Is There a $250 Billion Gap in Charitable Giving in the U.S.?

Nov 1, 2016 | By Katy Davis, Abigail Kim & Abi Warren in Blog

The World Giving Index ranks the United States number two worldwide on the generosity of its citizens, ahead of countries like New Zealand, Canada and the United Kingdom. But what if we told you that Americans think their neighbors should give more than the roughly 3% of annual income they already give to charity—a lot more?

Results from a recent poll reveal just that: convictions about generosity in the U.S. don’t match up with actual rates of individual giving. We asked 500 participants in an online poll to think about the average household in their neighborhood and then tell us what percentage of income they thought their neighbors should donate this year.

On average, survey respondents indicated that people should give 6.1% of their income to charity. This recommended level of donation is more than double the amount that people in the U.S. actually give.

In dollar terms, this giving gap translates to more than $250 billion – an amount that could be transformational when leveraged to address critical needs and social issues. For example, experts estimate that if one third of that amount ($83 billion) were annually invested in global agriculture, we’d be able to feed the 9.1 billion people predicted to be on our Earth in 2050.

At ideas42, we’re working with The Gates Foundation to bring a behavioral lens to individual giving – and investigate what is driving such a significant gap.

One factor stems from the fact that people are rarely, if ever, prompted to think about how much they currently give or how much they want to give overall. As a result, people often end up donating by happenstance or in response to direct appeals, sometimes giving much less (or more) than they’d actually like to. It’s similar to saving money. Unless you are prompted to set a savings goal or are enrolled to automatically save a percentage of your income each month, you may end up saving less for your future than you want to.

One promising way to prompt people to think about and take action on their charitable intentions is to support the development of clear goals. Research from behavioral science shows that while a vague desire to do something won’t get us very far, concrete tactics to help us form a specific intention can lead to real changes in behavior. For example, one study found that calling potential voters and facilitating the formation of a voting plan (e.g. I’ll go the poll located next to my office building, next Tuesday) can increase turnout by 9.1 percentage points among single-eligible-voter households. We want to use that same idea to foster thoughtful, actionable giving.

This year, ideas42 is collaborating with Bright Funds, a workplace donation platform, to pilot a web-based tool that applies research on goals to charitable giving. The tool helps people choose a target monthly donation amount and then suggests concrete steps to achieve that goal. Data from the tool will also be used to give donors personalized feedback on progress. This simple goal-setting exercise could help people give at levels that match their latent intentions, potentially unleashing a flood of generosity for social impact.

Goal-setting is just one of many new approaches to giving that we are exploring in our partnership with the Gates Foundation. By building on established behavioral insights and testing each pilot rigorously, we hope to highlight evidence-based solutions that help people clarify and act on their personal objectives for charitable giving. With initiatives like these, we can start to make inroads on that $250 billion.