Why Don't America's Rich Give More to Charity?

They could certainly afford to donate bigger sums, but something seems to be holding them back.

Gary Hershorn / Corbis / Getty

The rising wealth of the top tier of earners seems to be inaugurating a new age of charitable giving. More than 150 billionaires from around the world have now signed Bill and Melinda Gates’ Giving Pledge, promising to donate at least half of their fortunes to charity. Others give money to hospitals, parks, or schools, renaming them in the process; in New York City, Lincoln Center’s Avery Fisher Hall is now known as David Geffen Hall, while the historic 42nd Street library is called the Steven A. Schwarzman Building.

Such grand philanthropic donations are visible and public-facing, but they distract from a broader pattern in charitable giving: As a group, the wealthy do donate more money overall, but as a proportion of earnings, many of them give less than those with far less wealth. The Philanthropy Roundtable, an organization of philanthropic groups, has found that while households with annual earnings of less than $50,000 were less likely to donate any money to charity than those earning more than that, if they did donate, they gave a greater percentage of their income than those wealthier than them. A survey by The Chronicle of Philanthropy released in 2014 reached a similar finding: Those earning $200,000 or more per year reduced their giving during the Great Recession and its aftermath by 4.6 percent, while those bringing home less than $100,000 upped their donations by very nearly as much—4.5 percent, to be specific.

In other words, many wealthy people can afford to give away much more money than they do. Why don’t they? When I spoke with David Callahan, the founder and editor of Inside Philanthropy and the author of The Givers, a recently published book on big-money giving, he named several reasons. He said that many wealthy people are too busy to research charities, and can find their money tied up in their businesses. He also suggested it’s hard to part with money. “I think there is a sort of visceral desire for people not to see their bank account go down,” he told me.

Those reasons may well explain some of the gulf in giving, but one limitation is that some of them apply just as much to the middle class as to the 1 percent. Perhaps there is another way to think about this: Why would it be expected that society’s richest give money at all? After all, wealth doesn’t bestow unique insight, nor is it proof of empathy. Instead, there’s a body of psychological and behavioral-economics research suggesting that wealthy people are generally less caring, generous, and aware of how others think, feel, and live. Whether this is the case because money corrupts or because a certain type of person tends to want to accumulate it, this finding could at least partly explain why the well-off don’t give more than they do.

In a study published last year in the journal Psychological Science, for instance, Pia Dietze and Eric D. Knowles of New York University gave each of their subjects a pair of Google Glass and asked them to take a walk on a busy street. Using the technology to track people’s eye movements, the researchers discovered that their upper-income subjects spent significantly less time looking at other people in their field of vision. In another study, from 2010, researchers had their participants compare themselves with people either lower or higher on the income stratum. The men and women participating in the experiments picked up on emotional cues better when they looked to someone who earned more than they did, but not less. In other words, they read the situation better when they believed their status to be lower than others. And when they thought of themselves as higher-income, the ability dissipated.

The best-known study in this branch of research, titled “Higher Social Class Predicts Increased Unethical Behavior,” was published in 2012. It found that the higher a subject’s self-described social rank, the more candy they took from a jar labeled as being for children. In another experiment for that same paper, the nicer the car, the more likely a driver would cut off a pedestrian in a crosswalk or fail to yield to others at a four-way stop. As Jerry Useem described in The Atlantic earlier this year, there is a similar body of research about how power affects the brain, making people “more impulsive, less risk-aware, and, crucially, less adept at seeing things from other people’s point of view.”

What explains these patterns of behavior? Well, one way to think of social networks is as a form of insurance: If I look out for you, you’ll do the same for me when I need help. But this isn’t as much a concern for the wealthy. “You need people less,” says Michael Kraus, an assistant professor of organizational behavior at Yale University. “You have the resources to deal with any kind of threat you might experience.”

There is another finding the field of behavioral finance that is probably also at play. In a 2009 paper published in the Journal of Personality and Social Psychology, researchers asked their student subjects to view graphs showing the growth of economic inequality during various historic eras. The students from wealthier backgrounds were much more likely to attribute the inequities to innate talent or hard work than their less financially fortunate peers. For those who believe success is a matter of innate ability, it’s easier to dismiss others as irresponsible. This effect seems to have been on display earlier this year when, for instance, former Representative Jason Chaffetz claimed many people needed to choose between buying the latest iPhone and health care, and when an Australian 1 percenter provoked international outrage by insisting that 20-somethings could afford to buy homes if only they stopped throwing away money on avocado toast.

These dynamics are not unique to the present age of high inequality—they were a feature of the first Gilded Age too. Then, moralists complained the poor wasted their limited funds on alcohol, and community centers offered classes in budgeting. And way back in 1892, The Boston Globe published an op-ed arguing that the United States’ wealthiest citizens needed to give more money to charity. It was emblematic of America’s long streak of what Benjamin Soskis, a research associate at the Center of Nonprofits and Philanthropy at the Urban Institute, calls “philanthro-shaming.” As Soskis once noted of this era in a piece in The Washington Post, “Enterprising journalists began compiling lists of the nation’s millionaires and determining who donated the most—and the least. And some of them began to issue demands that these philanthropic slackers shape up.”

If this question has bugged Americans for more than a hundred years, maybe it’s time to view it in a different way. Most other developed countries tax people at higher rates, leaving their societal well-being less dependent on convincing individuals to donate to charity. But America is moving in the opposite direction. The Trump administration, in coordination with Republicans in Congress, is promoting a tax-reform package that would shower benefits on the wealthy, while giving much less to those at the lower end of the earning spectrum. When congressional Republicans were asked why they supported such lopsided legislation, despite polls showing how unpopular it is with voters, a few replied that it was because their donors insisted on it.

Those donors likely include many wealthy philanthropists. Charitable giving is certainly good for society, but it’s also important to recognize it as a way for the well-off to exert control. Yes, the wealthy philanthropist is doing a service, but that’s a choice—not a legal obligation, as taxes are. And givers are the ones determining what the money goes toward, which means a much narrower range of interests gets represented compared with if the allocation were up to the government. If many Americans want the richest among them to give more, maybe taxation, not philanthropy, is the more effective approach.