New data on U.S. charitable giving, just published by Giving USA, is eliciting the usual self-congratulatory toasts to American generosity. The data show another banner year for giving, with donations again hitting a record high—$390 billion in gifts by individuals, foundations, corporations and estates, an increase over 2015.
This sum is greater than the annual GDP of 160 countries. And aside from mandated payouts by foundations, all of these gifts are freely given—a vast and voluntary flow of dollars that support a civil society sector that is rightly legendary for its scope and diversity. The biggest share of charitable gifts came from individuals—totaling $281.8 billion last year.
That’s a seemingly impressive figure. But in fact, these new numbers offer the latest reminder of how little of America’s private wealth finds its way to nonprofit organizations—much less to groups that seek to help the most disadvantaged among us. Total annual giving last year equals just over 2 percent of GDP. More notably, though, such giving equals a far smaller fraction of total household wealth, which now stands at around $92 trillion. About three-quarters of that wealth is held by the top 10 percent of U.S. households, while the top 1 percent holds a third or more of this wealth—at least $30 trillion. Many of the assets of the wealthiest households are relatively liquid. A study last year found that around 70,000 U.S. households have assets of $30 million or more, excluding the value of their homes.
In other words, America's rich have more spare cash on hand than ever before. And to be sure, most of them give something to charity. According to a recent study, 91 percent of high-net-worth households give to charity. Such households, with incomes of at least $200k and assets of $1 million, gave $25,509 on average in 2015. Many wealthy Americans gave far more than that, with gifts of $1 million or more soaring in recent years. One study found that U.S. households made 1,823 such gifts in 2015, worth over $19 billion—a big jump from previous years.
Overall, it’s estimated that one-third of all charitable giving in the U.S. comes from the top 1 percent of U.S. households. In 2016, that would equal roughly $130 billion.
This sounds like a lot of charitable giving from the top 1 percent—except when you remember that this group has assets of over $30 trillion. As a group, the wealthiest Americans gave away less than a half of 1 percent of their total wealth in 2016.
Meanwhile, corporations didn’t do much better. Giving USA reports that corporate giving hit $18.55 billion in 2016. But all corporate profits last year totaled around $6.6 trillion.
In light of these numbers, Giving USA's findings are less encouraging—if not downright depressing.
While there’s been enormous attention to the philanthropy of the wealthy lately, including in this publication, it’s important not to lose sight of the bigger picture. Even as a growing number of wealthy donors step up to give, many are holding back and the far upper class as a whole is only parting with a tiny sliver of its wealth. Some of the very richest Americans—like Jeff Bezos and the Mars family—give barely anything all.
Why don’t the rich give more? There are various reasons, including that giving away money wisely is harder than it looks. It takes time, focus and energy—which can be in short supply for busy people still involved in their careers. Also, many wealthy people may simply care more about preserving and growing their family's assets than about helping out others.
Regardless of the explanations, the bottom line is that charitable giving is doing very little to alleviate record levels of inequality. This giving may seek to achieve many good things, which we report daily at IP, but it’s not on a scale that can make much of a dent in America’s biggest socioeconomic problems. That’s especially true given that much charitable giving doesn’t even go toward the most disadvantaged Americans in the first place.
Thanks to a range of factors, including historically low tax rates in recent decades, record levels of wealth have been piling up at the top of the income ladder—with just the tiniest trickle leaking out to the charitable sector. The wealthy, as a class, remain far more interested in helping themselves than helping others.