Let’s give those generous rich folks a break, okay?
Belle recently linked to an interesting article about charitable giving:
..poorest 20-percent of Americans give 3.2% of their income to charity, while the wealthiest 20-percent give only 1.2% to needy causes.
Let’s talk about being poor for a second.
POOR PEOPLE KNOW WHAT IT’S LIKE TO GO HUNGRY
As a result, they give. They never forget what it’s like to not have money or food.
My mother is a great example of this.
She grew up dirt poor, and as a result, money means very little to her when she has a lot of it because she has this need to give it all away or spend it in fear that she will die the next day not having lived a good life because of hoarding money (she’s the other extreme of those frugalites.)
Anyway, since she grew up poor, my mother gives money to everyone and anyone she feels needs it.
Sometimes I have to gently try and rein her in because she doesn’t understand that she still needs to save money for herself, and not put herself in a position of living paycheque to paycheque.
She gives money away like it’s going out of style to her brothers and sisters, and you can’t tell her to stop.
If she won the lottery, I’ll bet you she’d give away at least 25% of it to various people, if not more.
(She also blames her former poverty as the reason why she’s about 15 pounds overweight. She can’t stop eating, apparently!)
..BUT LET’S NOT FORGET SOME BASIC MATH HERE
I don’t have all the statistics and actual net dollar values from each 20% income set (who knows, maybe the final net dollar value of poor folks outstrips the rich ones), but let’s not forget some basic math here.
RICH FOLKS
Wikipedia (U.S. census)Â says that the top 20% of Americans are the ones earning $96,000 and up:
- 1.2% of $96,000 = $1152
- 1.2% of $167,000 = $2004
- 1.2% of $650,000 = $7800
- 1.2% of $1,000,000 = $12,000
TOTAL GIVEN FROM 4 HYPOTHETICAL RICH FOLKS = $22,956
POOR FOLKS
Wikipedia also says that the bottom 20% of Americans are the ones earning $0 – $18,500:
Assuming a base rate of $5000 because 3.2% of $0 is $0…
- 3.2% of $5000 = $160
- 3.2% of $10,000 = $320
- 3.2% of $15,000 = $480
- 3.2% of $18,500 = $592
TOTAL GIVEN FROM 4 HYPOTHETICAL POOR FOLKS = $1552
Coincidentally, that total number of 4 poor folks giving 3.2% of their income is the equivalent of ONE person earning $96,000 giving 1.2% of their income a year.
Someone earning $96,000 at the lowest rung of the higher income set, donates about 7.2X more as a net dollar value that someone earning $5000 in the lowest rung of the lower income set.
..and someone at the highest rung of the higher income set earning $1,000,000 donates the equivalent of about 20 people in the highest rung of the lower income set.
SO LET’S BE CAREFUL NOT TO PITCHFORK THE GENEROUS RICH FOLKS
I absolutely, 100% acknowledge that $160 may be more than what most people (never mind poor folks!) give to charity each year, so I totally, TOTALLY get that it is not a small amount of money for someone earning $5000 to fork over $160 to charity.
(Actually let’s just all acknowledge that giving money to charity rocks, no matter in what amount.)
..but I just want everyone to be careful before demonizing rich folks and making them feel bad for “ONLY giving 1.2% of their income to charity each year“.
Sure, they could DEFINITELY afford to give more (couldn’t we all?), but let’s not look the gift horse in the mouth and make them feel awful about it.
I’d rather just have them give, and encourage others in their circle to give.
Period.
In fact, I am even happier if they make more income and give more money as a percentage.
Everything is relative when you use percentages.
1.2% does not equal 1.2% as a final net dollar value at the end of the day, because it’s dependent on what income you use, so it stands to reason that the higher you go up in income, the more piddly the percentage looks in comparison.
22 Comments
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maria@moneyprinciple
Very, very well said. This is kind of obvious – proportions mean nothing without a reference to what they are proportions of. But you have managed to illustrate it beutifully.
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Kathy
Here’s my cynical view…
The government makes you meet a percentage floor before you can deduct you donations so many people can’t deduct it from income tax. The government doesn’t want private charities to assist the poor because the people receiving assistance from other sources are no longer dependent upon the government. If they aren’t dependent on the government, the government can’t control them, and also can’t rely on their votes. In the days before income taxes, people could get help from their neighbors or their church. Now the nanny state provides everything so the recipient must be beholden to it.As I said…my cynical political viewpoint at work here.
