How much charitable giving actually supports the most needy?
I recently read this article on a study commissioned by Google.org which shows that in the US the answer is that little of the charitable donations made by individual donors actually go to support the most needy? I would not be surprised if there would be a similar result in Canada.
Stanford Report, January 16, 2008
Relatively few charity dollars go to neediest, study finds
BY CLARE BALDWIN
Sheryl Sandberg, vice president of global online sales and operations at Google Inc. and a board member of Google.org, the company’s affiliated charitable foundation, talked about the study at a seminar on Jan. 10. Providing for the poor is the primary goal people cite for their charitable donations, but less than one third of that money actually goes to helping the neediest, according to a recent study commissioned by Google.org, the philanthropic arm of Google.
“The problem with charity is that it goes from the rich to the rich,” Sheryl Sandberg, a Google executive who helped to produce the study, told the audience at a Jan. 10 seminar at the Humanities Center organized by the Center on Philanthropy and Civil Society (PACS Center) at Stanford. “It’s truly remarkable that people think they’re giving to the poor and they aren’t.”
The seminar was the latest in a series hosted by the PACS Center and co-sponsored by the Program in Ethics in Society and the Center on Ethics. “Our goal is to provoke conversations about big topics in philanthropy,” said Debra Meyerson, one of the PACS Center’s co-directors.
About 40 scholars, students, philanthropists and local nonprofit executives gathered to discuss what to do about the apparent “charity gap” with Sandberg, vice president of global online sales and operations at Google, and her colleague Ellen Konar, a social and organizational psychologist who also works at Google.
“People are doing something that is inconsistent with what they say their objectives are,” Konar said, referring to the fact that the majority of study participants cited providing for the poor as their primary goal for charitable donations. Sandberg and Konar said that a remedy is donor education: If more donors are aware of a potential gap between their intended recipients and where the money actually goes, they may be able to take steps to ensure that their donations are used in a more effective manner.
Rob Reich, an associate professor of political science and, by courtesy, of education and a member of the PACS Center’s steering committee, suggested that “the purpose of charity is not to provide for the basic needs of the poor, but to promote the public expression of the eccentric or idiosyncratic preferences of donors—to create a vibrant and pluralistic civil society, of which helping the poor is one part.”
According to Konar, more than 10,000 households participated in the study, which she described as the biggest of its kind in the United States. The majority of the respondents said that their primary objective was to target the poor and that two-thirds of their donations were going to the poor. The study showed that individuals with less than $100,000 in annual income gave 67 percent of their donations to religious institutions, while individuals with more than $1 million in annual income gave 50 percent of their donations to healthcare and education.
But the study reported that of the $250 billion given in 2005, less than $78 billion went directly to those in need. Indeed, less than 20 cents of every dollar donated to religious organizations goes to the poor, Sandberg wrote last year in an op-ed in the Wall Street Journal. The numbers for healthcare and educational donations are worse—10 cents and less than 9 cents per dollar, respectively.
The PACS Center, which was established with a grant from the William and Flora Hewlett Foundation in the fall of 2006, aims to further the understanding of how philanthropic institutions, nonprofit organizations and other elements of civil society work for the public good in the United States and abroad. The center is a program of the Institute for Research in the Social Sciences and is housed at the Haas Center for Public Service.
Clare Baldwin is a freelance writer who lives in Palo Alto.
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.