said
Quote
Still, am I wrong in assuming that the wealthy would always deduct qualifying charitable contributions? And that it is those of lesser means who would find that either unnecessary (because the standard deduction covers their gifts) or too complicated, because they don't have professional tax advice?
That would help to account for the disparity the report mentions: It captured $180-billion that was given to charity in 2012, or about 80 percent of the total amount given to charity as tabulated by "Giving USA."
Another informative paragraph:
The wealthiest Americans—those who earned $200,000 or more—reduced the share of income they gave to charity by 4.6 percent from 2006 to 2012. Meanwhile, Americans who earned less than $100,000 chipped in 4.5 percent more of their income during the same time period. Middle- and lower-income Americans increased the share of income they donated to charity, even as they earned less, on average, than they did six years earlier.

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Michael
Fr. Michael Slusser
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Michael Slusser

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Re: Less Wealthy Are More Generous
« Reply #11 on: October 06, 2014, 10:04:57 PM »
2. The really, really wealthy are likely to make their most significant donations through a family foundation or similar entity which, of course, required a large one-time donation to establish.
I had the impression that private charitable giving via private family foundations was just as tax deductible as other charitable giving, and in the same way. One firm's website says,
A private non-operating foundation is appropriate for individuals who are philanthropic but want flexibility in managing and structuring their charitable gifts, as well as controlling the investments of the foundation.  The foundation is an attractive option for someone who desires maximum control over future charitable gifts while enjoying a current charitable income tax deduction.  This is how it works: A donor makes a substantial contribution to a private foundation, but the foundation isn’t required to immediately distribute the full amount of that contribution to charity.  As a foundation director/trustee, the donor can manage and invest the funds, and select the eventual charitable recipients over a period of years. - See more at: http://www.eisneramper.com/Wealth_of_Knowledge/private-foundation-0412.aspx#sthash.qoNgboHv.dpuf
If that is true, the Chronicle of Philanthropy's figures would include that foundation endowment and subsequent gifts in the total giving credited to people who do their giving that way.

Peace,
Michael
Fr. Michael Slusser
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DCharlton

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Re: Less Wealthy Are More Generous
« Reply #12 on: October 06, 2014, 10:33:49 PM »
The Chronicle study also shows that of the 20 states in which people gave the highest percent of their income to charity, 19 voted for Romney in 2012.  (The exception is Florida, which came 19th.) 

Florida is still a pretty conservative state.  I wonder whether there is a relation between taxes and giving.  Florida, for instance, doesn't have a state income tax. 
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Michael Slusser

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Re: Less Wealthy Are More Generous
« Reply #13 on: October 06, 2014, 10:49:16 PM »
The Chronicle study also shows that of the 20 states in which people gave the highest percent of their income to charity, 19 voted for Romney in 2012.  (The exception is Florida, which came 19th.) 

Florida is still a pretty conservative state.  I wonder whether there is a relation between taxes and giving.  Florida, for instance, doesn't have a state income tax.
The least generous state according to the Chronicle is New Hampshire, which also has no state income tax. New Hampshire remains the least generous. Those residents gave $17.40 for every $1,000 they earned.

Would many of these also be among the states with the lowest average incomes? And/or (apart from the Mormons) states with large numbers of tithing Evangelical Christians? There are lots of interesting relations to look at.

Peace,
Michael
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Bergs

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Re: Less Wealthy Are More Generous
« Reply #14 on: October 06, 2014, 11:05:44 PM »
It's always interesting to me when they publish tax returns of politicians, how little they give.  I think Mitt Romney was at the 10% mark.  But I remember looking at VP Joe Biden and MN Governor Mark Dayton's tax record showing pitiful giving.  Our household income was not near theirs but our giving far outstripped their giving. 

Other rich people I don't know about.  Politicians' tax records make such comparisons unfair I am sure.

Why other people are motivated to give, I don't know.  For me it's a joyful response to God's love.  Any other reason just pales in comparison.  Maybe these rich folk just don't know God's love so well.

Brian J. Bergs
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