Why Do the Rich Give Less than the Poor?

There’s an interesting article in the Atlantic Monthly about why the rich are less charitable than those with more modest incomes. Over the years I’ve heard this statistic used many times and it’s usually pretty consistent. The rich – although they give more in actual dollars – give far less of a percentage of their income to social causes than the poor. The top 20% in income give around 1.3 percent of their income to social causes, while the bottom 20% in income typically contribute around 3.2 percent.

Never mind the fact that neither of these numbers are all that amazing, why would lower income households contribute more than double the percentage contributions of the wealthy?

Paul Piff, the author of the study, posits a concrete reason, and it makes a lot of sense: the wealthy who are not as generous live in such a way that they are isolated from those in need. The wealthy people who live in affluent neighborhoods in affluent zip codes without a diverse socioeconomic neighborhood are less likely to be generous. The more isolated wealthy people are from significant social contact with the poor, the less likely they are to share their wealth with those who are vulnerable.

I think this is a key insight and a reason that the church is of great importance. The church is supposed to be the place where the rich and the poor come together weekly to worship as one. We share our concerns together and the typical socioeconomic stratification melts away in this fellowship. We express our unity in Christ and this unity runs across all of the typical societal boundaries such as income level, net worth, neighborhood, and so on.

I live in Johnson County, KS. It’s one of the most affluent suburbs in the country with a median household income of nearly $75K per year. I know a ton of really generous people whose income is double the median or more, and whose giving is way over a 3.2 percent level. Piff’s research helps to explain at least part of why this is true. So many of my friends who are in the top 20% are in some kind of significant relationship with folks who are in the bottom 20% – usually a relationship that is facilitated by a church or ministry. This relational tie stokes the generosity of the wealthy & the wealthier group consistently responds with great consistency.

This makes me hopeful about my church’s approach to the poor. We don’t just write checks or go out and serve them on the street. We invite them to worship with us and build relationships together over time. I think this should inspire churches to work hard not to simply give to the poor, but to make sure that the poor are a part of the congregation of the faithful. I know that this gets messy. I know that this will not be easy or comfortable, but it’s absolutely necessary. The souls of the rich are – to some extent – dependent upon their proximity to the poor.

My only caveat to this article is this. The church’s role is not simply to give wealthy people exposure to the poor, but to cultivate a completely different narrative with regard to money and wealth for all their members. What is the purpose of wealth? What is it for? To what end should all of our resources be leveraged? Within the Christian tradition we have some phenomenal teachings and perspectives on money, possessions, and stuff. Our tradition treats these things holistically, recognizing the needs of the group often usurp the wants of the individual – that’s generosity. It’s not just about how much money we give to social causes, it’s about how we view our lives and our resources.

The Christian is not meant to view their resources with an eye toward becoming upwardly mobile. Our tradition teaches us that we are to live generously. Our chief concern is that everyone has enough to live. The Christian narrative is not a narrative of scarcity and fear. It’s a narrative of hope and abundance. We can always afford to be generous because we know that there is enough for everyone, and if we find ourselves in big trouble, our brothers and sisters will help.

Generosity isn’t a virtue, it’s a way of viewing the world in which we live and our own lives. God is generous so we can be generous.

I think those two elements together 1) Living in relationship with the bottom 20%, and 2) Having a holistic view of wealth that is deeply rooted in God’s story of abundance, make for a healthy start in terms of how we view and talk about money.

