Are Americans More Generous? A Comparison of Charitable Giving in Canada and the United States. Highlights

Transcription

1 Vol. 7., No's. 2 & 3 - Spring/Summer 2000 Are Americans More Generous? A Comparison of Charitable Giving in Canada and the United States Larry McKeown - Senior Research Associate Highlights 88% of individual Canadians made donations, either financial or in-kind, to charitable and nonprofit organizations in 1997; this compares to 70% of American households that contributed money or property to charitable organizations in About half (52%) the dollar value of all financial donations made by Canadians went to religious organizations in 1997 compared to 60% of the value of money and property contributed formally by American households in Canadians direct relatively more of their support to health and social service organizations, accounting for 28% of the value of all financial donations in 1997 compared to 16% of the value of money and property formally contributed by Americans in 1998.

2 For reasons of geographic, cultural and historic similarity, Canadians often compare themselves with their neighbours to the south. The extent to which Canadians and Americans donate to charitable organizations is no exception. Are Canadians more or less generous than Americans in this regard? There is no simple answer to this seemingly straightforward question since, in both countries, charitable giving is a complex social behaviour influenced by socioeconomic factors (e.g., education) and public policy (e.g., taxation). This research bulletin helps to illustrate the complexity. The difficulty of assessing and comparing the philanthropic generosity of Canadians and Americans stems from this complexity and from differences in the surveys used to collect information. In this research bulletin we compare charitable giving data from two surveys: the 1997 National Survey of Giving, Volunteering and Participating (NSGVP) for Canada and the Independent Sector s 1999 Giving and Volunteering National Survey for the United States. 1 While these two surveys represent the most comparable sources of information available, there are important design differences (see Methodological Notes). An objective of this research bulletin is to confront the public perception that Americans are more generous than Canadians. The Fraser Institute, for example, asserts that Canadians give less to charities than do Americans and that Atlantic Canadians are among the least generous (Clemens & Samida, 2000; Francis & Clemens, 1999). These assertions appear to be based on a deliberately selective use of the available data. In fact, the only survey (Lane, Saxon-Harrold & Webber, 1994) specifically designed to be internationally comparable concluded that Canadians were more generous than were Americans with both their money and their time. 2 The following comparison is based on more recent survey findings. How Many and How Much? Perhaps the most sought after figures in comparing Canadian and American philanthropic behaviour are the donor rate (how many give) and the amount given (how much). Unfortunately, the survey instruments in each country use a different basis of measurement. The Canadian NSGVP uses the individual while the Independent Sector uses the household (see Methodological Notes). The use of the household tends to inflate the incidence of giving since, to be counted as a donating household, only one member of a household has to give. This difference also prevents a direct comparison of the actual amount donated. Another important survey design consideration stems from in-kind transfers or gifts of property, which are treated more routinely in the United States (see A Taxing Matter). As such, Americans are asked to report the aggregate total of monetary gifts and the value of property and it is not possible to delineate between the two using the Independent Sector s survey. 3 In contrast, the NSGVP does not ask for a valuation of property donated by Canadians to charitable organizations. 4 Canadians are asked about their inkind donations of clothing, household goods and food, but are not asked to report the monetary value.

3 Important differences in survey design prevent a direct comparison in certain aspects and the exercise of caution in others. For example, the American household contribution rate (70%) includes purchases of goods and services from charitable organizations while the Canadian individual charitable contribution rate (88%) does not. All considered, Figure 1 shows that Canadians have higher rates of charitable donations than do Americans. The survey results also indicate that Canadians have higher rates of purchased goods from, and in-kind contributions to, charities (Figure 2). The 78% of individual Canadians who reported making a direct financial donation to charitable organizations in 1997 gave an average of $ The 70% of American households that reported making a contribution to charitable organizations in 1998 gave an average of $1075 in money and property. 6 Figure 1: Charitable Contribution Rates in Canada and the United States Notes: (1) Percentage of Canadians making either a financial or in-kind charitable donation versus percentage of American households contributing to charity. (2) Based on individual Canadians reporting a direct financial donation to a charitable organization. (3) Based on 70% of American households contributing to a charitable organization, 79% of which reported giving cash or a cheque directly; excludes credit card payments.

