Following a visit in 1831-1832, French aristocrat Alexis de Tocqueville marveled at the innate generosity of the citizens he encountered in the nascent American democracy.
“I have seen Americans making great and sincere sacrifices for the key common good and a hundred times I have noticed that, when needs be, they almost always gave each other faithful support.”
Even today, the United Way honors its most generous donors with membership in the Tocqueville Society, and the U.S. remains an example to the world for generosity.
Yet over the past two decades, giving to charitable causes has declined markedly, especially among the vast majority of modest or moderate means who traditionally opened their hearts and wallets to worthy causes. Fewer than half of households give to charity today, compared with two thirds in the early 2000s. The falloff is significant enough that some nonprofit executives have dubbed it a “generosity crisis.”
While many of the reasons are understandable, the impact is more than financial. Participating in charitable activities builds community and belonging, in addition to helping the neediest. Generosity is at least as beneficial to the giver as to the recipient, and we should endeavor to revive the spirit that so impressed Tocqueville during the first American century.
One possible explanation for the subsidence in charitable giving is the general decline in organized religion. According to Gallup, the share of Americans who regularly attend religious services has declined from 42% in 2000 to 30% today.
Meanwhile, the percentage of those with no religious affiliation has surged from 9% to 21% today over that period. People who consider themselves highly religious are twice as likely to volunteer their time, and roughly half of those people do so through a faith-based organization, so the waning of religious involvement has taken a toll on charitable activity.
Of course, religious affiliation is only one means of connection to a larger community that shares a common interest. Many Americans seem to be losing faith in institutions in general, many of which exist to foster charitable activity. The general erosion of that sense of community cohesiveness has shown up in a broad decline in Americans’ inclination to join groups and organizations of all types that previously brought us together with other people of differing backgrounds and socioeconomic status.
Changes in the tax code have further eroded financial incentives. The 2017 Tax Cuts and Jobs Act sharply increased the standard deduction ($27,700 per couple in 2023), eliminating the opportunity for average taxpayers to write off a charitable contribution. The share of taxpayers who itemize deductions fell from 36% in 2005 to just 7.5% today, scotching the tax reward for their giving. An American Enterprise Institute report from July concludes that the change has in effect rendered charitable giving a luxury good.
With 1.8 million not-for-profit organizations in the U.S., fundraising can be intensely competitive. Increasingly, charitable groups have focused more efforts on the largest potential donors to maximize efficiency, but unintentionally sending a signal that small dollar contributors are less valued or important. A 2023 poll by the Better Business Bureau found that nearly half of individuals who have stopped giving to charity did so because they believed wealthier people should do more.
Despite the temporal decline in charitable giving and volunteerism over the past 20 years, the charitable instinct that de Tocqueville observed remains intact. According to a survey conducted in 2022 by the Generosity Commission, 74% of Americans say they aspire to be more generous, despite the notable decline in execution of their desire.
There is good news. A broad body of research has demonstrated that giving not only benefits the recipient. It turns out that in many cases the giver benefits even more.
Numerous scientific studies have documented positive physical responses experienced by individuals when they engage in philanthropic activities like giving money or time.
Acts of generosity have been shown to trigger the release of neurotransmitters and hormones like endorphins, dopamine and serotonin. These so-called “feel good” chemicals can boost feelings of happiness and wellbeing similar to the “runner’s high” often reported by endurance athletes. Some researchers have called the response a “giver’s high.” The release of these chemicals has also been shown to reduce stress and anxiety and produce a salutary effect on mental health.
Charitable giving can produce other more tangible physical benefits. A recent study by the BMC Publishing Public Health journal found a marked correlation between giving and longevity. The study found a 44% lower five-year risk of dying among adults over age 50 who volunteered at least once per week versus those who did not. The American Journal of Preventive Medicine noted that regular volunteers experienced lower levels of inflammation as well. Chronic inflammation can lead to a variety of health issues including heart disease and cancer.
Aside from the documented health benefits, giving money and time is an important way to build community and strengthen social connections that have been eroded over the past 20 years. Renewing that sense of common interest and community engagement could be the essential ingredient in tamping down partisan fever and building a more equitable and harmonious society. Everyone wins.
Merry Christmas and happy holidays to all.
Christopher A. Hopkins, CFA, is co-founder of Apogee Wealth Partners in Chattanooga.