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5
Percent of Income Givenby State*
State Charity as a % of AGI Average level of charity State Charity as a % of AGI Average level of charityUtah 6.2% $5,347 California 2.7% $2,307Alabama 4.3% $3,656 Delaware 2.7% $2,338Mississippi 4.3% $3,699 Indiana 2.7% $2,301Tennessee 4.3% $3,713 Michigan 2.7% $2,299Arkansas 3.9% $3,314 New York 2.7% $2,283South Carolina 3.8% $3,248 West Virginia 2.7% $2,273Louisiana 3.6% $3,086 Illinois 2.6% $2,219Oklahoma 3.6% $3,062 Iowa 2.6% $2,184D.C. 3.5% $3,052 Montana 2.6% $2,177Georgia 3.5% $3,016 Nevada 2.6% $2,202Texas 3.5% $3,024 Pennsylvania 2.6% $2,189Idaho 3.4% $2,949 Washington 2.6% $2,226North Carolina 3.4% $2,938 Colorado 2.5% $2,111South Dakota 3.4% $2,864 Minnesota 2.5% $2,172Florida 3.2% $2,723 Ohio 2.5% $2,114Maryland 3.1% $2,678 Oregon 2.5% $2,127Kansas 3.0% $2,532 Hawaii 2.4% $2,096Wyoming 3.0% $2,599 New Jersey 2.4% $2,110Kentucky 2.9% $2,487 Wisconsin 2.1% $1,798Nebraska 2.9% $2,481 Connecticut 2.0% $1,740Alaska 2.8% $2,408 Maine 2.0% $1,677Arizona 2.8% $2,380 Rhode Island 2.0% $1,709Missouri 2.8% $2,361 Vermont 1.9% $1,611New Mexico 2.8% $2,413 Massachusetts 1.8% $1,591North Dakota 2.8% $2,421 New Hampshire 1.8% $1,536Virginia 2.8% $2,451 U.S. average 2.8% $2,423
*Taxpayers earning $75,000-$100,000 Ref.: Chronicle of Philanthropy, 8-8-02
6
What Is Associated with Charitable Giving?
Ref.: PB&F 2002
Gender: Effect depends on income
Variable Most common direction of effect on giving
Taxes Positive
Income Positive
Wealth Positive
Race Insignificant
Education Positive
Age Positive
Family size Negative
Marital status Positive or insignificant
7
The Role of Religion
Charity measure Religious people
Secular people
t-statistic
GIVES 0.91 0.66 293*
VOLUNTEERS 0.67 0.44 137*
VALUE OF GIFTS $2,210 $642 88*
GIVES TO NON-RELIGIOUS CAUSES
0.71 0.61 141*
VOLUNTEERS TO NON-RELIGIOUS CAUSES
0.60 0.39 121*
Ref.: 2000 SCCBS
8
Informal Giving
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Money Time Blood Help tohomeless
Place inline
Mistakenchange
Empatheticattitudes
Religious
All
Secular
Data: 2002 GSS
9
Nature vs. Nurture
• A “God and Giving Gene”?– .25-.50 of “innate religiosity”
appears to be genetic– Why not innate charity as well?
• Learning hypothesis– Giving is a learned behavior, and
religious communities teach it
10
Evidence in Favor of Learning
Frequency of church attendance as a child
Percentage of secularist adults who donate to
charitySecular charities
only
Every week 47% 40%
Almost every week 41% 37%
A few times a year 35% 32%
Never 26% 29%
Data: 1999 Arts and Religion
11
What Is “Religious”?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
People who devote “a
great deal of effort” to
their spiritual lives
People who devote
“no effort” to their
spiritual lives
Gives to all causes
Gives to nonreligious
causes
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
People who belong to ahouse of worship
People who do notbelong to a house of
worship
Data: 1999 Arts and Religion
12
Evidence in Favor of Learning
Frequency of church attendance as a child
Percentage of secularist adults who donate to
charitySecular charities
only
Every week 47% 40%
Almost every week 41% 37%
A few times a year 35% 32%
Never 26% 29%
Data: 1999 Arts and Religion
13
The Importance of Family
51%
56%
61%
46%
48%
50%
52%
54%
56%
58%
60%
62%
1 2 3 to 6
Family size
Per
cen
tag
e vo
lun
teer
ing
14
Families teach giving behavior
56%
38%
0%
10%
20%
30%
40%
50%
60%
Parents volunteered Parents did not volunteer
Per
cen
tag
e o
f ad
ult
s w
ho
vo
lun
teer
15
Giving Rises with Income (Mostly)
Annual household income
Average value of annual
charitable gifts
Percentage giving
money to charity each
year
Average annual gifts
as a percentage of income
0-$20,000 $458 64% 4.58% $20,001-$30,000 $710 75% 2.84% $30,001-$50,000 $1,093 84% 2.73% $50,001-$75,000 $1,530 89% 2.45% $75,001-$100,000 $2,059 92% 2.35% $100,001 and above $3,089 94% 3.09%
16
Age and “New Philanthropy”
• New philanthropists appear different from their predecessors– Younger wealthy give less than older wealthy, on
average– New wealth comes from new sources– New philanthropy tends to be more “hands-on” and
entrepreneurial– Relatively little geographical bounding
Ref.: Brown 2000
