Column | A strategy for giving
In the emergency room and on the battlefield it’s easy to appreciate the wisdom of a triage system: those with the greatest need are helped first. But few of us, particularly the wealthy, apply that same type of thinking when it comes to making donations to charities.
December marks the height of the charity season, when Americans give the bulk of roughly $290 billion donated annually by individuals. Various studies have pointed to an overall increase in charitable giving in recent years, although new tax laws might adversely affect that trend.
Due to the higher standard deduction fewer Americans will itemize donations and that could lead to the unintended consequence of less money going to charity. Notably, however, the group least affected by the new tax rules is the one that makes the largest contributions: wealthy individuals earning over $200,000 a year.
So, which causes do these affluent folks support, and how do they make their gifting decisions?
The U.S. Trust study, published by Bank of America and Indiana University, reveals several troubling answers. First, roughly half of wealthy donors don’t have a strategy for giving. They are guided by relationships with organizationsâ€’such as colleges, churches and foundationsâ€’and by their own past patterns of giving. That’s understandable, but hardly the definition of a triage system.
Second, nearly half of wealthy people, 46 percent, make no contributions whatsoever to “basic needs” such as food and shelter. Even more concerning, among the 54 percent who did, the amount given represented only 19 percent of the total. In other words, although a majority of rich people see human need as important, they fail to give it the majority of their charity budget.
Statistics show that the poorer you are the more you give, proportionately, to basic needs. Why is that? Is it because poorer people more clearly recognize the plight of those even less fortunate?
Maybe it’s because wealthy Americans believe government is doing enough to aid the hungry and homeless. Perhaps some among the affluent are suspicious of the poor - believing they game the system and don’t take enough responsibility for their plight.
Such thinking only obfuscates the bottom line: despite an improving economy and a drop in unemployment, roughly 40 million Americans live in poverty. The latest figures from the U.S. Census Bureau also show that child poverty remains alarmingly high – due in part to the number of single-parent homes, coupled with the fact that women continue to earn less, on average, than men.
Although poverty figures differ depending on the metrics, there is general agreement that the U.S. has far more poverty than most developed countries such as Canada and in the U.K. How wealthy must we, as a nation, become before this stops?
As I write this at my office in California I’m also overwhelmed by the fact that more than 14,500 of my neighbors to the north have lost their homes and businesses in the Butte County wildfire. And that’s just the latest in a swath of disasters from Puerto Rico to Florida, the Carolinas, Texas and California that have left many people in need.
The U.S. Trust survey says just 1 percent of charitable donations by the wealthy goes to disaster relief efforts.
So, I wonder, is this the best time to write a check to help the school band get new uniforms? For the super rich, does your alma mater really need another building with your name on it?
There are many good causes, no doubt about that, and it would be foolish to cut them out of our charity budgets. But perhaps everyone, especially the wealthiest among us, can make a strategic adjustment so that more money goes where it’s needed most.
As Orwell might have framed it in this season of giving: All charities are equal, but some are more equal than others.