April 2, 2008 | Read Time: 2 minutes
Americans get richer by giving money away than keeping it — and the more they give, the more they can stimulate the economy.
Arthur C. Brooks, a professor of public administration at Syracuse University, told the annual meeting of the Association of Fundraising Professionals that for every dollar Americans give away, they will gain $3.75.
“I would have told you, as an economist, that the reason we give so much is because we’re so rich,” he says. “And I found that when people get richer, they give more money away. But I also found that when people give away more, they get richer.”
Mr. Brooks says he reached his conclusion after he analyzed data from a 2000 survey of charitable giving by 30,000 households in 41 different towns and cities across America. Households that donated money in one year saw their incomes increase the following year, he says. His findings held up when he compared annual charitable giving from 1957 to 2002 with the nation’s gross domestic product.. He says he was able to predict whether the gross domestic product would rise by looking at whether charitable giving had increased the previous year.
Mr. Brooks says his research shows that the way to keep America’s economy strong is not to spend more, but to give more: “Charitable giving is not just a smart choice, it’s a patriotic choice.”
Mr. Brooks offers a couple of theories about why people who give to charity become richer. Other research shows that people who give money away are happier and less stressed than those who don’t, he says, and being happy may make people more successful. Studies also show that people are more likely to perceive charitable people as leaders, and people in leadership positions tend to reap greater financial rewards.
Mr. Brooks says his research led him to take a different view of people who seek charitable donations. Their work is not a “necessary evil” but a public good, he says. “Giving makes us healthier, happier and richer individuals,” he says. “Every time you solicit a gift, you’re doing a favor to the people you’re soliciting.”