Here’s a quick excerpt from the article:

If Piff’s research suggests that exposure to need drives generous behavior, could it be that the isolation of wealthy Americans from those in need is a cause of their relative stinginess? Patrick Rooney, the associate dean at the Indiana University School of Philanthropy, told me that greater exposure to and identification with the challenges of meeting basic needs may create “higher empathy” among lower-income donors. His view is supported by a recent study by The Chronicle of Philanthropy, in which researchers analyzed giving habits across all American ZIP codes. Consistent with previous studies, they found that less affluent ZIP codes gave relatively more. Around Washington, D.C., for instance, middle- and lower-income neighborhoods, such as Suitland and Capitol Heights in Prince George’s County, Maryland, gave proportionally more than the tony neighborhoods of Bethesda, Maryland, and McLean, Virginia. But the researchers also found something else: differences in behavior among wealthy households, depending on the type of neighborhood they lived in. Wealthy people who lived in homogeneously affluent areas—areas where more than 40 percent of households earned at least $200,000 a year—were less generous than comparably wealthy people who lived in more socioeconomically diverse surroundings. It seems that insulation from people in need may dampen the charitable impulse.

Wealth affects not only how much money is given but to whom it is given. The poor tend to give to religious organizations and social-service charities, while the wealthy prefer to support colleges and universities, arts organizations, and museums. Of the 50 largest individual gifts to public charities in 2012, 34 went to educational institutions, the vast majority of them colleges and universities, like Harvard, Columbia, and Berkeley, that cater to the nation’s and the world’s elite. Museums and arts organizations such as the Metropolitan Museum of Art received nine of these major gifts, with the remaining donations spread among medical facilities and fashionable charities like the Central Park Conservancy. Not a single one of them went to a social-service organization or to a charity that principally serves the poor and the dispossessed. More gifts in this group went to elite prep schools (one, to the Hackley School in Tarrytown, New York) than to any of our nation’s largest social-service organizations, including United Way, the Salvation Army, and Feeding America (which got, among them, zero).

Underlying our charity system—and our tax code—is the premise that individuals will make better decisions regarding social investments than will our representative government. Other developed countries have a very different arrangement, with significantly higher individual tax rates and stronger social safety nets, and significantly lower charitable-contribution rates. We have always made a virtue of individual philanthropy, and Americans tend to see our large, independent charitable sector as crucial to our country’s public spirit. There is much to admire in our approach to charity, such as the social capital that is built by individual participation and volunteerism. But our charity system is also fundamentally regressive, and works in favor of the institutions of the elite. The pity is, most people still likely believe that, as Michael Bloomberg once said, “there’s a connection between being generous and being successful.” There is a connection, but probably not the one we have supposed.

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  • scott stone

    What a great post. It would be interesting to see what statistics show when you compare cities. Green Bay is fairly middle to lower income as an average. I wonder what the contribution rate is compared to a city such as Palm Springs.
    I like your assessment and I think this is somewhat of an indictment on the church. We even worship in the same socio-economic groups. That’s fairly sad. I know you aren’t big on the house church thing but our church is looking at purchasing some of the abandoned houses in depressed neighborhoods and opening “satellite” house churches. We have a large Mexican, Hmong and African American population yet our Sunday service is as white as a KKK rally. It drives me nuts. We are trying to met people where they are and that is in neighborhoods.
    Back to the article. I think this statement is quite impactful: “Other developed countries have a very different arrangement, with significantly higher individual tax rates and stronger social safety nets, and significantly lower charitable-contribution rates.”
    This is probably anecdotal on my part but the friends that I have that are fairly well off have an attitude that if the federal government is going to continue to tax them at higher rates then they’ll just leave the charity stuff to the government. When you get to a point where taxation at the margins is 50% they tend to feel they no longer have an obligation to contribute. I’m not saying I agree and their opinion is correct, I’m just expressing what I hear. Couple that with a political party and a president that really demonizes and tries to create animosity along income groups you can see why some opt out of charitable giving. Just a thought. I’d like your take.


  • Tim Suttle

    Hey Scott, Good to hear from you. While I don’t think it is really the government’s job to care for the poor. I think it’s pretty unrealistic to expect that Christians will all of the sudden become generous if the gov’t would lower tax rates. The church hasn’t discipled itself to that point yet – that’s on us, especially those of us who are pastors. But I do think that’s how it should work. We should not depend upon the government to care for the poor, we should be doing it ourselves.

