

Why the US is #1 in philanthropy and how it differs by country - dcaldwell
http://online.wsj.com/article/SB10001424052748704243904575630340322011652.html

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fmw
The article touches upon cultural differences in how publicly flaunting wealth
by openly giving large sums to charity is perceived. In Europe, from my
perspective as someone living in the Netherlands, we find it hard to imagine
to attend a flashy fundraiser dinner to finance good causes or even
politicians seeking election. The only thing that comes close are auctions for
charity, but these are generally frowned upon in traditional circles as
vehicles for celebrities and the noveau riche in their attempt to appear in
the society columns of the less respectable newspapers. We love participating
in state sanctioned lotteries for charity (the only kind allowed here in the
Netherlands) and collectively open our wallets whenever a natural disaster
strikes (e.g. the tsunami of '04 or more recently the floods in Pakistan or
the disaster in Haiti). Our reaction to events like that is to broadcast
tremendously successful fundraiser shows on the public TV channels (like NPR
in the US) that feature celebrities appealing to the public to give money. I
suppose these natural disasters remind us of our own battle with the elements,
like the flood of 1953. The problem with that kind of aid, of course, is that
it isn't very effective, because it's hard to put all that money to good use
in areas where all the infrastructure is gone while dealing with corrupt
governments that can't be relied upon.

That being said, we do try to imitate the US. Things like fundraiser dinners
are starting to happen on a small scale. There is no self respecting (pseudo)
celebrity that doesn't work on a side project as the 'ambassador' of some kind
of animal shelter or what not. A cynic would say that these activities are
great publicity for people that want to stay in the spotlight. Of course,
there are also a few people doing productive charity work, e.g. on education
or micro lending, so it wouldn't do to be overly dismissive.

A major difference between European welfare states and the US is taxation. Our
(upper) middle class pays a 52% income tax and that is just the first in a
long list of fiscal burdens. This raises different expectations from the
government, because unlike the US we actually give them the money to pursue
the dreams of ambitious politicians so they don't have to overspend the
budget. As I'm of the persuasion that private initiatives are infinitely more
promising than anything the government comes up with I envy the American
culture where the wealthy don't look to the government to support the causes
they care about.

Of course, the downside of the American culture is that the way politics gets
financed (with the Obama campaign as a positive exception) seems a bit sketchy
at times. Not that our own system is preferable, because we've taken it to the
other extreme and have our government pay for the election campaigns of our
politicians in order to avoid the suggestion of political debt to private
benefactors. My main worry about charitable giving in the US are the
incredibly well financed religious groups that force their creationist
fantasies upon helpless school children or hold back things like stem cell
research. The right answer to that, however, isn't to change the American
culture of giving, but to make sure that voices of reason can match the deep
coffers of religious pressure groups.

~~~
lucasjung
"Of course, the downside of the American culture is that the way politics gets
financed (with the Obama campaign as a positive exception) seems a bit sketchy
at times. Not that our own system is preferable, because we've taken it to the
other extreme and have our government pay for the election campaigns of our
politicians in order to avoid the suggestion of political debt to private
benefactors."

You are correct that Obama financed his campaign in a way that was
significantly different than any other U.S. presidential campaign in three
decades. However, I think that you misunderstand how our presidential
campaigns are financed, and especially how Obama's was financed differently.

For decades (ending with Obama), our presidential campaigns were funded by a
mix of public and private money. In return for agreeing to additional
restrictions and oversight on their fundraising and spending, presidential
candidates in the U.S. are given government-provided funds to match
contributions. The advantage to this is obvious: loads of extra cash. The
disadvantages are that the candidate's campaign spending is subject to
additional rules and regulations, and his total campaign fund is effectively
capped by the accompanying restrictions. However, this limit is so high that
for most of the program's existence (it began in 1976) there was no practical
way for a presidential candidate to raise more money on his own than he could
by taking the matching public dollars.

Obama changed that: he refused public campaign financing and directly raised
more money than allowed for by the limit on public financing. Now that he has
shown it to be possible, it is likely that every major-party presidential
nominee from now on will follow his example and refuse public campaign
financing. This means that their spending will no longer be subject to the
full scope of rules which previous campaigns operated under. If you believe
that wholly public and wholly private financing are undesirable extremes and
that some sort of middle ground would be preferable, then you should consider
the Obama campaign to be a negative exception, not positive: he took U.S.
presidential campaign finance away from an intermediate state and drove it
straight to the extreme of wholly private financing. Personally, I was never a
fan of public campaign financing and am happy to see it made obsolete, but if
I'm reading you correctly you find wholly private financing to be "a bit
sketchy."