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Ariana
It is hard to be critical of the wealthy who do give to charity. You honestly can’t tell whether their reasons are either philanthropic or to be able to reduce their contributions from their tax bills.
It pisses me off that a lot of educational institutions get endowments and donations from alumni. Most of that money doesn’t even help lower tuition costs for students. -
Tania
It’s really a coincidence that this is your most recent post as I just read an essay in the New Yorker that talked about how being around a ton of money can desensitize someone and make them “disinterested” in others needs. This in turn can make them less likely to help others and I think your post points out that someone with less to give may still give to help others in need of food, shelter, etc.
What I found interesting more than the article itself were a few of the readers’ comments. One in particular claimed she feels lower income classes only think of themselves and the wealthier people she knows are the ones that do many charitable works. I took offense at this because I feel it’s a bit out of touch as my friends cross all levels from unemployed to blue collar to white collar executives. I think what the commenter failed to consider is that many lower income families may not participate in charitable events or volunteer but do go out of their way to help neighbors or other families in need. They take in “hanai” children (taking care of someone else’s child in your home as you do their own but without formal adoption procedures), help a neighbor with carpentry/construction work (I know entire lower income areas where everyone pitched in to build everyone else’s homes) or many other examples of giving. While they may not have their resume filled with volunteer/charity activities, I see this type of giving go on daily with my friends in lower income brackets. I know very few upper middle class that will welcome someone to reside in to their home when in need but see it occur all the time with my blue collar friends. The difference is they do not call it “charitable works”, it is merely a helping hand extended to family member or friend.
I think the disparity comes into play in the US with fair wages, speculative real estate investment driving up home prices (Hawaii for example, real estate prices are not in line with income levels of long time locals) and how government taxes are utilized. Government spending is wasteful and the US spends more money on enforcement than effective prevention and solutions to societal problems IMHO.
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Tracy
I enjoyed this post, mochimac! Is that income chart listing gross or net incomes?
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PK
Another note – government programs displace private charity. In the upper tax brackets, a higher percentage of their income goes to taxes, and some percentage of those taxes go to charity (or at least charity like programs).
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Lynn
Clarification–people with higher incomes pay a higher percentage of INCOME taxes, which does not translate to paying a higher percentage of their income to taxes overall. When you take into consideration sales tax (poor people spend a higher percentage of their income instead of saving/investing), payroll taxes (poor people pay payroll taxes on 100% of wages because payroll taxes are only assessed on the first $113,700 of income, capital gains income isn’t subject to payroll taxes, etc.), state taxes (i.e. wheel taxes that are assessed per vehicle regardless of whether it is a BMW or a 1999 Ford), poor people pay a much higher percentage of their incomes in taxes.
The percentage does matter, because as income continues to gradually shift from lower income people to higher income people as it has been doing, the total $ number of charity donations decreases as well. When you consider this trend you have more low-income people and less dollars donated to charity. Coupled with the reality that a wealthy person giving $100,000 to Harvard has a different societal impact than 1,000 low-income people giving $100 to their local food bank, you have an even bigger problem.
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Matt NY
I think you made a math error – poor people greatly outnumber rich people – that’s why they talk about “the 99%” and the “1%”. Multiply the contributions of poor people by 99 and see what you get. If you want to be a stickler for detail, make it 15 times, as about 15% (of Americans anyway) are below the poverty line, although probably 1/3 I would consider to be “working poor” – unable to afford basic necessities like healthcare, healthy food, etc, even though they are technically working at minimum wage jobs ($16k per year).
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Matt NY
@Matt NY: Sorry – I skimmed the post instead of reading it through (at work). Have you seen this video about the relative distribution of wealth in the US? This is what I was talking about: https://www.youtube.com/watch?v=GjVko-DMeF4
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Matt NY
@Matt NY: The wealth curve is so distorted that almost the whole top 20% could be giving nothing at all, and if one of the top 0.1% gives 1% of his income, it looks like the top 20% is being very generous because of the HUGE difference in wealth as you get to the top.
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jane savers @ solving the money puzzle
I am on a very tight budget and have not given to charity this year but I try and compensate by giving time and stuff.
I am a regular blood donor and I just dropped off a working DVD player to the Habitat For Humanity Restore so they can profit from the sale. I used to volunteer at the store but that was when I had a job with regular hours.
I want to volunteer more because it is a way for a person without resources to contribute without having to spend money I just don’t have.
theFIREstarter
Jane that’s so cool!
I’m going to make sure I give blood in 2014 as I’ve never done it before. Need to man up and overcome the fear of the needle! 🙂