4 Figure 2: Charitable Purchase and In-Kind Contribution Rates in Canada and the United States Notes: (1) American rate based on 70% of households contributing to charity, 80% of which reported purchasing goods or services (e.g. chocolate bars). (2) American rate based on 70% of households contributing to charity, 84% of which made an in-kind donation of food or clothing. Canadian rate based on combining individuals donating household goods or clothing (63%) with individuals donating food (52%). Where Donations Go An important difference between Canadian and American charitable contributions is the type of charitable organizations they support. While a slight majority of the dollar value (52%) of direct donations was accounted for by religious organizations in Canada during 1997, over a quarter (28%) of donations went to social services and health organizations. In comparison, the lion s share of the dollar value of formal contributions (60%) in the United States went to religious organizations during 1998 while just 16% went to human services and health organizations (Figure 3). This difference in the type of organizations supported may reflect the relative importance of religion in each country (see The Role of Religion). Figure 3: Value of Charitable Contributions in Canada and the United States, by Type of Organization

5 Note: Canadian distribution based on financial donations and American distribution based on formal contributions. Patterns and Variations In each country, both the incidence and amount of charitable donations vary by socioeconomic characteristics such as income, age and education. For example, 88% of Canadians with a household income of $60,000 or more in 1997 made a financial donation compared to the national average of 78%. In the United States, over 80% of households with income greater than $50,000 contributed to charitable organizations in 1998 compared to the national average of 70%. Although donors with higher incomes in both countries tend to make larger donations, they do not always contribute a greater percentage of their household income. Individual Canadians in households with less than $20,000 in income reported an average financial donation representing 1.4% of total household income while those in households with more than $100,000 gave 0.5% of total household income. In comparison, American households earning under $10,000 a year gave, in money and property, 5.2% of total household income and households with incomes over $100,000 gave 2.2%. Other important influences on charitable giving in both countries are age and education. For example, almost 84% of Canadians aged made a financial donation in 1997 compared to the national rate of 78%. Almost 79% of American households in which the respondent was years of age made a charitable contribution, ten percentage points higher than the national rate in Most Canadians with a university degree made a financial donation (90%) in 1997 while over 80% of American households that contained a college graduate made a charitable contribution in 1998.

6 Both surveys establish a link between giving and volunteering; that is, volunteers tend to give more than non-volunteers. For example, Canadians who volunteered in 1997 made financial donations that averaged about two and a half times that of non-volunteers. Similarly, American contributing households with a volunteer also contributed over two and a half times more than did contributing households in which the respondent did not volunteer. The Role of Religion While religion is associated with charitable giving in both Canada and the United States, there is a relative difference that warrants further examination. In 1997 just over one in three (35%) Canadians donated money to religious organizations while almost one half (45%) of American households contributed to religious organizations in 1998 (Figure 4). As indicated previously, religious organizations account for just over half (52%) of the value of financial donations in Canada compared to 60% of the value of money and property formally contributed by American households. Concomitantly, the survey information also indicates that Americans tend to participate more actively in religious organizations. In 1997, 57% of Canadians reported attending religious services whereas three in every four Americans attended religious services in 1998 (Figure 5). Of the 20% of Canadians who attended services weekly in 1997, 90% reported making a donation. In comparison, of the 38% of Americans who attended services weekly in 1998, 84% reported making a contribution to charity. Clearly, the role of religion in charitable giving represents a difference between Canada and the United States. It is important to emphasize however, that this difference tends to be one of degree. The top 25% of donors in Canada, who account for 80% of the total value of donations in 1997, were more likely to attend weekly religious services, to cite religious obligations as a motivation for charitable giving, and to make significant contributions to religious organizations (Greenberg, 2000).

