The Chronicle of Philanthropy (CoP) published new data highlighting the mismatch between affluence and need nationwide. The data, based on CoP's How America Gives study, compares giving behavior with quality-of-life measurements in more than 2,700 counties across the U.S. Past studies have shown that those with lower income give more per dollar -- according to CoP's data, households that earn $50,000 to $75,000 give an average of 7.6% of their discretionary income to charity, whereas those who make $100,000 or more only give about 4.2% (though, we should note that the total amount people in wealthy areas give is often larger than the amount given by those who live in less affluent counties.) Indeed, CoP's latest data shows that residents in more affluent areas (those with higher standards of living, low poverty and low crime) give less to charity than those in less affluent areas.
Orange County follows suit with this trend. In CoP's interactive map, one can see that Orange County's opportunity index (a measure of economic well-being) is well above average (57.5%) whereas its giving ratio is at the bottom (only 2.8%).
To articulate this in a more tangible manner, in April, the Orange County Register published an article stating that, while Orange County is well known for its affluence, 1 in 4 residents live in poverty - that's a stunning 24.3% of residents, giving the OC one of the highest poverty rates in the state.
This data makes clear people in wealthy communities are missing opportunities to make a positive impact in not only their neighbors' lives, but that of their county as a whole. With government funding for affordable housing and other social services being drastically cut, philanthropy must pick up the slack. As they say, a rising tide lifts all boats. More philanthropic investments could lower crime, poverty and the need for tax funded social services across the county.
So why don't more affluent OC residents give to charity? From the same CoP article:
"When it comes to volunteering, if it’s hard to find an organization to volunteer with, you might not do as much. When it comes to donating money, I think probably the same factors are taking place."
As an advisor, I often hear the same grievances from my clients. In fact, there is a common adage about how hard it can be to give money away responsibly and effectively. Consider that there are an estimated 1.5 million nonprofit organizations in the U.S. alone. Also, consider the latest news of some of our nation's most treasured and well-established nonprofits and the scandals of mismanagement (see Pro Publica's groundbreaking story on the Red Cross's failures in Haiti). It's no wonder donors are unclear about where to give their time, talent and treasure. It's not an easy landscape to navigate.
Another problem may likely be that those in affluent communities are unaware of the plight of their neighbors, whereas lower income residents identify with the challenges facing the less fortunate in their community and are therefore more likely to give. "Social capital and neighborly empathy are sometimes missing in wealthy counties, where a veneer of affluence may mask struggling residents and persuade people there’s no need to donate to social-service organizations."
This is where we see the role of philanthropic advisors can add value in boosting the overall culture of philanthropic giving. We research and map out the landscape of social issues, identifying the core issues, theories of change, and key stakeholders. Then we work with our clients to make sound philanthropic investments based on this research.
We know that when donors feel confident about where their charitable gifts are going, when they have well-informed advisors for their philanthropic investments (just as they do for their other financial investments), they are more likely to give more to the causes that truly need it. Social Good Strategies, LLC is committed to growing that culture of philanthropy in Orange County and beyond.