Why Middle Class Americans Aren’t Giving to Charity

Fewer middle and low income Americans are donating their hard-earned dollars to charity compared to wealthier Americans, a concerning trend that should serve as a wake-up call to established philanthropists, religious leaders, and state and federal lawmakers.

The Chronicle of Philanthropy summarizes findings from the Lilly Family School of Philanthropy this way: “Nearly eight out of 10 households with more than $200,000 of wealth gave to charity in 2018, the study said. By contrast, fewer than four in 10 households with wealth less than $50,000 made donations.”

While charitable giving increased during the pandemic, as first-time givers donated their stimulus check to help neighbors in crisis and established philanthropists dipped into their charitable reserves, giving among low-income and middle-income Americans is waning. 

However, lawmakers are doubling down on regulations that would require those with charitable-giving accounts to disburse money at a faster clip. Lawmakers instead should focus on democratizing giving and empowering middle-class Americans to invest in charitable causes.

As President Ronald Reagan said, “Millions of individuals making their own decisions in the marketplace will always allocate resources better than any centralized government planning process.” But—to allocate resources, especially to charity—Americans desperately need more disposable income.

Middle-class Americans for years have struggled to keep up with rising costs. It’s time for lawmakers to craft policy that will generate more disposable income for middle-class Americans adversely affected not once but twice in the last decade by economic downturn and job loss. 

There are a variety of policy solutions that would alleviate stressors for middle class Americans and, consequently, free those in lower income brackets to support causes they care about. The upside? Doing so would create a more diverse and representative philanthropic community.

Lawmakers, instead of seeking a quick fix, need to address the hard topics. They need to address the housing crisis, student loan crisis and the childcare crisis if they hope to create a culture in which people of all income brackets are willing to offer people a hand up.

Instead of implementing sluggish rental-assistance programs and protracted eviction moratoriums that hurt immigrant, minority and mom-and-pop property owners, lawmakers should roll out a federal income tax moratorium, as it would help everyone make up financial ground lost during the pandemic.

Likewise, lawmakers should encourage businesses and philanthropists to continue the trend of paying off student loans. This models the act of charitable giving for future givers and enables young adults to take on the joy and challenges of married life sooner than they otherwise would.  

Gone are the days when students could work their way through college. That reality is playing out in real time as people delay marriage and homeownership. But, as Philanthropy Roundtable points out, two really is “better than one“, as married couples are more likely to give to charity.

A report released in the wake of the Great Recession says as much: “The demographic characteristic most likely to increase giving to charitable causes is marriage. Compared to the unmarried, married households were 62 percent more giving in 2011.” The same is true of married couples today.

Furthermore, lawmakers should hold accountable those who artificially hike the cost of college. Al Lord, former chief executive officer at student-loan behemoth Sallie Mae, in a recent exposé said the cost of college is “criminal.” He’s not wrong. Lawmakers need to remove the government incentives that encourage big businesses to inflate the cost of higher education. 

What’s more, state and federal lawmakers need to address the housing crisis. The dearth of homes on the market is a problem as it’s driving up costs for everyday Americans, who are missing out on the opportunity to build wealth and retirement savings via home ownership.

Lawmakers need to devise ways to create more inclusive zoning regulations, cut the regulatory red tape that delays home construction, and reconfigure perverse incentives that drive real-estate agents to invest their time in high-dollar clienteles rather than first-time buyers looking for a starter home.

Finally, lawmakers need to address our childcare crisis. The cost of childcare has “risen at roughly twice the pace of inflation since 2000,”  reports the Wall Street Journal. It’s sucking budgets dry and the “Big Daycare” subsidies in President Joe Biden’s infrastructure plan would hike the cost of childcare even more.

Instead, lawmakers should insist on funding families. Rather than subsidize childcare facilities, lawmakers should credit taxpayers, who can then decide the best course of action for their family. As women have fewer children, having the freedom to remain home full time to see one’s child grow and flourish would be a game-changer for today’s American family. 

Alternatively, parents would have the option of employing a friend or relative—a sibling, aunt, grandmother—to take care of their child rather than sending their child to daycare. This could be especially helpful if a child with unique circumstances requires more one-on-one attention.

There are no shortcuts to creating a better, more equitable, and prosperous future in which Americans of all income levels have a say in the charitable makeup of our country. Lawmakers need to go back to the drawing board and come up with policy solutions that will pave the way for middle class America to have a bigger voice in our philanthropic community.