Cheap in Amercia, Who Gives? Who Doesn't?

I half-watched (while working) a special 20/20 on ABC last night that focused on charitable giving in America. I am not usually a fan of the show, but the topic peaked my interest so I decided to take it in.

A couple key take aways for me:
"The most charitable people in America are the working poor"
The people that gave away the highest percentage of their money were the working poor. They also had a graph that was U-shaped showing that the middle class is the least giving (compared to the rich and poor). Kind of surprising - I would have thought the opposite.


Billionaire's Reasons For Not Giving More to Charitable Causes:

  • I give enough already - Pretty self explanatory.
  • Can't spend/invest it effectively - They have so much to give away, they can't find good opportunities to make charitable investments. It actually makes sense to me, these smart people don't want to waste their money, they want to see tangible results.
  • I don't have enough to give - They discussed this with Ted Turner and I laughed. He rambled off the same reasons that some poor person like me would use to not give more. Most of the money is tied up in investments (paper wealth); he is worried about Social Security going broke and wants to make sure he is financially able to support himself; economic uncertainty, he already lost $8 billion of value in his Time Warner ownership, he could quickly lose the rest.
  • I need to make more, so I can give more - Warren Buffett argued this for years, and its a valid point. These people are good at accumulating wealth; it makes sense for them to use their financial means to accumulate more wealth so they will be able to give more in the end. Its a valid up to a point. What’s the point of accumulating all this wealth if you can't see it put to good use?

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Comments (8)


The reason why wealthy people give less is because they want to protect themselves and their investments first. They are very meticulous when it comes to there money.

I give when I know I'm able I don't have a set schedule to give. I also don't give the same amount all the time.

andrew carnegie, one of the richest men in his day started giving his wealth away while he was still alive. when he died over $350 million would be spread out to various causes/foundations. in today's dollars that's $8 billion. that's a lot of money without having to own stocks in google.

I think the recent handling of donations by certain groups has driven people away from Charity.

Look at how the money for Katrina relief was handled. The government allowed a great deal of the donated funds to be thrown away at frivolous causes.

Why would I want to donate money if I know it's going to be pissed away by greedy contractors?

Unfortunately, the honest and well meaning charities are guilty by association.

-Grant

When looking at that U-shaped curve, it's worth noting that religion is the #1 recipient of charitable giving in the US. The poor tend to give to their churches - Christianity flogs pretty openly the notion of giving even if you haven't got a lot to give. God will provide and all that jazz.

That said, charitable giving outside of religion is perfunctory for much of the US. It's not built into the culture. People just hear the news about organizational scandals and maybe once a year read an article about making sure charities aren't spending contributions on administrative costs and figure it's better to save their pennies themselves. It's too much work to find a worthwhile organization. It's very sad, really. (And I don't just say that because I work in fundraising professionally.)

Thanks for the post - it's a topic I've been thinking about a lot lately.

So, for years I've thought of someone who gave at least as much and probably a lot more than my peers. Until I started actually tracking my spending - and I realized that when I actually add it up, the percentage I'm giving is way, way lower than I would have estimated.

Horrified, I've now set up a separate (ING) savings account with automatic monthly withdrawls - and then I use this pot when I find something I want to give to.

On the topic of charities wasting money / Katrina: this is also a good point. I think one of the biggest problems in charity giving is that if you don't either (a) work for/with an organizaiton that you trust and want to contribute to/through, or (b) take the time to seek out who you want to give money to, you're lible to give instead on "impulse" - and just like any other kind of impluse spending, you end up making bad decisions. In particular, you end up giving money to organizations that have somehow come to your attention and have made you feel like your money's going to be worth a ton there. Unfortunately, for obvious reasons, this in practice usually means you're giving money to an organization that's spending a lot of its money on outreach and funds building - which is directly opposite what you want to be doing. In addition, the highest levels of waste occur with money given in a chaotic fashion directly after a major news-generating tragedy - which is again the time you're the most likely to give on impluse.

Fortunately, there are a number of groups that rate charities in terms of things like percentage of income that goes to the actual cause rather than overhead and more fundraising - I like Forbes' list, but there are a number of good ones. And I'm hopeful that the automatic-withdrawl strategy will help me remember to give on a regular basis, not just when the news happens to pick up some story that catches my attention.

We'll see...!

Again, thanks for the post....

In the same batch of RSS feeds which your posting arrived in today came this link for a different way to give. Looks like a good idea to me. It's called Donor's Choose

"At this not-for profit web site, public school teachers propose materials or experiences that will help their students learn. These proposals become classroom reality when individuals like you choose one to fund."

http://www.donorschoose.org/

As usual, a typical rehash by ABC news. There are two kinds of money: income and assets.

It's wise to separate the two in any financial discussion. So which is it that the poor give more away: income or assets? One suspects it has to be the 'income' category. Would you be willing to give away 10% of your house or your car or your property or whatever to charity? No, right. Apart from anything, it's legally difficult to give away that part. So we need to rephrase the statement:

"The people that gave away the highest percentage of their (income) were the working poor."

Naturally, this would be true: $1 or $10 represents a larger part of their income than a rich or middle class person. Could this not be just economy of scale at work here?

They also had a graph that was U-shaped showing that the middle class is the least giving (compared to the rich and poor). Kind of surprising - I would have thought the opposite.

That the middle class (whatever they are) give less is hardly surprising: the savings rate in the middle class is desperate, with rising mortgages, double mortgages, car loans, multiple credit card debts, etc.. The middle class is being squeezed on all sides, including taxes, debt (all kinds of debts), living costs, pension plans + contributions, health care ... Plus the cost of maintaining a 'certain' lifestyle...

Is it any wonder? Not really.

I would caution anyone from dismissing or choosing a charity on the basis of how much of the contribution goes toward programmatic costs. Organizations go through periods when it is imperative to spend a great deal on administrative or fundraising costs. Mid- to large-sized organizations preparing for a major capital campaign will show skewed numbers in terms of dollars spent on fundraising. It may seem counter-intuitive, but, in my experience, organizations are typically so involved in just getting from year to year that strategic initiatives require the expertise of outside consultants who, like their corporate counterparts, are not cheap.

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