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[Infographic] Charitable Giving in the U.S. vs the UK

April 05, 2014

"The UK should not aspire to a U.S. model of philanthropy and tax incentives -- it is not replicable and is a unique product of social, political and historical factors," a report released by the UK-based Charities Aid Foundation back in February argues.

The report, Give Me a Break (20 pages, PDF), argues that while there are things the UK can learn from the U.S. model of philanthropy, there are features of it that the UK, which has a well-organized welfare state, cannot and should not replicate. "For instance," the report notes, "the U.S. charitable deduction is inherently biased toward those [with] higher incomes....Similarly, donations in the U.S. go disproprtionately to religious causes and education (45 percent in total)."

A few other interesting facts from the report that are included in the infographic below:

  • The oldest surviving charity in the U.S. is the Scots' Charitable Society of Boston, which was founded in 1657 and incorporated in 1786; the oldest in the UK is the King's School, Canterbury, founded in 597.
  • The average deduction claimed for donations of clothes in the U.S. in 2004 was $1,400.
  • 2.6 percent of the UK workforce is employed by the voluntary sector, while the nonprofit sector accounts for 9.2 percent of wages and salaries in the U.S.
  • Evidence from the U.S. suggests that donations go up as tax rates rise.

Infographic_US_v_UK

Do you agree with the suggestion that the U.S. model of philanthropy is "inherently biased toward the wealthy"? Do you think the value of the charitable deduction in the U.S. should be lowered, capped, or eliminated? Does the current system in the U.S. do as much as it should to incentivize giving for the needy and more vulnerable members of society? Share your thoughts in the comments section....

Comments

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Yes -- the US system is biased for higher income earners. The tax deduction for charitable giving should extend to all income brackets, all levels of giving. There is not enough accountability to ensure that dollars are given to the most needy. Donors can and do hide behind "donor choice" to direct dollars to causes like their daughter's sorority, or some other c3 that does related to social equity. Similarly, if donors put their money into a donor advised fund, they get a tax benefit, but Donor Advised Funds are not subject to a minimum disbursement requirement. Unless there can be a much higher level of accountability and transparency in this area, I think caps are justified.

The wealthy folks making donations are often the same people who pay NO taxes, or very little - as in less than their hairdressers or handymen. They drive on our roads, use our electrical grids, and are protected by the same police that the rest of us pay for. They then get to pick and choose where they will spend some dollars in order to avoid paying their fair share of taxes - and it usually is their alma mater university, the opera (that none of the rest of us can afford to attend) or their church. Then they get a lot of glory "for doing good". True non-profits doing the "dirty work" or food banks, homeless services or programs for underserved youth are not attractive to most rich people and do not get the funding they need. Poorer folks who do support those organizations get no tax deductions because the tax systems are set up to benefit the rich only.

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