Monday, August 16, 2010
Why Giving Matters part 1
Economic Times are hard, so we can't really afford to give anymore. Right? Maybe not. I want to share with you a wonderful article by Arthur Brooks. It's fairly long, so I will post it in sections over the next few days. If you would like a copy of the article in it's entirety, send me your contact info and I will gladly send you a copy. Send your info to garners at xmission dot com.
Until then, Happy Giving, and I hope to see you at our concert on Saturday.
If you don't know what concert I'm talking about check it out here
Read on. This will knock your socks off.
WHY GIVING MATTERS
By Arthur C. Brooks
Acts of charity—giving money, serving others, even donating blood—create a remarkable return, lifting us spiritually and financially.
In 1905 the famous industrialist John D. Rockefeller was quoted as saying, “God gave me my money.”1 Now, that’s sort of troubling to Christian people. God gave him his money? Some have used the quote as evidence that John D. Rockefeller was a bad man—that he believed he deserved to be rich when other people were poor. But that’s actually not what he meant.
A year later Rockefeller went on to tell a reporter from the New York American: “I believe the power to make money is a gift from God . . . to be developed and used to the best of our ability for the good of mankind.”2 Rockefeller believed that he made money because he was charged with helping others. He honestly believed that if he stopped giving his money in the right way then God would take his money away.
Entrepreneurs in this country are some of its most charitable citizens. For years I taught in a department of entrepreneurship and got to know modern John D. Rockefellers who believed they were rich partly because they gave. But, you know, I never believed it—never believed a word of it—because I was trained as an economist.
When students walk into their first class in economics, here’s what the professor doesn’t say: “You want to get rich? Give your money away.” It doesn’t make sense. No, the professor will tell you that you have to have money first, and then you can give it away. So I set out to test Rockefeller’s view that he was rich because he gave. That way, the next time I heard someone say you could get rich by giving your money away, I was going to respond: “No, you’re wrong. I have the data that say you have to have it before you can give it away.”
Giving in America
Americans give a lot. In 2006 they gave about $300 billion to charity. To put that into perspective, $300 billion is more than the entire national income of Sweden. Seventy-five percent of America’s families give every year. Fifty percent volunteer their time, and Americans give in myriad other ways that are not captured in data.
The most charitable state in the United States is Utah, where people give approximately twice as much as the second leading state. I’m tempted to say that that should make Utahns proud. But I suppose that’s not the right word. However, it should make you pleased—and determined to keep it up.
How do Americans compare in charitable giving with people around the world? There’s a perception out there, if you listen to politicians, that we’re stingy. Former president Jimmy Carter said in a relatively recent speech that Americans are indifferent to the suffering of the poor around the world: “Theirs is a different world from ours. And we don’t really care about what happens to them.”3
But the data say President Carter is wrong. If we look at how much money Americans give per capita compared to citizens in other countries of the world, we find that the average American citizen gives away three-and-a-half times as much money each year as the average French citizen, seven times as much as the average German, and 14 times as much as the average Italian.
Now, as an economist I want to know if that’s because we are richer. However, when you correct for income differences and tax differences, and all the things that make the United States a different country, you find that the gap doesn’t close.
Get First or Give First?
I intended to show that Rockefeller was wrong: that you have to have the money before you give it away and that we need tax policy that puts plenty of money in our pockets—then we’ll help each other.
Researchers at Harvard University collected data on 30,000 American families from 41 communities coast to coast in a comprehensive look at people’s service behavior and charitable giving. I eagerly anticipated these data because they were going to give me a statistical way to show that you have to have the money first.
I worked for months on my computer in my darkened office. My conclusion was, sure enough, that when people get richer, they tend to give more money away. But I also came up with the following counterintuitive finding—that when people give more money away, they tend to prosper.
Be sure to come back tomorrow, for part 2. L.G