Posted by Peter
Wealthy Americans are becoming increasingly interested in donating to global causes. Since 1997, the rate of global giving has increased steadily at an average of 12.5 percent each year. According to a recent Financial Times story, JPMorgan Private Bank has “noted a rise of about 20 percent over the last year in client interest in overseas donations, with high-net-worth individuals looking to support education, health and economic expansion projects in developing countries.”
And they aren’t alone. Financial planners and international banks have seen similar upswings. It all begs the question—why?
What does this increased giving tells us about Americans?
First, it speaks to the sort of Main Street conservatism that permeates the culture, despite the popular media-driven assumption that conservative values are old-fashioned or even backward. With increasing frequency, Americans are educating themselves about global issues and working to fix the problems they see in concert with private organizations. In so doing, Americans breed a culture of self-reliance by acknowledging that government cannot fix every problem plaguing the modern world.
Second, it proves once again the power of tax cuts. Federal income tax rates decreased significantly between 2000 and 2007, and this has undoubtedly contributed to the rise in charitable giving. You say no way, but we do know from the experience in Western Europe, that as taxes went up, giving went down. Why? Because the state was going to solve the problem – not individuals. This leads some to contend that tax cuts hurt those in need. The truth is though, that when Americans keep more of their money they will often use it to help those in need—sans any governmental mandate to do so. Moreover, private citizens will consistently make more efficient use of their resources than government would because private giving creates partnerships between individuals and organizations and fosters accountability.