Generosity Index, 10th Anniversary

For Generosity Index media questions, please call Marty Cohn, 617-962-3136

The data: 1995-2004
- National
- Massachusetts
- The 50 States
This is also the 10th anniversary of the Generosity Index (GI), the purpose of which is to stimulate discussions of charitable giving in the year-end holiday giving season, by reporting the latest (two years earlier) IRS data summarizing personal income tax returns. The numbers we first reported in 1997 were actually from 1995, and those we report now are for 2004. We thus have a complete decade — 1995-2004 — of IRS data on Adjusted Gross Income (AGI) and Itemized Charitable Contributions (ICC), for each state and for the nation — 1.2 billion tax returns! By considering the histories of income and charitable giving, and their interrelationships, over the past 10 years, states can gain clearer understanding of how philanthropy works.

This was a very eventful, interesting and revealing decade for philanthropy. It began with the economic boom of the mid-late ’90s, followed by the recession of 2001-02, sharpened by September 11 with its paroxysm of charitable giving, followed by a turn-around in 2003-04, in a changed world. This was also a decade of a strongly globalizing economy, and when computers and the Internet were revolutionizing information management and communications. These developments transformed the demographics of wealth—all of which contributed to the current paradigm-shift in philanthropy.

National Trends

For the nation as a whole over the decade, the number of taxpayers rose 12%; their average income (AAGI) increased 44%; and their average giving (AICCs) rose 64% (from $2,449 to $4,012). As a result, total itemized giving more than doubled — an increase of 117% (from $74.8M to $162.2M, see Chart 1).

[Chart 1 - click to enlarge]

Taxpayers itemizing charitable contributions rose from 26% to 30% during the decade. ICCs therefore represent the giving of a minority of donors (all taxpayers give, but most do not itemize their gifts), but a substantial majority of the dollars given—about 80% on average, of total personal giving as estimated by Giving U.S.A. If Giving U.S.A. is correct, the 71-74% of taxpayers who were non-itemizers contributed only 20% of estimated total personal contributions.

These overall income and giving data were most powerfully affected by the top income group (see Chart 2: >$200K). Their number more than doubled during the decade (up 138%); they are also the heaviest itemizers (90%), and since itemization carries penalties for either exaggeration or understatement, ICCs are a good indicator of their charitable giving. Their average income (AAGIs) rose by 11% ($499,393 to $554,643), but their average giving (AICCs) rose by 26% ($16,882 to $21,246). Combining all these increases, their total giving tripled (300%). As a percentage of taxpayers they rose from 1.1 to 2.3%; their share of total contributions rose from 25% to 36%. As a percentage of income, their giving rose from 3.4% to 3.8%. Nonetheless, they accounted for 45% of the total increase. Because they have the largest capacity for growth, fundraising and efforts to promote charitable giving focus on them.

[Chart 2 - click to enlarge]

See also:
- Generosity Index 1997-2004 All Returns by State
- Generosity Index 1997-2004 AGI over $200,000 by State
- Technical Notes
- Response to The Boston Foundation Report (5/2006)
- "Generosity Index" in the news


Charts 3 and 4 present corresponding data for Massachusetts. Total giving here also more than doubled, increasing by 121% (U.S.: 117%). Our number of taxpayers rose by significantly less — 7.3% (U.S.: 12%) — but we have a higher portion of itemizers of charitable contributions, rising from 32.5% to 37% (U.S.: 25.7% to 30.4%). Average income was higher to begin with and increased more — from $40,972 ($35.2K) to $62,855 ($50.7K), or 53% (U.S.: 44%). Average contributions were lower—$1,919 (U.S.: $2449) but rose significantly more, by 81% (U.S.: 64%), to $3,465 — still $547 below the national average ($4,012), for this third-wealthiest state in the nation.

[Chart 3 - click to enlarge]

[Chart 4 - click to enlarge]

The top income group was pivotal. About 95% itemize CCs, so ICCs accurately reflect their actual giving. Their number rose 254% (U.S.: 139%). Their average income (AAGI) began slightly higher at $512,090 (U.S.: $499,393) but rose 34% (U.S.: 19%) to a much higher peak in 2000 ($687,547 — U.S.: $594,298), then sank with the recession and is still rebounding, now at a level equivalent to their peers nationwide—to $557,857 in 2004 (up 8.9% from 1995; U.S.: $554,643, up 11%). Their total giving more than tripled (310%; U.S.: 300%). Their percentage of all taxpayers rose from 1.5% to 3.5% (U.S.: 1.1% to 2.3%); their share of total giving in Massachusetts rose from 35% to 50% (U.S.: 25-36%). Their increased giving accounted for 61% (U.S.: 45%) of the total increase. Average ICCs rose from $15,344 to a high of $22,532 in 2000 (up 47%), then fell and is returning up at $19,096 (up 24% — U.S.: 26%). So this leadership group’s average income rose 8.9% from 1995, but their average giving rose 24%. Their AGI is still 19% below the 2000 high, while their AICC is about equal to its high in 2000. If they continue to raise their giving proportionately as their income returns to its high level, Massachusetts will set new records in giving and in generosity — the relation of giving to income, or net worth.

Graph 5 represents the Massachusetts Generosity Index (GI) numbers and ranks, 1995-2004, for all taxpayers and for the top income group. GI ranks are relative, showing how the absolute dollar numbers relate to those of other states with similar ranks in income and charitable giving — Massachusetts has high income and low giving ranks. If something dramatic happens to Massachusetts’ numbers that is not reflected in the GI, it may mean that the dramatic event happened to other states as well. Note that the GI ranks data, not people; numbers arithmetically rank themselves, so ranking by itself involves no interpretive statements. These are only indicators, and not measurements, of generosity (which is far too complex to “measure”).

[Graph 5 - click to enlarge]

Massachusetts is third in the nation in income — the sole exception being our peak year 2000, when we rose to second. Our charitable giving was consistently low until 1997, when it began to explore higher ranges — rising to 40, dropping back to 42 but then: 34!, 20!!!, 30! Then in the recession it dropped back to 39 twice, and is now climbing back, up to 37. Every year since 1997, when the GI was first published, our rank has been higher than every year before 1997. Comparing the decades before and after the GI was introduced, our Giving rank has risen from the mid-40s to the mid-30s! As of 2004 we are steadily rising again. This evidence refutes unfriendly speculations that publishing the GI lowers charitable giving; if it has had any influence at all, that has been to increase giving.

For years Massachusetts had the largest negative disparity in the nation between our income and giving ranks, until 1997 when we began to close the gap and inch steadily upward in the GI — averaging 50 from 1991-6, then abruptly 48, 49, 48, and 44 from 1997-2000, then the recessional dip—47 in 2001, two 49s, and in 2004 back up to 47. While all this was going on, the income rank remained steady. The GI rank combining the two reflects their relations, though less dramatically, meaning that some — not all — of the variation in differentials was shared by states with similar giving and income levels, several of which are in New England.

The top income group produces the changes, because it has greater elasticity in both income and giving. We look to them for leadership in narrowing the gap between our very high income rank and our low giving rank. They have responded well to the news that Massachusetts has significant room for growth in giving. Their Income rank has varied from 6th to 12th—6 points; their Giving rank has varied from 37th to 16th — 21 points; the gap between them has varied from 27 to only 10 (in 2000, when they were 6th in income and 16th in giving). If they could afford to rise to 16th, how high can they rise in coming years? Their giving has frequently risen more than their income, proportionately, which is a sign of increasing generosity. We congratulate and thank them.

(posted 11/14/06)