Since 2009, a rising economic tide has mainly lifted yachts. During the recovery, the gap between the rich and the poor has widened. Both in terms of incomes and wealth, the rich got richer. Meanwhile, the poor and middle class either saw their earnings and wealth stagnate or fall off.
And yet amidst all that, something odd happened. Even during the downturn and recovery, the poorest Americans upped their charitable giving. Meanwhile, the highest-income people gave less and less, the Chronicle of Philanthropy reported in October.
The rich also give to charity differently than the poor: compared to lower-income Americans, the rich's charitable giving places a far lower emphasis on helping their disadvantaged peers. When the poor and rich are (figuratively and literally) moving farther apart, an empathy gap naturally opens up between the upper and lower classes — after all, if I can't see you, I'm less likely to help you.
Taken together, the trends paint a disturbing picture for the future of both the American economy and philanthropy: as the rich get richer and more removed from the daily lives of the poor, the bulk of charitable giving is also likely to become further removed from the needs of the poor.
What happened during the recession
Something amazing happened between 2006 and 2012. Using IRS data, the Chronicle found that the lowest-income Americans actually boosted the share of their incomes that they give to charity. But as you travel up the income ladder, the story reverses: the boost in charitable donations diminishes, then becomes negative, as incomes rise (importantly, these are only among people who itemize giving on their taxes):
What makes the above chart all the more striking is that poorer Americans' incomes stagnated during the downturn, while richer Americans thrived. Here's a look, for example, at how household incomes at the 20th, 40th, 60th, 80th, and 95th percentiles changed from 2006 to 2012, according to Census data.
Though it's not exactly the breakdown that the Chronicle provides in its donation chart, this and other data undeniably shows that the downturn was kinder to people at the top than the bottom.
None of this, of course, means that the poorest Americans are giving the most to charity; the richest Americans by far give away more money. The top one percent of tax returns (comprising people earning around $500,000 or more) in 2011 accounted for nearly one-quarter of all charitable contributions, according to data from a 2011 Congressional Budget Office report.
But still: why would the lowest-income Americans have given more over that period than richer Americans? They had less to begin with, and they recovered more slowly.
One clue lies in how the lower-income Americans give. That 2011 Congressional Budget Office report took a look at how charitable giving breaks down. According to 2005 data, the lowest-income Americans tend to give the majority of their money to churches and other religious organizations (which often use the money to help the community's needy). The next most popular kind of charity are those that help people meet basic needs.
The rich, meanwhile, are more likely to give to arts organizations, as well as schools and health organizations — predominantly hospitals and disease-specific groups (think Susan G. Komen). The source of that data, a 2007 report from Indiana University, shows that people toward the lower end of the income spectrum give a substantially bigger share of their donations to helping the poor than the very richest people.
True, earning below $100,000 doesn't exactly make a household "poor," but even the stark differences between those households and those that make over $500,000 suggests a few things about why lower-income Americans boosted their giving.
One is a sense of empathy. Lower-income people feel a sense of duty to help out people like themselves, says Stacy Palmer, editor at the Chronicle of Philanthropy.
"In part it's what you're familiar with and what you've seen and where you see the need," she says. "One of the reasons in the recession years we saw the lower-income people give generously is they saw people around them losing their jobs and underwater on their homes." Food banks, for example, rely heavily on donations from lower-income people, as MarketWatch has reported.
The big takeaway here is that when times were the worst — when people were losing their homes and their jobs — the poorest Americans took it upon themselves to reinforce their own safety net.
But consider this data in conjunction with other economic trends, and there's a troubling future hidden in this data. And it's embedded in the fact that even while the highest-income Americans dialed back their giving in the recession, they also remain the biggest donors.
Here, for example, is a more detailed look at giving by income, using 2011 tax data. Though the bottom of it cuts off at $45,000, it suggests a U-shaped distribution in charitable giving, with people at the bottom and the top giving the biggest shares of their adjusted gross income (AGI) to charity.
Any smart nonprofit will also heavily court the high value donors. Yes, there are lots more $50,000 earners than $5,000,000 earners, but those five-million-dollar-income people are also becoming more plentiful all of the time.
As rich donors become more important, their priorities will increasingly dominate the agenda. That means this growing potential pot of money — as well as a lot of the talent in the philanthropic sector — is likelier to go more towards museums, schools, and hospitals, and less toward the disadvantaged. It's less likely that that big pool of philanthropic money will go to the nation's food pantries (and therefore food pantry customers).
One thing this means is that if the government cuts back on spending, as it has on food stamps, for example, lower-income Americans may increasingly find themselves reliant on one another to stay afloat.
In addition, there's reason to think higher-income Americans will funnel their money increasingly away from the poor. As the Chronicle found in 2012, the rich tend to give less to poorer people when the rich live in economically segregated neighborhoods — it's easy to forget the plight of the poor when you never encounter them.
This isn't to shame the rich person who donates $20,000 to a failing arts organization, which is of course a wonderful thing to do. The message here isn't that wealthy Americans are a bunch of Scrooges. The real story is much subtler: if the nation becomes more unequal and economically segregated — or, put another way, if Americans' incomes move apart and the rich and poor increasingly live apart physically — it becomes much easier for people to be blind to how people outside their own class are living.
And that suggests impacts well beyond even the realm of charity — the fraying of the social fabric of the nation, as the sense of "community" people feel increasingly is limited to those in one's own tax bracket.