It is ingrained in the American character to believe we are the hope of the world.
Parents, teachers, religious and civic leaders proclaim the idea as a fundamental truth long before we’ve learned how to question the things we are taught. We believe we willingly share our good fortune. We believe that is a fundamental to being an American.
But there’s another strain in the American character, a part of us that our writers and poets treat more candidly than the publishers of our grade-school history books. It is the elbows-out, capital-amassing, acquisitive side of us that is dissected in our best literature. Our most memorable fictional characters are Americans of this stripe.
So what’s the reality? Who are we, really?
Are we altruistic and generous? Or are we stingy and greedy?
Why do we give?
The charity world spends a lot of time addressing these questions. Charity administrators study why people give, or don’t give, and how donors view their programs. The answers go to the heart of the services they provide and how they get money to pay for them.
An ambitious attempt to understand
The cumulative result has been a lot of writing, thinking and applying that modern Holy Grail of analysis — polling — in an effort to understand donors.
But there is evidence that approach — the dispassionate analysis of why we give and the tailoring of fundraising efforts to reflect the answer — has contributed to a general feeling of uneasiness about charities. It offends our idealism, undermines our egalitarianism and suggests that, perhaps, we are not so innately good after all — that we need to be cajoled into sharing our wealth.
Blake Bromley is typical of the breed of accountants and lawyers who scrutinize the ledgers of charitable organizations and guide their administration. Working from a base in Vancouver, Bromley has spent a lifetime developing a multicultural knowledge of the charity universe — among his clients are governments in England, Russia, Vietnam, China, Australia and South Africa. Along the way he has become something of a lawyer-philosopher on giving.
Bromley says the answer to the question of why we give is complex -- a product of the economic, social and political environment of each individual donor. He believes it is a question better left unanswered — that reducing donor motivation to broad categories, and using that information to frame fundraising drives, is cynical and misses the point of giving.
“Charities must concentrate more on fulfilling and communicating their mission and less on slick fundraising initiatives if they are to survive,” Bromley has written.
But skepticism about charities is nothing new. Cynicism about American giving, and doubts about the reliability of donors were at the heart of a pivotal debate over tax policy a century ago.
The tax deduction for charitable donations — the single institution that binds the most people together in the U.S. charity universe — was attached to an income surtax in 1917. Its early history suggests that the unappealing Americans of literature and film — the Dimmesdales and the Babbitts, the Gatsbys and the Angstroms, the Charles Foster Kanes — reflect our true character.
Charitable deduction is offspring of war
The tax deduction was born of war, debated in an environment of unabashed jingoism, pushed into law by an elitist Senate and administered by a commissioner of revenue whose public writings starkly illustrate the racism of the day.
America needed money to fight Germany. In February 1913, the states had ratified the Constitutional amendment paving the way for the modern income tax, which was adopted in October. The War Revenue Act of 1917, which contained the charity tax deduction, was an additional income tax to raise $2.5 billion dollars for the war.
The Income Tax Amendment was a progressive reform. Its supporters viewed it as a brake on the influence of wealthy Americans. Wealthy Americans, in turn, felt attacked, even more so when the 1917 revenue bill came along.
But they had a friend in the Senate in Henry French Hollis of New Hampshire.
Hollis had graduated from Harvard and was a Smithsonian Institution regent. In the grand tradition of the Senate, he was to leave that institution in 1919, become a member of the Interallied War Finance Council, the United States Liquidation Commission for France and England and, ultimately, a wealthy international lawyer.
Hollis, in short, was an insider.
When the War Revenue Act reached the Senate, Hollis argued for the amendment that embedded charitable deductions into American tax law for good. But benevolence was not his motivation. He did it out of fear for the survival of the institutions that the American elite relied upon.
American colleges —which mostly served the wealthy — were heavily dependent on donations from moneyed people at the time. They could collapse, Hollis argued, if those donations dried up. Faced with an additional tax, “that will be the first place where wealthy men will be tempted to economize,” the senator argued. “Namely, in donations to charity,” and while he mentioned other causes, his main focus was colleges dependent on rich graduates — like Harvard, his alma mater, cradle of the American elite.
