Friday, December 27

Charitable Giving Up for the Working and Middle Class but Down for the Wealthy, According to IRS Data

A new and extensive analysis of IRS data reveals what many people know to be true: the wealthiest Americans are donating a much smaller share of their income to charity than low and middle-income Americans give from theirs.

The study, conducted by nonprofit news organization the Chronicle of Philanthropy, was released this week. The findings were based on tax returns of Americans who itemized their deductions, including charitable gifts, between the years of 2006 and 2012, and the report also gave rankings for states and metropolitan areas based on the ratio of contributions to adjusted gross income.

According to the report, Americans who earned $200,000 or more gave an average of 4.6% less of their income between 2006 and 2012. However, those who earned less than $100,000 increased their giving by 4.5% more of their income during that same period — even as their income fell.

The report also studied the changes in giving patterns in major cities. In the same period, giving by share of income fell by more than 10% in Philadelphia and Buffalo; giving in Los Angeles, Minneapolis-St. Paul and Washington, D.C., fell by 9%.

However, despite the grim-sounding totals, many services still credited low and middle-income residents with sustaining social programs even as the recession hit.

Tami Phillips of the Midnight Mission, which serves the homeless in Los Angeles, said that for those with low incomes, the need for charitable giving “hits closer to home. Any day, they too could become homeless.”

And the report indicated that there could be a reason for the Midnight Mission’s lack of wealthy donors. On average, the wealthy were more likely than low-income donors to give to causes that supported the arts and higher education, said the Chronicle of Philanthropy’s editor, Stacy Palmer, rather than giving to social services.

However, charities still look to the wealthy for funding. Although the 1% gave a smaller share of their incomes, their total amount of giving increased by $4.6 billion — a total of $77.5 billion in 2012, adjusting for inflation.

Other highlights of the study included data by state and by city. Utah was revealed to be the most generous, giving $65.60 for every $1,000 they earned. Perhaps this isn’t a surprise, though, given the large presence of the Mormon Church in the state, which calls for its members to tithe at least 10% of their income to charity.

Churches with high rates of church attendance, like Mississippi, Alabama and Tennessee, also gave at the highest rates after Utah. Those with lower numbers of churchgoers, Maine, Vermont and New Hampshire comprised the bottom three, with New Hampshire residents only giving $17.40 per $1,000 earned.

Salt Lake City topped the list of the 50 most generous cities, with residents giving 5.4% of their income. Memphis, Tennessee; Birmingham, Alabama; Atlanta, Georgia; and Nashville, Tennessee rounded out the top 5.

The cities that gave the smallest shares of their income were Hartford, Connecticut; Providence, Rhode Island; and San Jose, California.

Perhaps the most surprising result was the data on Las Vegas, Nevada, which earned the title of fastest-growing city in terms of generosity by rising 21 places since 2006. The entire state of Nevada also gave 13% more on average between 2006 and 2012.

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