Rich Less Likely To Donate To Charity Than Middle Class: Study

August 21, 2012Personal Financeby EW News Desk Team

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Wealthy Americans may donate more money, in absolute dollars, to charity than their less affluent counterparts, but they tend to give away a smaller share of their income as compared to the middle class as well, said a new study by the Chronicle of Philanthropy on Sunday, using tax-deduction data from the Internal Revenue Service.

According to the Chronicle, Americans earning more than $200,000 a year donated just 4.2 percent of their income to charitable organisations in 2008 – the most recent year for which data was available.

Comparatively, the middle class, who earned between $50,000-$75,000 annually, gave out average of 7.6 percent of their income to charity that year.

The report also discovered found that a person’s zipcode also factored in to the percentage of donations he/she would give. Neighbourhoods, where more than 40 percent of the residents earned $200,000 or more, for instance saw the average resident give away just 2.8 percent of their discretionary income.

According to Paul Piff, a postdoctoral scholar in psychology at the University of California at Berkeley, the difference in charitable donations could be attributed to the impact of money on people’s lives.

As wealth increases, Piff says, “people become more insulated, less likely to engage with others, and less sensitive to the suffering of others.”

Related: Infographic: Do Rich People Live By A Different Set of Moral Standards?

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“Simply seeing someone in need at the grocery store or looking down the street at a neighbor’s modest house can serve as basic psychological reminders of the needs of other people,” according to Piff.  “Absent that, wealth will have these egregious effects insulating you more and more.”

“It’s not that they’re (the rich are) bad people,” added Robert Sharpe Jr., a fundraising consultant in Memphis. “They’re just not rooted in the community.”

The study also examined the influence of religion, political affiliations and tax incentives on an individual’s generosity.

According to the report, “regions of the country that are deeply religious are more generous than those that are not,” while Red states (Republicans) gave much more than Blue states (Democrats).

Nevertheless, despite the study’s findings, the authors also noted that high-income earners still accounted for the largest share of donations in the country. In 2008, wealthy Americans provided 41 percent of all charitable donations in the country, backed by famous philanthropists such as Warren Buffett and Bill Gates.

Last week, Microsoft co-founder, and billionaire Bill Gates announced over $3.4 million in new funding to reinvent the toilet in the modern world. This brings his total spending for the toilet project up to $370 million since last year, and his total funding for health, development and education ventures worldwide up to $26 billion.

Related: Infographic: How Bill Gates Is Personally Saving The World

Related: Bill Gates Sinks More Money Into Reinventing The Toilet

Related: Gates, Buffett Propose Billionaire Giveaway to Charity

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