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Extra11/27/2006 3:21 PM ET

America the charitable: A few surprises

It's well known that Americans lead the world in philanthropy. But those making $20,000 or less give away more, as a share of their income, than do higher income groups.

By Christian Science Monitor

Everybody knows Americans are big givers. But their charitable impulses keep generating surprises.

Consider just a few conclusions from recent research:

  • Charitable giving plays a bigger role in the economy than is suggested by some $260 billion in annual contributions. Each dollar of giving appears to create $19 of extra national income, according to a new book.
  • Demand for nonprofit services gets proportionately bigger, not smaller, as a locality's income rises, a Federal Reserve economist finds.
  • The philanthropy of the wealthy may not hinge on tax incentives to the degree many believe. In one new survey, a majority of wealthy givers say they would contribute the same amount if the estate tax were abolished. Ditto, they said, if they could no longer deduct the value of gifts from their taxable income.

These disparate studies are shedding light not just on who gives but also on why they give and what their actions mean to society. Often, the conclusions run counter to expectations.

"It's the first word, not the last word," says Arthur Brooks, referring to his new book on charity called "Who Really Cares." "We need more people thinking about (the study of charitable giving) in a serious way."

Brooks and other experts say that by understanding charity better, Americans can learn how to encourage more giving. The result would probably be a healthier and wealthier society.

Time and money

Of course, it's not as if American philanthropy has never been studied before. A number of institutions track the nonprofit sector fulltime in one way or another. But the data on charity-linked activities are far less complete -- and less systematically analyzed -- than for areas such as government and private industry.

One thing that's long been known: The United States leads the world in levels of charitable activity. The pattern runs from the rich, steeped in long tradition of philanthropy, to the poor. Those making $20,000 or less a year give away more, as a share of their income, than do higher income groups.

Americans donate their time as well as money -- some $150 billion worth annually (measured by using an estimated average value of $18.04 per hour).

"I see a great commitment," says Karen Rivers, who recruits helpers for the Colorado branch of Volunteers of America in Denver. "We just were inundated with people who wanted to volunteer for Thanksgiving Day."

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Rivers had to turn volunteers away as the group served holiday meals to about 3,000 homeless and others in need.

Some experts see charity as a defining trait of the United States, more than consumerism or business. But those forces may be intertwined.

For one thing, many nonprofits are selling services -- from health care to classical music -- in a marketplace alongside for-profit rivals. By many measures, they are successful.

For example: As personal incomes rise in a given county, the income of nonprofits seems to rise even faster, says Rob Grunewald, an associate economist at the Federal Reserve Bank of Minneapolis, who has analyzed counties in 47 states. This suggests that not-for-profit activities are what economists call a "superior good," something people want to buy more of (or donate more to) as their incomes rise.

But ties between charitable ventures and the economy hardly end there.

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