The Stanford Social Innovation Review announced yesterday that my post “Why Do People Give to Charity” was one of their top five most read posts of 2008. I’d love to think that this is because it was such a brilliantly written post, but in fact it is mostly due to Google. The post (and my follow up post, “Why Do People Really Give to Charity”) holds the top four ranks on Google for the search term “why do people give to charity”. Interestingly, this is a popular search term and every day I get a handful of visitors to my blog who have just googled that term.
If you think about it, it is rather amazing that there is a whole field dedicated to philanthropy and $300 billion a year is given away, yet a lot of people have no idea why. The most popular reasons that I hear put forth is that charitable donations are made for the tax deduction. This is even more bizarre to me because 1) a ton of charitable giving is done by people who do not itemize their income tax deductions and therefore receive no tax benefit from giving and 2) no matter how fancy you get with tax planning, you will always have more money if you don’t give to charity. The idea that wealthy individuals give $100 in order to save $40 in taxes is irrational to say the least.
I believe that people give to charity because it fulfills the healthy human desire to help others. I think that helping others makes people feel good and improves the world in which they live and so they benefit from the act of giving. That’s OK. It is good to help others and it is fine that givers benefit from giving. You don’t have to resort to guilt, tax evasion schemes and secret quid pro quo arrangements to understand why people give.
I have to admit Sean, we never use the “tax benefit” conversation unless we’re in the depths of a planned giving conversation. I have never identified tax incentives as a reason for giving because it also doesn’t make sense to me personally.
Thanks for reassuring the world that there isn’t always an ulterior motive when one does something nice 🙂
I just read an interesting article in The Economist (hat tip to the Chronicle of Philanthropy) on why people give. It asserts that people are often motivated by image, and that in those circumstances, monetary incentives (such as tax benefits) actually decrease the amount they give. Interesting take on the topic.
Bonus: it quotes a new study by Dan Ariely, author of Predictably Irrational.
Great article Sonia. I tagged it and it will appear in my next Daily Digest post.
Agreed, Sean. It seems unthinkable that the primary reason people give is for financial benefit. In fact, the 2006 Bank of America Study of High Net-Worth Philanthropy indicates that over 65% of surveyed philanthropists give in order to “meet critical needs,” to “[give] back to society,” or to “bring about a desired impact.”
In the development of the FasterCures Philanthropy Advisory Service, we conducted interviews with individual donors, their advisors, and other philanthropy stakeholders. The Philanthropy Advisory Service is an online resource that provides information about nonprofit disease research organizations in order to inform philanthropic investment in disease research. Not surprisingly, our target audience is often driven to invest in biomedical research for personal reasons, because their loved ones or themselves are affected by disease. These donors are often striving to find cures in their lifetimes, and they cannot afford their investments to be used unproductively. This audience is demanding transparency, accountability, effectiveness, and progress of these nonprofit organizations.
FasterCures is building the Philanthropy Advisory Service to facilitate transparency, encourage accountability, and channel funds to organizations that demonstrate effectiveness and progress against their goals. We are excited to be part of the Second Great Wave of Philanthropy you define and the community of resources that will contribute to the effectiveness of our collective philanthropic efforts.
You’re doing great work with FasterCures Melissa. I wish you the best.