How Generous Are We?

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The holiday season and end-of-year rush to make charitable contributions you can claim on your federal tax filing make this a common time for Americans to make such donations. Past studies have suggested the U.S. is one of the most generous nations in the world.

A new study by Upgraded Points based on individual tax return data from the IRS shows that Americans donate more than $215 billion to charitable causes each year. The study shows just how dominant the richest 1% in America are when it comes to charitable giving, and which states and cities are the most and least generous.

Past studies, based on IRS returns, were incomplete because only taxpayers who itemized their deductions were allowed to claim charitable donations. But after a 2020 rule change allowing other taxpayers to claim donations, the total number of returns with charitable contributions more than tripled, giving a much more accurate picture of Americans’ generosity.

At first glance, Wisconsin looks generous, ranking 10th highest in the percent of taxpayers — 35% — who donate to charity. New Jersey ranked 1st at 40.5% and West Virginia ranked last at 22.1%.

However, Wisconsinites are not as generous in how much they give — in the average percent of adjusted gross income given to charity. By that measure the report found that Utah, with its Mormon culture and history of tithing, is by far the most generous state, with its average donor giving $35.63 of every thousand dollars of adjusted gross income to charity. That compares to $7.36 for West Virginia, which again ranked last. Wisconsin ranked ahead of just nine states, with an average donation of $11.12 per thousand of adjusted gross income.

When it comes to the 55 largest urban areas the metro area of Washington DC ranked first in the percent of people donating — 41.2% — while the Miami metro area ranked 55th, with 26.8% of people donating. The Milwaukee metro area ranked 13th, with 36.4% of people donating to charity.

But again, the picture looks much different when you look at average giving per $1,000 of adjustable gross income. There Salt Lake City in Utah ranks first, giving $30.70 per $1,000 in income, and Providence, Rhode Island ranks the lowest with just $7.78. As for metro Milwaukee, it ranked ahead of 18 metro areas, slightly lower than the median, with $14.09 donated per $1,000 of gross income.

All of which might suggest that Wisconsin and metro Milwaukee have generous instincts, in that a higher percentage of people than the national average give to charity, but are thrifty about it, giving a lower percentage of their income than the average donor nationally.

But while these regional differences are of some interest, the overwhelming trend this study shows is the domination of wealthy people when it comes to charitable giving. Of $215 billion given to charity annually more than one quarter of that comes from “Ultra-high earners — who bring in more than $10 million annually” and “representing less than 0.02% of all tax returns,” the study noted. “And more than half of all charitable contributions are made by the top 1% of earners.”

Which may give 1% of the country considerable power over the non-profit sector. That has been seen in higher education, where big donors are using their clout to influence how universities like Harvard handle student protests and statements about the current Israel vs. Hamas crisis. It’s only the latest of an increasing trend: “George Mason University in 2019 tightened donor rules after disclosures came to light that the conservative Koch Foundation received a say in the hiring and firing of some professors under agreements that provided millions of dollars to the school,” CNN reported. “A prominent Yale University historian in 2021 resigned from a prestigious program at the university, citing pressure from donors, and a leading donor to the University of North Carolina at Chapel Hill helped block a proposed appointment of journalist Nikole Hannah-Jones to the school.”

In Wisconsin John Menard, the billionaire owner of the Menard’s home improvement chain, donated $2.36 million to Stout University to expand the Center for Study of Institutions and Innovation, which started in 2017 with a donation from the Charles Koch Foundation, “to facilitate civil and rational debate and research on civil liberty issues like freedom of religion, speech, press and assembly.”

The super-rich have taken over the world of museums, a story by the New York Times chronicled.

The annual reports by Giving USA have found that “More and more charitable dollars” are coming from wealthy donors, and “fewer and fewer …coming from lower- and middle-income donors…Top-heavy philanthropy poses at least two huge risks to charities. One is that it makes charities vulnerable to donor fickleness and donor control,” the group reported. It also means less money coming in because wealthy people “tend not to give directly to working nonprofits, but to intermediaries like private foundations and donor-advised funds,” who get a significant chunk of the money.

A 2022 report by the Institute for Policy Studies offered an even more pointed warning: “Because a greater concentration of total donation amounts is from a small circle of elite funders, these funders wield disproportionate influence over charities’ activities, and even their core missions, thereby endangering the clients who depend on the charities’ work, as well as the charities themselves.”

And then there is the realm of politics, where tax-exempt foundations are pushing to shrink the government social safety net that protects lower-income people. In Wisconsin Uihlein Family Foundation has donated $17.85 million and the Bradley Foundation $2.75 million to a foundation lobbying the Wisconsin Legislature to make it harder to collect unemployment insurance and Medicaid.

All of which calls into question whether more charitable dollars necessarily make Wisconsin or America a better place. What may be may important is who’s giving the money and how they want it spent.