The History of Private Philanthropy and the Links between Income Inequality, Charitable Giving, and Social Public Spending in the United States and Europe

Other External Scholars:
Camille Landais, University of California, Berkeley
Project Date:
Nov 2009
Award Amount:
$29,500
Project Programs:
Social, Political, and Economic Inequality

The United States is exceptional in two strikingly different ways: it is the developed nation with the greatest share of private charitable contributions but also the highest level of inequality. In 2008, Camille Landais, a post-doctoral fellow at the University of California, Berkeley, received an award from the Russell Sage Foundation to find out what accounts for the discrepancy between charitable giving and income inequality. Under the supervision of Professor Emmanuel Saez of the University of California, Berkeley, Landais created a data set from IRS tax information on income and charitable contributions dating back to 1913. The data set integrates tables on income and contributions for every state. Augmented with tax data from Europe, the data set provides long-term comparative evidence of international levels of private philanthropy, public spending, and inequalities in France, Germany, the United Kingdom, and the United States. Landais’ research on U.S. data has produced interesting results on the patterns of affluent giving in response to taxation, and raises important questions, especially in light of potential changes to tax policies by the Obama administration.  

With additional support from the Russell Sage Foundation, Landais will investigate what lies behind private charitable contributions and what the implications are for tax and welfare policies in the United States and Europe. Some evidence suggests that reported contributions during the post-war period (when contributions were at an all-time high) may have been fabricated due to the low audit rates and loose legislation on contributions to private foundations by the wealthy. This evidence is also apparent in France, where a huge decline (350 percent) of reported contributions occurred in 1983 when it became compulsory to provide a receipt when claiming any charitable deduction for tax purposes. In order to complete this study, Landais will look directly at data reported by the non-profit sector in different fields (arts and culture, education, religion, etc.). His purpose is to distinguish between some fields that are essentially funded by rich households (such as arts and culture) and others that are funded by low-income families (religious charities).  Landais will estimate the fraction of social welfare enhancing contributions by using audited tax returns as well as his data sets.

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