~~~
fmw
Thanks for the insightful refresher on how presidential campaigns are
financed, because the last time I read up on it was back in '08 at the time of
the last presidential election. I'm very much in favor of private financing,
actually, but with a sufficient level of transparency. I really liked how
Obama seemed to get his money from small contributions by individuals. That is
very different from the image of powerful special interest groups financing
elections. That doesn't mean, however, that I think money from special
interests groups should be fully restricted. I much rather have them pay than
the government, but look favorably upon candidates that avoid creating the
wrong impression by concentrating on small contributors.

~~~
lucasjung
"I really liked how Obama seemed to get his money from small contributions by
individuals. That is very different from the image of powerful special
interest groups financing elections."

The key words from this quote: "seemed" and "image." You are absolutely
correct: Obama "seemed" to get his money from small contributions by
individuals. Many (most?) Americans shared a common perception of the "image"
of powerful special interest groups financing his opponents (both primary and
general). I am very skeptical of this. I would very much like to see some
actual numbers on the share of his campaign dollars which came from small
donors vs. large contributors, and how he stacked up against his opponents and
previous presidential candidates. I strongly suspect that he was more or less
average, and that these perceptions were the result of very good marketing by
his campaign (which is more or less what political campaigns are supposed to
do). Unfortunately, I think that sorting out which of his contributions came
from large or small sources will prove incredibly difficult because of the
lack of quality control in his contribution acceptance system:

[http://www.cbsnews.com/stories/2008/10/22/opinion/main453853...](http://www.cbsnews.com/stories/2008/10/22/opinion/main4538537.shtml)

[http://www.washingtonpost.com/wp-
dyn/content/article/2008/10...](http://www.washingtonpost.com/wp-
dyn/content/article/2008/10/10/AR2008101002989.html)

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rbranson
One thing that's never mentioned in these types of articles is that the top
two categories for donations are churches and schools. Fully one third of US
donations are to churches and another 13% for educational institutions
(including private colleges and K-12 schools). That's nearly half of donations
going to organizations that perform very little actual philanthropy and spend
most of their money with organizational self-interest in mind.

~~~
Groxx
Doesn't that make the _donation_ philanthropic, with the express goal of the
receiver using it to further their self-interest? That's still philanthropy.

Heck, what donation-receiver _doesn't_ do this? Middle-men like the Red Cross
count for both giver and receiver, so they're partially exempt - they give
money / services they receive to those who intend to use it to further their
best interest.

~~~
rbranson
The people who donate to the Red Cross are very unlikely to receive back in
any tangible form. The average American church is more like a club which
collects money from it's members to maintain the clubhouse and provide weekly
entertainment.

The more hip, "relevant" churches require even more money because they have
more contemporary furnishings and design, agency-style marketing campaigns,
sophisticated audio/video equipment, larger spaces for ancillary services such
as child care and small group meetings, bring in out-of-town acts, and keep a
large staff to support these operations. This is especially effective because
it positions the church as more of a brand and lifestyle provider rather than
just a "thing that we do on Sundays." People who spend 5-10 hours a week
involved in church activities become psychologically dependent and are going
to be astronomically more likely to donate, and donate in larger amounts.

This is clearly in the best interest of the church as it increases donations,
and I have no problem with them undertaking these activities, but I think they
operate far outside of the original spirit of what tax-exempt status was
purposed for.

As a side note, and a little anecdote, my girlfriend works at a liquor store
and has several regular customers that use their tax-exempt status as church
staff to purchase wine and liquor that is clearly for themselves. Of course,
there's almost no way to create an efficient audit trail for this type of
stuff, so they get away with it.

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ilitirit
_I find the US initiative highly problematic. You can write donations off in
your taxes to a large degree in the USA. So the rich make a choice: Would I
rather donate or pay taxes? The donors are taking the place of the state.
That's unacceptable._

[http://www.spiegel.de/international/germany/0,1518,710972,00...](http://www.spiegel.de/international/germany/0,1518,710972,00.html)

~~~
viggity
There are four ways to spend money

1\. You can spend your money on yourself

2\. You can spend your money on someone else

3\. You can spend someone else's money on yourself

4\. You can spend someone else's money on yet another person

As you go down the list, people get more and more careless with how that money
is spent. Yet you suggest that #4 is superior to #2 (bureaucrat spending money
on a third party, instead of the rich spending their own money on a third
party). And that make zero sense.

~~~
ilitirit
I didn't "suggest" anything...

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callmeed
This article sure doesn't answer the "why" question well. I'd love to see some
deeper analysis, especially related to tax breaks, the number of available
charities, and correlation between giving & religion.

~~~
dcaldwell
Houses of worship and religiously affiliated organizations pull the largest %
of donations in the US according to studies. Given the much higher presence of
churches and church attendance in the US as opposed to Europe, I could see
that driving per capita donations in the US up. However, unless it's only the
Christian population that gives more per capita, I'm not sure why other highly
religious countries wouldn't also rank high.

The article does address tax breaks in some countries. In regards to the
number of charities in the US, not counting houses of worship, we have around
1 for every 300 persons. Not sure what that level is in other countries but
would love to find out.

~~~
btmorex
Religious charity also doesn't really explain it. Even if you removed 100% of
the U.S. charitable giving to religious organizations, they would still easily
rank #1.

My guess is that it's mostly cultural. For example, a lot of large employers
will even match employee contributions up to a certain level every year to the
charity of the employees choice.

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d99kris
I think it would be more fair to rank based on per capita or percentage of
GNI. Maybe I'm just Swedish.

~~~
xiaoma
The third and fourth sentences from the article:

"Charitable giving in the U.S. _as a proportion of gross domestic product_ ,
for example, is around 1.7%. In Europe, it is around 0.7% and in Japan it is
just 0.04%, according to U.S. wealth manager Northern Trust."

GDP is a very similar statistic to GNI, but also includes income from other
countries such as interest and dividends. Per capita rankings would make both
Japan and Europe as a whole look even worse, since the the US has a higher
per-capita GPD. For Sweden, which has a comparable GDP per person, it would
come out about the same.

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barry-cotter
Because it has the largest economy in the world, perhaps?

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known
Swedish are the best. Without _tax breaks_ their ODA is 0.98%

~~~
gjm11
The ODA figure is the amount the government spends, not what individuals give.
(The US's ODA figure is rather low. Perhaps that has an impact, one way or
another, on the giving of individuals in the US.)