7 Figure 4: Charitable Contribution Rates in Canada and the United States, by Religious and Other Charities Figure 5: Attendance at Religious Services in Canada and the United States Giving: Why and Why Not Although both the Canadian and American surveys collect information on the motives for and barriers to giving, they do so by asking somewhat different questions. Despite this, the role of religion remains discernible. For example,

8 over 60% of Americans cited being asked by clergy as an important motivation for their contribution in 1998 while just 34% of Canadian donors indicated making their donations to fulfil religious obligations or beliefs. Reasons for not contributing and for not giving were broadly similar in the two countries. The major barrier cited by American non-contributing households was that they could not afford to give (69%). Similarly, the two most frequent reasons for not donating reported by Canadians were that they were saving money for future needs (66%) and that they would prefer to spend money in other ways (67%). A Taxing Matter In the 1997 NSGVP survey, 46% of Canadians who reported making a donation to a charitable organization indicated that they or someone else in the household would be claiming a tax credit. 8 Just 38% of American contributing households indicated that someone in the household had claimed a charitable donation for Why the apparently low propensity to claim charitable tax credits? In Canada, the likelihood of reporting a charitable donation for income tax purposes increases steadily with the amount given (Figure 6). The surveys indicate the average individual donation by Canadians intending to claim a tax receipt was over $400 compared to $89 for those who did not intend to claim. In the United States, the effect was more evident. The average American household contribution was $1,798 in money and property for those households that claimed a deduction in 1998 compared to $270 for households that did not claim a deduction. It is also important to note that contributions of property account for approximately 25% of the total value of American charitable contributions. No comparable figure is readily available for Canada. Americans can routinely claim in-kind donations on their income taxes since many charitable organizations have assessors on staff to appraise the value of donated property and provide a tax receipt. In Canada, the process is somewhat more onerous as the Canada Customs and Revenue Agency requires an independent, third-party assessment of the value of property. At the time of the respective surveys, there were also some notable differences in tax policy between the two countries. For example, the tax treatment of capital gains on donations in Canada was viewed as less favourable; recent changes have been made to Canadian tax policy in this regard. It seems differences in charitable giving between Canada in 1997 and the United States in 1998 may not only be attributable to the respective political cultures but also to public policy differences. 9 Figure 6: Canadian Donors Claiming a Tax Credit, by Average Size of Donation

9 Are Americans More Generous? It appears that relatively more Canadians donate to charitable organizations but that, on average, Americans who contribute tend to give a larger amount. Are Americans donating higher average amounts because they have higher average incomes? A recent report by The Fraser Institute on charitable donations and taxes concludes "that Canadians give less because they have less" (Francis & Clemens, 1999, p. 3). Such an inference allows the authors to advocate a policy of lower taxes as a means of increasing charitable donations. In support of this assertion, The Fraser Institute reports: in 1995, 68.5% of Americans contributed to charities while only 39% of Canadians donated to registered charities. In the absence of providing a source for this formation, one assumes that the "68.5% of Americans" is from the Independent Sector s 1996 Giving and Volunteering in the United States survey. If so, it is more accurate to state 68.5% of American households. Less evident is the source for "39% of Canadians" since the most obvious comparison was with the 1997 NSGVP; it reports that 88% of individual Canadians made donations. The 1997 NSGVP results were available to The Fraser Institute authors since they are used in the very next paragraph of their report: Further, an overwhelming 89 percent of Canadians on the latest Statistics Canada non-profit and volunteering survey indicated that they were not motivated by tax credits. A more accurate interpretation of this survey finding is that 11% of Canadians donating to charities indicated that the income tax credit was a reason for