    Quick question. What’s your take on the often repeated point that tax rates for the wealthy are historically low while at the same time wealth is concentrating in the hands of the wealthy. Is the wealthy person’s view that they are taxed too much based in reality, or is it a reaction to the right wing propaganda and the tea party movement? I’m wondering about this a lot, especially in light of the mountains of research showing historically low tax rates for the wealthy. (see this for the one-sided commentary: http://neweconomicsinstitute.org/content/wealth-inequality-america). I’m interested in your perspective. – ts

  • scott stone

    Your first few sentences made me laugh because I think you hit the nail on the head. I don’t think wealthy individuals will all of a sudden become more charitable if their effective tax rate is less. My point, and I didn’t clarify my position well enough, is that they use tax policy as part of their excuse for not being more charitable.
    My issue with taxes is that it is used as a wedge issue. I don’t like the divisiveness around the issue and unfortunately you have to put the blame on the president and his party. They play off of peoples weaknesses and ignorance to score points. “You are in the position you because of evil rich people.” The problem with statistics is they actually do lie. http://news.yahoo.com/tax-bills-rich-families-approach-30-high-124406026.html Here is an article that addresses the notion of taxation.
    Here is my main point. None of us pay enough to fund the spending that occurs at the federal level. I’m the guy who consistently says that we should have gone back to Clinton era tax rates coupled with Clinton era spending levels. I spend more time than I should looking at OMB and CBO number right on the federal websites, even whitehouse.gov. Most people don’t know this but the federal gov’t collected a record amount of revenue via taxation last year. Every year they collect more and more money. Every year they spend more and more money. There are no such things as draconian cuts. The federal gov’t uses a method called baseline budgeting that has automatic yearly increases associated with each spending allocation, immaterial of whether the program needs to be increased. If you take take the time to look you can see that the government has never spent less from one year to the next. They always spend more. Cuts are no more than a decrease in the rate of growth. If a program was slated to increase next year by 7% and congress was trying to increase the program by 4% then that becomes a draconian cut of 3%. I can not in good conscience agree to tax people at higher rates until my government becomes better stewards of what they are already provide. It is immoral to assume that someone that is wealthier than I should have more of their income confiscated by government to feed their bad habits.
    When the issue comes around to the debt ceiling again, which it will, you will hear President Obama saying that we need to pay for the bills that we’ve accrued. He always uses the restaurant metaphor. “If you go out for a nice dinner you need to pay the bill for what you’ve ordered.” It’s the wrong metaphor. We are the bartender that needs to cut off the drunk who’s had to much to drink and we need to call him a cab.
    The largest revenue stream to the treasury is individual income taxes. 44 cents of every dollar collect comes from personal income taxes.The top 10% wage earners pay 71% of all that is collected. My question always is what is enough. Should they pay 80% or 90%. When we see that they pay 71% of all income taxes collected we certainly can’t say they aren’t paying their fair share. Even Bill Maher recently said “The rich pay the freight in this country.”
    Personally I think it’s all a game. The right will try and minimize taxation constantly and the left will continue to demonize “rich people.” We’ll continue to get nowhere and unfortunately we have some serious structural issues. There is a tremendous amount of pain throughout our country. People are seriously hurting and we are arguing over marginal tax rates. I’m just going to try and continue to facilitate God’s desire for communion and Jesus’ teaching about community in my little world here in Green Bay. I care but I don’t care what goes on in DC. My problem is I see budgets (federal budgets) as moral documents and we do not have our priorities in place. We can tax the rich more, I really don’t care but I just don’t see what that accomplishes except to make some people feel better because the rich guy is getting the screws put to him a bit more.
    On another note I should be headed out to Calif next year to finish up my MAT at Fuller with a focus on ethics. It’s been a great ride so far. Every day I become more and more aware of how ignorant I am. The only saving grace is that I have no ego and can admit I’m a freaking idiot.


