Is US Philanthropy exceptional?

Is US philanthropy exceptional and is it unfair to judge Australia against US standards for wealth and philanthropy? Those were two questions posed in media I read last week.

"We overdo this thing about philanthropy because we don't compare with the Americans. There is no one with money in Australia if you compare us to the wealth in the US," said Harvey Norman chief, Gerry Harvey in TheAustralian. 

My friend, Sabith Khan posed the question, "Is US philanthropy exceptional?" in his blog The Clockwork Muse.   My response? US philanthropy is not exceptional and we do ourselves a disservice by thinking so.  Yes, it involves institutions which are native to the USA - such as the US tax treatment of donations.  But the US concept of philanthropy was inherited and remains consistent with other, much older cultures including the Islamic culture of giving which in turn spread to Europe around the 13th century.  Many of the institutions of philanthropy in the US were adopted from Britain. Among the institutions inherited from Britain was the legal concept of 'charity' which is based on the Elizabethan statute of 1601. 

British philanthropy was well developed in the nineteenth century at the time that it was only beginning to take root in the US. Its development from Tudor times to the early nineteenth century is described by the two great histories of British charity written by WK Jordan and D Owen. Reduced to its essence it is a tale of the emerging haves recognising a responsibility for - even a self-interest in - alleviating poverty and providing better education and health.  Many of the ways in which 18th and 19th century British philanthropists met these challenges were equal in their innovation to today's so called, "new philanthropy".

The newly wealthy US industrialists, moved by similar concerns about the welfare of the communities from which their fortunes had been created, looked across the Atlantic for ideas.  Some such as Andrew Carnegie and George Peabody were active in both Britain and the USA.

Some of the significant differences, especially the significantly higher levels of donations by US taxpayers stem from the era of World War I and its aftermath. By that time the British state had begun to take more responsibility for welfare and the relief of poverty.  For example, the old age pension was created for Britons in 1908.  After the War, under the influence of the Fabian movement, the British government took further responsibility for education, culture, health, welfare and religion. The influence of the Fabians was significant in the development of these social institutions in Australia and New Zealand too.

Conversely, in the USA much of this responsibility for welfare and poverty was taken up by philanthropy - supported, nonetheless, indirectly by the state through the generous tax treatment of philanthropy.  Tax rebates on philanthropy were created in 1913 when income tax was first introduced in the US. Olivier Zunz describes US philanthropy as "self-taxing for the common good" and cites Tocqueville who talked of it in his descriptions of Jeffersonian (early 19th century) America, as "self interest properly understood". (Zunz O, 2012, Philanthropy in America: a History, Princeton University Press, Princeton).

Britain has no such direct tax relief on charitable donations though relief is available to a donor who "covenants" a regular payment to a charity. Instead through Gift Aid, the charity receiving a donation also can claim an additional amount equivalent to the tax payable by the donor on her donations.

In contrast, however, Australia actually preceded the US by introducing tax deductibility for gifts to charity as early as 1907 in Victoria.  Tax deductibility was enacted federally in 1915. So in that regard, Australia cannot claim to be different from the USA.*

What about wealth, as suggested by Gerry Harvey?  The following data from Wealth-X Ultra High Net Worth Report ought to give pause for reflection. The USA has 60,280 UHNWIs (i.e. with over $30 million financial assets) with an average worth of $133 million.  Australia has 3,350 worth on average $122 million.**   As percentages of their respective populations, UNHWIs represent 0.019% of the USA total population, 0.015% of Australia.*** Oceania saw the greatest growth in UHNW population, with an increase of 5.9%, largely driven by the continued growth of Australia. That excuse is disappearing as fast as the wealth gap is narrowing!

  

*New Zealand also offers tax relief on donations though until recently it was capped at a very low level.

**New Zealand 485 worth $126 million. UK, 10,515 worth $126 million.

***0.011% of New Zealand and 0.017% of UK population.