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Wealth and the Commonwealth Newsletter
Center on Wealth and Philanthropy
Spiritual and Cultural Life in an Age of Affluence Wealth and the Commonwealth Newsletter Volume 9: December 2005

Contents

Comparison of Catalogue for Philanthropy and CWP Indices

Study Offers New Portrait of Charitable Giving by States


 

Comparison of Catalogue for Philanthropy and CWP Indices

2004 Catalogue for Philanthropy Generosity Index (2002 data)

1. Mississippi

2. Arkansas

3. Oklahoma

4. Louisiana

5. Alabama

6. Tennessee

7. South Dakota

8. Utah

9. South Carolina

10. Idaho

11. Wyoming

12. Texas

Center on Wealth and Philanthropy Index (2002 data)

1. Utah

2/3. Maryland/New York (tie)

4. Connecticut

5. California

6. Hawaii

7. New Jersey

8. Georgia

9. South Carolina

10. North Carolina

11. Massachusetts

12. Wyoming

The Chronicle of Philanthropy has provided a complete comparison of the rankings of the two indices. To see the Chronicle's coverage follow the links below.

Harvy Lipman's article: "Study Seeks to Dispel Image of Massachusetts as Stingy" Accompanying chart: "Ranking Generosity in the States"



Dear Colleagues:

I am pleased to send you this special issue of our newsletter, Wealth and the Commonwealth. This newsletter features our latest report, Geography and Generosity: The Boston Area and Beyond.

Over the past decade, increasing attention has been focused on the relative generosity�or lack thereof�of the residents of different states or regions in this country. In particular, various reports published locally and nationally have drawn sharply different conclusions regarding the generosity of Massachusetts residents. The resolution of this issue holds profound significance for the meaning and practice of philanthropy in the Commonwealth and across the nation. In our report we call for a de-emphasis of comparative rankings that can be used to chide regions about their giving in favor of an approach that encourages charitable giving by drawing on the inclination of people to care for others.

In September 2004, with funding from the Boston Foundation, the Center on Wealth and Philanthropy at Boston College began a two-year study, Geography and Generosity: Boston and Beyond, focusing on charitable giving for regions, states, and metropolitan areas across the United States. The report on the first year of research is available in PDF format by following the link below.

We have included our press release announcing the report in this newsletter. It provides an overview of our findings and their implications. For additional information, including recent coverage in the press, please follow the link at the end of the article. We would also like to call your attention to the November 21st article in the Chronicle of Philanthropy. We thank the Chronicle for providing a direct link to this article so that individuals without a subscription to the Chronicle may also read it.

As always, I welcome your comments and feedback. I wish you, your family, and your friends the blessings of this sacred season.

Cordially,

Paul Schervish

Center on Wealth and Philanthropy


  • Study Offers New Portrait of Charitable Giving by States
  • 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 relative to income, which since 1997 had been annually evaluated by the Generosity Index, a widely used list published by the Catologue of Philanthropy that ranks all 50 states according to how much local residents give to charity.

    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 using the CWP methodology, 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 researchers 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.

    "Dr. Schervish 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 Catalogue of Philanthropy's Generosity Index has received national media attention and has served as grist for cultural conversation on thousands of websites.

    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 in favor of 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 Havens 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, and held giving by all other states constant, Massachusetts could not rise above number 23 on the Index based on IRS data for 2000 and could not rise above number 24 on the Index based on IRS data for 2002. At the same time the analysis concluded that the state of Mississippi would not fall below 25th place even if residents of that state had given zero to charity based on IRS data for 2000 nor would they fall below 25th place based on IRS data for 2002.

    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, the CWP approach 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 on the CWP index in comparison to 49th on the Generosity Index.

    The sidebar presents a snapshot of the way in which a ranking of the top twelve "most generous" states would change based on the reevaluation conducted by the BC researchers. Stark changes in ranking occur for many other states, especially those at the top and bottom of the income distribution.

    Moving away from rankings

    Schervish and Havens 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 it 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 large amounts and residents who contribute small amounts, and on developing practical programs that will increase giving as it currently exists.

    By replacing scolding with inspiration, Schervish and Havens 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 blessings, and achieve deeper personal happiness, in the form of 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 and of a new vision for inspiring charitable giving. And at the same time, it provides a new vision of how philanthropy can serve a broader community by encouraging a deeper commitment to philanthropy.

    Link to CWP website for PDF of report and media coverage
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