The Charity Gap
April 4, 2007; Page A15
As Americans prepare their tax returns, many will be toting up their tax-deductible donations. Whether it is support for a church or hospital or their alma mater, they have every reason to feel good about what they're doing.
But there is a surprising disconnect between Americans' philanthropic aspirations and their charitable giving. The vast majority of givers believe the bulk of their donations help those less fortunate than themselves. In fact, less than one-third of the money individuals gave to nonprofits in 2005 went to help the economically disadvantaged, according to a new study commissioned by Google.org, the philanthropic arm of Google. Of the $250 billion in donations, less than $78 billion explicitly targeted those in need.
The analysis, carried out by the Center on Philanthropy at Indiana University, concluded that only 8% of donations provide food, shelter or other basic necessities. At most, an additional 23% is directed to the poor -- either providing other direct benefits (such as medical treatment and scholarships) or through initiatives creating opportunity and empowerment (such as literacy and job training programs). It's just not true, in other words, that the major beneficiaries of charity and philanthropy are the disadvantaged.
The "charity gap" is even wider among the affluent. Wealthy individuals claim, according to a Bank of America Study, that their giving is driven by a "feeling that those who have more should give to those with less." But people who earn more than $1 million per year give only 4% of their donations for basic needs and an additional 19% to other programs geared toward the poor.
These numbers matter. Overall donations by individuals are more than four times that of foundation and corporate philanthropic efforts combined. And they matter most among the wealthiest, since fewer than 10,000 families contribute more than 20% of all donations.
While more research is necessary to understand this charity gap, several explanations seem likely. First, it is certainly easier to give -- and harder to say no -- to those in your own community or among your circle of friends. Neighbors deliver invitations to school auctions; classmates call for university capital campaigns. The homeless shelter in the inner city offers neither the peer pressure of a familiar face nor the opportunity for one's friends to see one's generosity. Giving to organizations close to home also offers more comfort that funds will be used effectively.
A second reason may be that donors do not fully understand where their contributions go. For people with annual incomes below $100,000, religious giving dominates, comprising two-thirds of all donations. While the church food drive may be in donors' minds as they reach into their pockets, less than 20 cents of every dollar given to religious organizations funds programs for the economically disadvantaged. For the wealthiest Americans, education and health care comprise the majority of donations. Yet in education, fewer than nine cents per dollar pays for scholarships; in health, only 10 cents per dollar funds programs targeted to the needy.
Of course, philanthropic giving not targeted to the disadvantaged nevertheless supports important causes -- education, health, the arts -- and valuable public goods. Such programs benefit everyone, rich and poor, though to substantially differing degrees. But because they are broad-based, such efforts are far from the most effective method of addressing critical issues for those most in need.
The "charity gap" becomes more acute as the scale goes global. The most generous estimate shows that only 8% of U.S. individual donations supports international causes of any kind. Though many organizations including Global Giving and TechnoServe demonstrate that small amounts of money can make an enormous difference in the lives of individuals and communities in poor countries, the world's poorest are virtually ignored by the philanthropic giving of citizens of the world's wealthiest nation.
As Americans consider their 1040s this year, they need to ask if there is a disconnect between their desires and their actions. Many will find, perhaps to their surprise, that what they want to do is not, in deed, what they're doing. If so, they should start looking deeper into how their donations benefit those whose economic fortunes are dramatically different from their own.
Ms. Sandberg is vice president of global online sales & operations at Google Inc. and a board member of Google.org.