U.S. Silicon Valley, CA (1998) Belongs to a work-related organization 16% 52% Belongs to a religious organization 70% 26% Gives to religious organizations 48% 37% Gives to education organizations 20% 36% Gives to human-service organizations 25% 18%
17
Planned Giving Instruments
• Pooled income funds– Pay lifetime annuities– Split between charity and beneficiaries
• Charitable lead trust– Dividends pay to charity till time t– After t, principal pays to beneficiary
• Charitable remainder trust– Dividends pay to beneficiary till time t– After t, principal pays to charity
Ref.: Hodgkinson (Salamon) 2002
18
Development Innovations
• Venture philanthropy– Foundation giving in search of large,
immediate payoff outcomes across a wide variety of potential activities
• E-philanthropy– Donations given over the internet
• Credit card donations taken from websites• Donation portals: collect donor information and
donations for a commission• Charity malls: For-profits that advertise on NPO
sites and donate a percentage of sales to the charity
Ref. Brooks 2002
19
Institutional Philanthropy
• Foundations– 50,000 and growing– $450b in assets
• Corporations– 75% of corporate giving not from corporate
foundations– Cash and in-kind giving
• Federations (pass-through organizations)– General: United Ways– Specific: American Cancer Society, March of Dimes
• Gift funds– Donor-advised and controlled accounts– Run by for-profit investment firms
Ref.: Lenkowsky (Salamon) 2002
20
Foundation Types
• Independent: 95%– Operating (6%)– Non-operating (94%)– Usually connected with family
fortunes
• Community: 1%– Pool community assets
• Corporate: 4%
Ref.: Lenkowsky (Salamon) 2002
22
Direct Government Subsidies Are Large …
Billions of 1997 dollars Percent of total revenues
All nonprofits 207.8 31.3
Arts and culture 1.5 9.7
Health 137.7 42.2
Education 23.1 19.4
Social welfare 40.1 52.1
$138
$23
$7
$40
$2$0
$20
$40
$60
$80
$100
$120
$140
$160H
ealth
Edu
catio
n
Re
ligio
n
So
cia
lw
elfa
re
Art
s a
ndcu
lture
Bill
ion
s of
199
7 d
olla
rs
$138
$23
$7
$40
$2$0
$20
$40
$60
$80
$100
$120
$140
$160H
ealth
Edu
catio
n
Re
ligio
n
So
cia
lw
elfa
re
Art
s a
ndcu
lture
Bill
ion
s of
199
7 d
olla
rs
23
…and Growing
$0
$50
$100
$150
$200
$250
1977 1982 1987 1992 199724%
25%
26%
27%
28%
29%
30%
31%
32%
Sector revenues from government (1997 prices)
Percent of sector funding from government
$0
$50
$100
$150
$200
$250
1977 1982 1987 1992 199724%
25%
26%
27%
28%
29%
30%
31%
32%
Sector revenues from government (1997 prices)
Percent of sector funding from government
24
U.S. Governments Fund the Nonprofit Sector at an Unremarkable Level
0%
10%
20%
30%
40%
50%
60%
70%
80%
Ire
land
Be
lgiu
mG
erm
any
Isra
el
Ne
the
rland
sF
ran
ceA
ust
riaU
nite
d K
ingd
omJa
pan
Rom
ania
Sou
th A
fric
aC
zech
Re
pub
licIt
aly
Fin
land
No
rwa
yS
pain
Au
stra
liaU
nite
d S
tate
sS
we
den
Hun
gary
Tan
zan
iaS
outh
Ko
rea
Po
land
Slo
vak
Arg
en
tina
Pe
ruB
razi
lC
olo
mb
iaM
exi
coP
aki
stan
Ph
ilipp
ine
sK
enya
0%
10%
20%
30%
40%
50%
60%
70%
80%
Ire
land
Be
lgiu
mG
erm
any
Isra
el
Ne
the
rland
sF
ran
ceA
ust
riaU
nite
d K
ingd
omJa
pan
Rom
ania
Sou
th A
fric
aC
zech
Re
pub
licIt
aly
Fin
land
No
rwa
yS
pain
Au
stra
liaU
nite
d S
tate
sS
we
den
Hun
gary
Tan
zan
iaS
outh
Ko
rea
Po
land
Slo
vak
Arg
en
tina
Pe
ruB
razi
lC
olo
mb
iaM
exi
coP
aki
stan
Ph
ilipp
ine
sK
enya
Data: Salamon, et al. (1999)
25
Indirect Subsidies and Taxes
• Taxes foregone on deductible contributions
• UBIT• Property taxes• Tax credits
26
Income Tax Revenues Foregone
• t=individual’s marginal tax rate• m=gross income• D=tax-deductible donations• t(m-D)=taxes paid• tD=indirect government subsidy• 2002 estimate: $37.2b
27
Corporate Tax Exemption and the UBIT
• As a general rule, organizations have incentives to invest in activities where their earnings are tax exempt but other organizations must pay tax
• Nonprofits to a significant degree can shift costs from exempt to non-exempt activities
• → UBIT payments to government are very low
28
The Property Tax Exemption
• Could be thought of as a subsidy by the state, or as a reflection of the “sovereignty” of nonprofits
• Total US value of exemption around $6 billion (mostly in hospitals and education)
• Increased use of PILOTS: strategic move for nonprofits