10 their gift. However, more than one in three Canadian donors indicated that they would increase the amount if offered a better tax credit (Figure 7). Most importantly, almost half (45%) of the top donors, accounting for 80% of the value of all donations in 1997, indicated they would increase their donation. A more recent Fraser Institute report argues that Americans are more generous than Canadians and that the Maritime provinces ranked dead last in Canada (Clemens & Samida, 2000). 10 However, according to the NSGVP, between 82% and 84% of those living in Atlantic Canada made a financial donation, placing the Atlantic provinces in the top five in terms of donor rate (Figure 8). 11 It is apparent that patterns of charitable giving in Canada and the United States are influenced by a myriad of socioeconomic, demographic and institutional factors. Evidently, there are both similarities and differences in the patterns of giving between the two countries reflecting these underlying factors. One critical factor, the role of religion, represents an important difference in the political culture or landscape of each country. Indeed, even The Fraser Institute admits that the prominence of religious activity in some areas of the U.S. is an important factor explaining differences in charitable giving. 12 This research bulletin has demonstrated that assessing philanthropic generosity is not a simple matter. As such, the question of whether Americans are more generous does not have a simple answer; it depends on how the question is posed. Canadians are more generous if the question is "how many" and some Americans are more generous if the question is "how much". Also important are the source of information and the political lens, if any, through which it is examined. This leeway allows The Fraser Institute to state that "Canadians are downright scrooge-like in terms of their relative generosity when placed beside Americans" (Clemens & Samida, 2000, p. 2). Canadians and Americans provide support to individuals and communities in many forms ranging from baking a pie for a grieving neighbour to providing gifts of art to national galleries. One indication of this support, charitable giving, is a complex human behaviour that requires a consideration of many factors. Based on the most recent and comparable information, Canadians have a higher rate of charitable giving than do Americans. While Americans who do give tend to contribute more on average, a higher proportion is contributed to religious organizations and much less to social service and health organizations.

11 Figure 7: Canadian Donors who would Donate More if Given a Better Tax Credit, by Average Size of Donation Figure 8: Charitable Donation Rate in Canada, by Province Methodological Notes The National Survey of Giving, Volunteering and Participating (NSGVP) was a joint project of: the Canadian Centre for Philanthropy, Volunteer Canada,

12 Canadian Heritage, Health Canada, Human Resources Development Canada, and the Kahanoff Foundation s Nonprofit Sector Research Initiative. In November of 1997, Statistics Canada administered the NSGVP to a representative sample of 18,303 Canadians aged 15 years and over. Survey participants were asked how they gave money and other resources to individuals and organizations, volunteered time in their communities and participated in active citizenship for a one year period. The Giving and Volunteering National Survey in the United States is conducted biennially by the Independent Sector. 13 From May to July 1999, a representative sample of 2,553 adult Americans 18 years of age or older was asked a series of questions about the total giving of their household in As individuals, they were asked about their own volunteering and participating for the same period. Results from this survey are based on findings reported in the Executive Summary (Independent Sector, 2000) and from special tabulations. There are important design differences between these survey instruments, both in terms of content and methodology (Table 1). Important design differences include the unit of analysis, wording of the actual questions asked and the sequencing. 14 An important methodological difference is the sample size. The Independent Sector estimates have an error rate of +/- 3% at the national level while the NSGVP estimates provided for this research bulletin are statistically unqualified. Table 1: Measuring Giving in Canada and the United States Notes: (1) For purposes of this research bulletin, monetary values from the United States are expressed in current American dollars and those from Canada in current Canadian dollars. (2) For purposes of this research bulletin, Canadian giving is dated 1997 and American giving is dated 1998.

