What It Would Take to Increase Giving

June 18, 2013 | Read Time: 3 minutes

Donations to charities have hovered at around 2 percent of America’s gross domestic product for decades. To increase last year’s $316-billion total giving by 1 percentage point, charities would have had to raise an extra $158-billion.

Below are some ideas to boost donations as well as estimates of how much they extra they could provide to charities.

The Starbucks Solution

Patrick Rooney, a top official at the Indiana University Lilly Family School of Philanthropy, says he has calculated that giving by individuals would roughly double if every household reallocated $5 a day that it now spends on Starbucks drinks or other “superfluous consumption.” Here’s the math:

What individuals gave in 2012: $228.9-billion

Number of American households in 2012: 121 million

Extra dollars: $1,825 per household or $220.8-billion
The 5-Percent Solution

Independent Sector, a coalition of nonprofits and foundations, led a major campaign in the 1990s called Give Five, encouraging Americans to give 5 percent of their gross income to charity. If the campaign had been successful, individual giving would have looked like this last year:

What individuals gave in 2012: $228.9-billion

Total U.S. personal income: $13.7-trillion

Giving under the 5-percent solution: $685-billion

Extra dollars: $456.1-billion
The 1-Percent Solution

The One Percent Club in Minnesota urges wealthy people to donate each year 1 percent of their net worth or 5 percent of their income, whichever is greater. While that effort is generally aimed at people with a lot of investment assets, if all Americans had donated 1-percent of their net worth, their giving would have looked like this in 2011*:

What individuals gave in 2011: $220.3-billion

Aggregate U.S. household net worth: $40.2-trillion

Giving under the 1-percent solution: $402-billion

Extra dollars: $181.7-billion

*The most recent year for which U.S. Census Bureau figures on aggregate household net worth are available.
Denise Applewhite/Princeton University

The Peter Singer Solution

Peter Singer, a professor of bioethics at Princeton University, says the percentage of income that people give should rise along with earnings. Those making $10-million or more should give at least 23.5 percent, according to an online calculator he has developed, while those with higher incomes should give bigger percentages. Here’s how giving would have looked in 2010 if the highest earners had donated at least 25 percent of their incomes:

What taxpayers earning $10-million or more gave in 2010*: $20-billion, or 5.8 percent

Their total adjusted gross income: $345.7-billion

Giving under the Peter Singer Solution: $86.4-billion

Extra dollars: $66.4-billion

*The most recent figures from the Internal Revenue Service for taxpayers who itemize deductions.
Courtesy of Target

The Corporate Solution

The Minnesota Keystone Club urges local companies to give 2 percent to 5 percent of their pre-tax profits to charity, some of which can include volunteering time. Corporate giving would have looked like this if all U.S. companies had donated 2 percent of their pre-tax profits in cash:

What corporations gave in 2012: $18-billion

Pre-tax U.S. corporate profits in 2012: $2-trillion

Giving under the corporate solution: $40-billion

Extra dollars: $22-billion