‘Liberty ... in imminent danger’
The commissioner of revenue, Daniel C. Roper, explained the law in a political journal in January 1918. He began with the tale of a confused “old darkey” in a “southern town,” speaking in an Uncle Remus-like dialect, Roper’s clumsy stab at illustrating the challenge of administering the new tax. The commissioner went on to argue “the enemy is at the door, liberty and its institutions are in imminent danger … Any other program or policy of administration would injure our cause and help the Kaiser.”
So public discussion of the tax, and the charitable deduction, reflected not the high-minded notions of a community dedicated to selfless giving, but the easy arrogance of the bureaucratic superstructure of an emergent world power. It seemed to presage the 1920s — but the 1920s of Warren Harding, not that of Will Rogers.
Nevertheless, the question of donor motivation is complicated, as our lawyer-philosopher asserts. After all, America did manage to shine its spotlight on both Harding and Rogers in the same jazz-besotted 10-year span. Its people, their interests and their motivations for giving to the less fortunate were increasingly diverse.
Subsequent Congresses altered the deduction as they changed the broader tax codes. Periodic debates centered on what a donor loses when he gives to charity, how the tax code should reflect that, and whether the motivation to give is different for different levels of income.
The notions of greed and generosity occasionally leavened the debates, but they mostly played out in a framework of dry legalisms with scant public engagement. The political challenge remained unaltered: maintain a charity deduction that is fair, equitable and effective — different and somewhat competing goals. In practical terms, it comes down to figuring out the marginal rate at which the tax is applied, and balancing the twin facets of motivation: benevolence and financial advantage.
As lawmakers turned the tax code into an indecipherable jumble of clauses and schedules, public notions about charities continued to evolve on a more or less parallel (and similarly complicated) track through the 20th Century. Americans continued to give, and they developed a full-blooded mistrust of the charity world.
Special-interest debate and doubts
So who are we, really, if our public debate over charity tax deductions is reduced to a struggle among charity lobbyists, corporate lawyers and the institutional vagaries of the Congress, while our notion of individual charities is clouded by scams, bad management and a vague idea that these organizations spend too much on administration, and too little on programs?
Why, indeed, do we give?
Independent Sector, a charity umbrella group, is one of the many organizations that periodically examine the question. In its most recent comprehensive study, in 2001, 84 percent of donors said they believe they can improve the welfare of others.
They cite many reasons — religious obligations, someone they know asked them to give, people with more should give to those with less. And while only 20 percent of households that contribute cite the tax deduction, wealthier contributors cite tax advantages as considerably more important.
Eugene Tempel, executive director of the Center on Philanthropy at Indiana University, says his organization’s studies also find varied motivations:
“Typically, people give because they identify with a cause…there are people who feel a responsibility to give back … and often people will say if they are asked by the right person, they will give.”
Americans give at a level four times that of Britain and Germany, he says, which reflects the American character:
“Part of the expectation of our democratic values is the ability to do something in a community the way you want to do it.” Elsewhere, these responsibilities are left to governments. “For example, the private philanthropy that goes into public schools is uniquely American. A group might decide it wants a certain foreign language taught, set up a school foundation, and pay for including it in the curriculum.”
Greedy or generous?
The statistics are dizzying. The opinions of the experts are sophisticated, nuanced and, consequently, inconclusive. We know a little bit about why we give, but the tougher question still looms:
Are we greedy or are we generous?
It’s complicated. And none of this seems to settle it.
But perhaps this does:
Buried in the 2001 study by Independent Sector is the fact that households in which members volunteer for charitable causes or at their church give more than twice as much money to charities than households with no volunteers.
Congress has chosen not to allow deductions for time donated. Why?
To do that, our lawmakers would have to figure out a way to put a dollar value on volunteer time. They’d have to calculate how much one human being’s time is worth, as opposed to another’s. You could concoct a system based on income, but could you do that fairly in the eyes of the public? No, because the value of one’s time is intangible.
Yet those of us who give time also give twice the money as those who don’t.
It seems then, we give because we are good. The part of the American character that is hopeful and generous — while flawed, while not perfect — is fundamentally intact.