Happy Donors

Posted by Laura Otten, Ph.D., Director on December 12th, 2019 in Thoughts & Commentary

0 comment

So many cultures and faiths teach the adage that it is better to give than receive.  While it is done to encourage selflessness while helping those less fortunate.  Research indicates, however, that giving isn’t quite the selfless act we think it is, in that is also beneficial to the giver.

donation box

Giving both time and money actually ratchet ups a giver’s oxytocin (the “compassion hormone”), as well as endorphins and dopamine, producing what some refer to as the “donor’s high” (akin to a runner’s high). 

People who donate, regardless of their motivation (genuine altruism or moral whitewashing, and every other reason, it doesn’t matter why you give)[1], have better mental and physical health, and some studies suggest that those who give may even live longer than those who don’t.  Again, motivation doesn’t matter, which, truth be told, really bothers me.  Those who give because they believe it is their responsibility to help those less fortunate, to make the world a better, healthier, safer, enriched place to live ought, in my book, receive greater serendipitous benefits from giving than those who give to feel better about past deeds. 

Perhaps we should be talking to current and potential philanthropists about the health benefits of giving rather than pitching to them this cause or that nonprofit.  Perhaps at the next conference for philanthropists or for fundraisers, there should be at least a session, on the health benefits of giving.  Talk about return on investment!  Maybe we could increase giving and put a dent in health care costs if philanthropists only knew of these invisible benefits that are going untapped.

I am only being partially flip here, and doing so because I remain continually stymied.  I have never understood how the economy goes up and down but giving to charities remains just 2% of our GDP, year after year.  In 2018, Bridgespan took a look at 2000 families with assets of $500 million or more.  They donated an average of 1.2% of their assets in 2017.  Looking at it per individual household, that’s $6 million for those households at the bottom, with assets of “just” $500 million.  But 1.2%?  I ask that question in general, as 1.2% seems quite trifling in the context of assets of $500M.  But I also ask that question knowing that their wealth is growing at an average of about 11% a year so that charitable giving is not depleting their wealth.  

The average American household headed by a person between 45 and 54 years of age has assets of $737,500.  If that household were giving 1.2% of its assets, it would give $8,730.  And while percentages are the leveler, allowing us to compare a family with assets of $500 million with a family of assets of just under $750,000, the difference in the absolute dollars given versus the absolute dollar value of assets, seems huge. 

Assets aren’t all liquid.  In fact, for most, the biggest asset in that calculation for those at the lower end (under $1 million) of the scale is their house, a very illiquid asset.  If a financial pinch or crisis were to happen to that family after it made its $8,730 gift to charity, it could find itself struggling or unable to meet that financial crisis.  A family with $500 million in assets, however, has much deeper pockets to address a financial crisis, even after giving away its $6 million. 

The Giving Pledge, fading though it appears to be in getting folks to sign on, asks for people to give a majority of their wealth to charity during their lifetimes.  There is a huge difference between 1.2% and 50%.  I keep coming back to the same question:  what is magical about the paltry figure of 1.2%.  That’s one glass ceiling I’d love to see us break this season of giving and beyond.

[1] Though I’ve not seen research on this, I suspect that if it doesn’t matter the motivation for giving, it also doesn’t matter whether you give a useful gift, the benefit of thinking you’ve given a good gift reaps the same rewards.  Talk to food banks and food cupboards, thrift stores and those who work with the homeless, for example, who will list all of the useless goods—expired and damaged food, clothes and blankets ready for the rag bin, items that couldn’t be given away—and you will learn of the tons of goods donated by happy givers that the nonprofits must then pay to dispose of.

The opinions expressed in Nonprofit University Blog are those of writer and do not necessarily reflect the opinion of La Salle University or any other institution or individual.