Center on Wealth and Philanthropy Study Finds States
Previously Labeled 'Stingy' Have Higher Generosity Levels Than Previously Reported;
Researchers Call for New, More Rigorous Way to Calculate Giving
CHESTNUT HILL, MA (11-14-05) -- States previously reported to lag behind the nation in charitable giving actually have higher generosity levels than those indicated by a widely-touted annual index, according to a new study conducted by researchers at the Boston College Center on Wealth and Philanthropy.
The study, sponsored by the Boston Foundation, recalculates giving levels which since 1997 had been annually evaluated by the Generosity Index, a widely used list that ranks all 50 states according to how much local residents give to charity, published by the Catalogue for Philanthropy.
For example, the 2004 Generosity Index, based on 2002 data, ranked Massachusetts as the second stingiest state in the nation, and the 2002 Index, based on 2000 data, ranked it the seventh stingiest state. But that charge is revealed as a "myth" in the new report, which for the first time subjects the Index to rigorous scrutiny. When cost of living and tax burden in the area are taken into account, Massachusetts moves from 49th to 11th in terms of charitable giving based on 2002 data and from 44th to 6th based on 2000 data.
The new report, titled Geography and Generosity and conducted by noted philanthropy experts Paul G. Schervish, director of the Boston College Center on Wealth and Philanthropy, and John J. Havens, center associate director, was released at a forum at the Boston Foundation.
Schervish and Havens presented a summary of their findings, suggesting a more rigorous way to calculate the level of giving in a particular state and calling for a different way to understand the idea of generosity -- not as a narrowly competitive status on the single incremental list, but as a complex attitude that factors in significant differences between states and regions in the country.
has achieved something truly remarkable with this study," said Paul S.
Grogan, President and CEO of the Boston Foundation. "He has put our understanding
of philanthropy onto a foundation of fact rather than hunch. And he confirms
what many have suspected: the residents of Massachusetts give generously and
well to causes and ideas that matter to them. In fact, this report invites us
to change our understanding of ourselves."
The report was commissioned in part because the Index of Generosity has proved so resonant. It has received national media attention and has served as grist for cultural conversation on thousands of websites. It was offered as proof during the presidential election of 2004 by columnists and talk-radio hosts that George W. Bush has a better grasp on core American values because the states that voted for him are clustered at the more generous end of the list.
What's wrong with the Index
Geography and Generosity includes an analysis of the Generosity Index--which is based on income tax returns--and determined that it is inaccurate in part because of a built-in bias against high-income states, such as Massachusetts, and for low-income states such as Mississippi, which has frequently come out as the most generous state in the nation on the Index. When Schervish and his team used the same formula that was used by Dr. George McCully, publisher of the Catalogue for Philanthropy and the creator of the Generosity Index, they determined that even if Massachusetts residents had given 100 or 1,000 times the amount of money that was in fact donated to charity in 2004, and held giving by all other states constant, Massachusetts could not rise above number 23 on the Index. At the same time, the calculation suggested that the state of Mississippi would not fall below 26th place out of 50 even if residents of that state had given zero to charity in 2004.
In addition to the methodological bias in the index, Schervish and Havens cite what they believe to be three critical errors in the Index methodology:
• Average adjusted gross income is calculated for one group of people (all who filed income tax forms), while the average charitable deduction is calculated for a separate group—those who itemize their returns. Because the two groups are not the same, no meaningful ratio of generosity can be calculated using this data.
• The use of itemized returns adds doubt to any conclusions because while only 20 percent of residents in some states itemize their returns, the proportion in other states rises as high as 40 percent. In specific, 21 percent of residents of Mississippi filed itemized returns while 37 percent of Massachusetts residents did the same. This reflects a much higher cost of living in Massachusetts. In particular, the cost of housing in the Bay State is significantly higher than in Mississippi which would encourage more residents to itemize their returns in order to take advantage of the deduction for mortgage interest. This underscores important differences in standards of living that have an influence on giving.
• Also, tax returns do not capture the total income of all the residents of a state, and itemized tax returns do not capture the total charitable contribution they make. Those who are not required to file an income tax return, for example, are lost to the calculation of the Index.
The researchers cite other problems with the Index, as well: it does not take into account the significant differences in tax burdens in different states, other differences in the cost of living, or the differences in patterns in giving to secular and religious institutions and causes—all of which differentiate regions of the country as well as specific states.
