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How generous are America’s rich?

The wealthier people are the more they tend to give to charity—both in absolute and relative terms

WHEN THE super-rich make charitable donations, their philanthropy is often met with scepticism, or even hostility. In April Jeff Bezos, the boss of Amazon, an e-commerce giant, donated $100m to American food banks. Rather than commend Mr Bezos, many criticised him for giving too little, or for trying to divert attention from his company’s treatment of workers. The covid-19 pandemic, which has already attracted more than $1bn-worth of charitable giving by individual Americans, will offer other opportunities for billionaire-bashing. But new research suggests that one strand of the criticism—the claim that the rich give proportionately less of their incomes—is misplaced.

A working paper published this week by researchers at Texas A&M University used data from 10,665 American households, collected between 2001 and 2017, to gauge generosity according to three measures: the likelihood of giving, the amount given and that amount as a proportion of income.

They found that the rich are, as you would expect, more likely to donate to charity; they also give significantly more. Among households in the top 5% of the income distribution—those earning more than $233,400 per year—91% made at least one donation a year. Among households in the bottom 5%—those earning less than $11,200—the proportion was 22%. Those in the richest group gave about $6,500 per year, on average, while those in the poorest gave roughly $110.

As a proportion of income, the results are much more even: most households gave about 1.5% of their income. There was a tendency for higher-earning households to give a greater share—albeit with marked differences among the very poorest ventile (who gave 2%) and the richest one (who gave 1.7%)

What of the extremely wealthy? There were too few in the sample to draw reliable conclusions. However, using data from America’s Internal Revenue Service, the authors found that those taking home between $5m and $10m a year donated 4.3% of their income, on average. Those making at least $10m a year gave away 8.6% of it.

Philanthropic decisions often reflect the interests of the people making them. The researchers found that wealthier people donate less to causes affiliated with religion and more to arts and educational ones. The best-off households directed around 33% of their giving towards religious groups and 11% to the arts, compared with 44% and 5%, respectively, for the poorest ones. Charities dedicated to basic needs and health received about 16% and 8% of donations, regardless of income level.

Billionaires such as Mr Bezos will no doubt continue to face uncharitable scrutiny. Even if their donations are large, in absolute and relative terms, critics have two ready retorts: the richest can afford to be even more generous; and no amount of generosity can mask the inequalities that the pandemic has laid bare.

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