    • rumitoid

      “They play off of peoples weaknesses and ignorance to score points.” Another Romneyite with the 47% mentality. Only the weak and ignorant could, or do, vote for Democrats? They have no real values or worthwhile policies but are simply scam artists manipulating the baser instincts of human nature just to gain reelection? No Republican would never dream of playing “off of peoples weaknesses and ignorance to score points”? Ever watch Fox News? I am being charitable.

      To give is our treasure, or it needs to be. Getting that heart is usually a long and painful process. But it must be, in order to truly qualify as charity, free, even in our thoughts. To sing along with Janice, “It ain’t nothing if it ain’t free, babe.” Do not let your left hand know what your right hand is doing. I take it that I do not earn anything, even a pay check; it is given by God for his ends. It is not mine; it is in trust. No boast or sense of loss or sacrifice in charity, for we are just transfer points. Abundance is in the peace of God alone and that is what we share.

      • scott stone

        Hello Rumitiod,

        Thanks for the replay. Let’s start off with me correcting a few of your preconceived notions. I certainly am no Romneyite. I thought he was and is a good man but a horrible candidate. His 47% comment was stupid but to some extend true. There is a segment of the population that will never vote for a Republican, just as there is a segment of the population that will never vote for a Democrat. They all are closed minded. I certain do not believe that you have to be ignorant to vote democrat. I regularly vote democrat (Bill Clinton the first time along with Barak Obama the first time.) I can see a plethora of reasons why an individual would want vote democrat such as universal health care, for which I am a huge proponent of, gun control, limited military engagement, etc.
        Your statement that “No Republican would never dream of playing “off of peoples weaknesses and ignorance to score points”? is incorrect in it’s assumption. I never said anything like that. I know the Republicans do this. They are notorious for making people feel personally insecure so they can expand the military all under the guise of making us feel safer. My guess is this is an issue that you and I probably agree on.
        My point was specifically on taxation and the lefts attempt to create animosity between income groups. This has been going on for many years and the president isn’t the first to do so. He and his party have been able to turn phrases such as “the rich” into a pejorative. There is some discussion about wealthy individuals paying the lowest marginal rates ever and I just wanted to point out that this may be true but they still are the ones “paying the freight” as Bill Maher even admitted to. Yes thier marginal rates are lower but the percentage of overall income taxes collected from this group is higher than it ever has been. I’m not trying to carry their water I’m just trying to have an honest dialogue and point out misconceptions and inconsistencies.
        And when it comes to charitable giving I could care less. If the percentage they give is lower but the dollar value is greater what’s the issue. It’s like saying the gift you gave me isn’t good enough. I’m just glad they are giving. I’m thankful when anyone contributes time, talent , and money to a charitable cause. To make an issue out of what percentage they give is petty in my opinion. Take the gift, say thank you and move on.

  • Matt Purdum

    People in Florida live behind gates and security guards. If someone who looks like Trayvon Martin gets in, they kill him. That’s the spiritual situation in Florida. They go to rich churches in gated communities and on the islands. The pastors tell them God loves them and the money flows in for sound systems, sanctuaries, landscapers, pastors pensions, and youth camps. What they do give they spend on themselves. They don’t want to be a part of the real community, and frankly, that’s fine, if that’s how they are they can stay behind the gates.

  • I think rich people are just like anyone else.

    Some give more…and some give less.

    That there are far more people of modest incomes than rich people, is a given.

  • You have exactly described the parish where I am member. It is about people helping others, with an outreach ministry that tries to help those in need, and bring them into the church. I think it is the isolation that causes the lack of compassionate giving. Once one’s heart is touched, so is the pocketbook. Thank you for putting this back into perspective for me.

    The Pink Flamingo

  • David Szaks

    I have an alternate theory….
    I’d wager that the reason the rich give less the the poor probably has much to do with why they are rich in the first place.