A new measure of generosity
In addition to developing a new method for calculating total charitable giving in each state, researchers at the Boston College Center on Wealth and Philanthropy have created new measures of giving relative to income for each state. They measure the share of total charitable contributions donated by the residents of each state and compare it to the share of income earned by residents of the same state. In this case, income can be calculated in terms of gross income, net of taxes, adjusted for differences in the cost of living in different states. In this way, all the residents of a state are captured the same way for each calculation, and there is no intrinsic bias against high- or low-income states. As the Generosity Index purports but fails to do, this formula compares the capacity of state residents to give against their actual pattern of giving.
Using this alternative measure, a dramatic change in state giving is revealed. When data for the year 2000 was used to calculate "generosity" by this new methodology, Massachusetts, for example, placed far higher on a linear scale, rising to 6th place as opposed to 44th, which is where it is ranked on the Generosity Index for 2000. When data from 2002 was used, Massachusetts ranked 11th in comparison to 49th on the Generosity Index.
Below is a snapshot of the way in which a ranking of the top ten "most generous" states would change based on the reevaluation conducted by the BC researchers.
Catalogue for Philanthropy Generosity Index (2002 data)
7. South Dakota
9. South Carolina
Center on Wealth
and Philanthropy Recalculated Index (2002 data)
2/3. Maryland/New York (tie)
7. New Jersey
9. South Carolina
10. North Carolina
(Maryland and New York are actually tied for position 2 and 3 on the new scale)
Moving away from rankings
Schervish and his team stress, however, that any attempt to compare one state to another is at best a rough approximation.
"The alternative methodology presented in this report is one of many that could have been developed," noted Havens. "A different but also largely accurate methodology might have placed the residents of Massachusetts somewhat higher or lower than the measurements used here. Designating a specific rank conveys more certitude than a measure can in fact, accurately achieve."
Also, any calculation of contributions as a fraction of potential giving measures, in fact, donations of money made, rather than generosity. The report notes that generosity can take the form of gifts in kind, of contributions of time spent in a charitable endeavor, or gifts of cash to family members—none of which would be captured by a scale that seeks to capture donations of money.
The Schervish and Havens report calls for a new approach to the whole idea of charitable giving. Instead of what is described as a strategy of "chiding" people into giving using a scolding model that upbraids an entire population for not giving enough, it suggests focusing on the fact that every state has residents who contribute largely and residents who contribute small amounts, and developing practical programs that will increase giving as it currently exists.
By replacing scolding with inspiration, Schervish and his colleagues suggest three questions that can be used to change the conversation about philanthropic giving:
• What is
important for you to do as an act of caring for others?
• What can you do better through philanthropy than through government of commerce?, and
• What enables you to identify with the fate of others, express gratitude for your own good fortune, and achieve deeper personal happiness, effectiveness and significance, for yourselves and others, at the same time?
The report is ultimately designed to give the philanthropic community information it can use to achieve a deeper understanding of individual giving as well as patterns within a state. And at the same time, it provides a new vision of how philanthropy can serve a broader community twice—through direct and indirect giving and through the cultivation of an attitude of incremental change rather than a competitive ranking of different communities in different circumstances.
The full report may be found at www.bc.edu/research/cwp
The Boston College Center on Wealth and Philanthropy is a multidisciplinary research center specializing in the study of spirituality, wealth, philanthropy and other aspects of cultural life in an age of affluence. Founded in 1970, the Center is a recognized authority on the relation between economic wherewithal and philanthropy, the motivations for charitable involvement and the underlying meaning of practice of care. For more information, visit www.bc.edu/research/cwp
The Boston Foundation, one of the nation's oldest and largest community foundations, has assets of about $700 million. In 2004, the Foundation made $51 million in grants to nonprofit organizations, and received gifts of $41 million. The Boston Foundation is made up of 750 separate charitable funds, which have been established by donors either for the general benefit of the community or for special purposes. The Boston Foundation also serves as a civic leader, convener, and sponsor of special initiatives designed to build community. For more information about the Boston Foundation and its grant making, visit www.tbf.org, or call 617-338-1700.
For more information:
BC Center on Wealth and Philanthropy
Paul Schervish; John Havens 617-552-4070