13 For Further Information: Canadian Centre for Philanthropy ( The Fraser Institute Forums: June 1999 and January 2000 ( Internal Revenue Service Individual Tax Statistics ( Statistics Canada Daily news, various ( References Air Canada. (2000, June). Philanthropy Canadian-Style. enroute. p. 92. Clements, J. & Samida, D. (2000, January). Who is Really More Generous? Fraser Forum. Vancouver: The Fraser Institute. Francis, J. & Clemens, J. (1999, June). Fraser Forum. Vancouver: The Fraser Institute. Greenberg, L. (2000, Summer). Some Insights into Canada s Major Donors, Research Bulletin, 7(1). Toronto: Canadian Centre for Philanthropy. Hall, M., Knighton, T., Reed P., Bussière, P., McRae, D, & Bowen, P. (1998). Caring Canadians, Involved Canadians: Highlights from the 1997 National Survey of Giving, Volunteering and Participating (71-542XPE). Ottawa: Statistics Canada. Heinz, L. (1999, Autumn). Trends in Individual Donations: Research Bulletin, 6(4). Toronto: Canadian Centre for Philanthropy. Independent Sector. (2000). Giving and Volunteering in the United States, Executive Summary Edition. Washington: Author, Lane, J., Saxon-Harrold, S. & Weber, N. Eds. (1994). International Giving and Volunteering. Charities Aid Foundation (1st Edition). Charities Aid Foundation.

14 Monahan, P. with Roth, E. (2000). Federal Regulations of Charities: A critical assessment of recent proposals for legislative and regulatory reform. Toronto: York University. Statistics Canada. (2000, October 24). Charitable Donors. The Daily. (11-001). Ottawa: Author Footnotes: 1 The author would like to acknowledge Keith Hume, Research Associate with the Independent Sector, for his comments on an earlier draft of this research bulletin; however, the opinions expressed are solely those of the Canadian Centre for Philanthropy. 2 Sixty-two percent of Canadians made a charitable contribution in the previous month compared to 55% of Americans in Canadians were also more generous in terms of the average amount given. 3 American respondents were asked "In total, approximately how much money and/or the cash equivalent of property have you and the members of your household contributed to in 1998?" 4 The NSGVP asked respondents "if you or your spouse/partner have made any financial contributions to a charitable or non-profit organization in any of the following ways in the past 12 months (and) what was the amount of this donation?" 5 Total direct and indirect financial support in Canada was estimated between $4.5 and $5.8 billion for 1997 (Hall, et. al., 1998). 6 The Independent Sector estimates $135 billion total giving in the U.S. for 1998 (Independent Sector, 2000). 7 Some detailed 1998 breakdowns from the Independent Sector s survey, including age, were not available in time for this bulletin. Historically, American households with respondents from years of age have the highest contribution rate. 8 For more information on charitable donations claimed by Canadians for income tax purposes, see Heinz (2000). 9 For an assessment of Canadian charitable tax regulation, please see Monahan and Roth (2000). They find that the legislative context for charitable regulations was "broadly similar" in Canada and the United States. For example, both countries define "charitable" with respect to the Pemsel categories as rooted in common law history and convention.

15 10 A December 20, 1999 media release by The Fraser Institute states the Western Provinces are most generous while the Maritimes and Quebec are least. 11 Furthermore, analysis of the 1999 income tax data by Statistics Canada indicates that Prince Edward Island, Newfoundland, New Brunswick and Nova Scotia ranked in the top five provinces for median (half donated less, half more) charitable donations (Statistics Canada, 2000). 12 "Utah has a huge Mormon population and they re off the charts in terms of giving", notes Clemens (Air Canada, 2000, p.92). 13 The Independent Sector is a national coalition of over 700 voluntary organizations, foundations and corporate giving programs in the United States that works to encourage philanthropy, volunteering, nonprofit initiative and citizen action to better serve people and communities. 14 For example, the Independent Sector asks for amount of contribution by "charitable field" and then asks about methods of payment (e.g. payroll deduction, credit card). Conversely, the NSGVP asks respondents about the ways in which they made financial contributions (mail, telephone, door-todoor canvassing) and then asks questions about the amount and type of organization Canadian Centre for Philanthropy This Research Bulletin is copyright, and its reproduction or transmittal, in whole or in part, in any form or by any means, or its storage in a retrieval system, without the prior written permission of the copyright owner is strictly forbidden. 425 University Avenue, Suite 700, Toronto, Ontario, M5G 1T6 (416) Please visit our Web sites: / /