It’s better to give than receive. Various studies have found this to be true in that spending money on others or giving to charity is more likely to put a smile on your face than buying things for yourself. We all know this to some degree, but we don’t necessarily practice it throughout our lives.
The term philanthropy was first coined by the Greek playwright Aeschylus in 5th century BCE. Back then it meant “love of humanity.” Today it means generosity in all its forms and is often defined as giving gifts of “time, talent and treasure” to help make life better for other people.
Billionaire philanthropists who make large donations and get their names on buildings are clearly doing wonderful things. And tax breaks for this generosity seem entirely justifiable. Some recent examples of billionaires doing right:
- Warren Buffett promises to give away 99% of his wealth upon his death. He’s already donated more than $50 billion to the Bill and Melinda Gates Foundation (BMGF) and the rest of his estate may very well go towards primary and reproductive health causes.
- This past summer Bill Gates gave the BMGF an additional $20 billion. He and his former wife, Melinda French Gates, say they plan to give away 95% of their wealth during their lifetimes.
- Laurene Powell Jobs, widow of Steve Jobs, plans to give away her $28 billion in assets largely toward climate change during her lifetime or shortly after her death.
- Mackenzie Scott, ex-wife of Amazon’s Jeff Bezos, has donated more than $20 billion to various causes since 2020.
- And just this week, Patagonia’s CEO Yvon Chouinard decided to give away his entire company valued at $3 billion to a specially designed trust and nonprofit organization. While Chouinard may see enormous tax savings by doing so, this generous move will ensure all profits (~$100 million each year) are used to combat climate change and protect undeveloped land across the globe.
“Hopefully this will influence a new form of capitalism that doesn’t end up with a few rich people and a bunch of poor people,” Chouinard said in an exclusive interview. “We are going to give away the maximum amount of money to people who are actively working on saving this planet.”
But let’s not forget the enormous number of upper- and middle-income citizens who donate 5% to 10% of their annual income to worthy causes every year. Or the lower-income not-for-profit employees who may donate very little money, but toil away at low wages giving their time and talent for the common good.
It seems obvious that all people are important when it comes to giving and together can help pave the way toward a healthier and more compassionate environment.
According to several of the largest charitable foundations, the average income donated to charity ranges from just 3% to 5% of annual gross income. And the average percent donated to charity is the highest for lower income households, which suggests that lower income folks donate a higher percentage of their disposable income.
Reports from McClatchy Newspapers found in recent surveys that not only do the poor donate more per capita than individuals in higher income brackets, but their generosity tends to remain higher during economic downturns.
This is very difficult to measure as IRS tax return data contains giving information for households that choose to itemize their donations leaving out many lower-income households.
Yet the trend is heading in the wrong direction. In 2018 just 49.6% of U.S. households made a charitable contribution, the latest year for which comprehensive data is available. This is a drop of nearly 17 percentage points from 2000, when 66.2% of American households gave charitable donations.
As I wrote about in my previous post, happiness is derived by what people give to you and meaningfulness is more about what you give to others. Meaningfulness is more likely to lead to a long and healthy life. And philanthropy should be practiced by all of us.