‘Tis the Season for Giving…Selfishly

Many charitable organizations report receiving the majority of their donations during the last few months of each year, likely due to a combination of year-end tax planning and general good cheer, intensified by the annual pitches from the charities themselves, which tend to cluster when conventional wisdom dictates people will be most generous. In the United States, most of that giving will be domestic, supporting organizations focused on causes within our national borders.

Focusing locally has precedent. Patronizing local businesses is an easy way to nurture a thriving community. Large corporations with headquarters elsewhere usually centralize administrative tasks and won’t hire local service providers like bankers, accountants, and lawyers, who then won’t be able to afford gym memberships, auto detailing, eating out, or new clothes. The jobs those purchases sustain will wither or fail to grow. In several recent exchanges with friends, more than one person has suggested that something similar is true for charitable giving.

While I recognize that localizing giving may appear a good way to monitor the impact of gifts, the tribalism of it seems to degrade the intent. Giving locally might create the same sort of virtuous circle of job creation that spending locally does, but does it really help those most in need? Or is that conception of giving too naïve? Perhaps we should just transparently acknowledge that the goal of philanthropy is more complicated than just aiding the most disadvantaged.

The largest category of giving in the US is the most local: individual houses of worship. Since each church or mosque or synagogue allocates funds differently, it is hard to say how much of this giving is truly for those in need; some if it is spent on buildings and candles and prayer books that directly benefit the giver more than any supplicant. Additionally, although some churches may send money to overseas missions, most of their work tends to be in their local community. Once again, this directly benefits the giver by improving their immediate surroundings.

This enhancement of the proximate environment is a dominant theme in US philanthropy. Most people sponsor their local symphony, not the one three states over. They support their own kids’ sport teams, not the rivals’. They run in races to raise donations for the local hospital ward. They sell raffle tickets for the local fire department’s fundraising drive. Given that US citizens pay less in taxes than the citizens of other advanced nations, perhaps it is unsurprising that their charitable giving is focused domestically. In the United States, we rely on charities to provide services that are provided by tax-funded entities in other rich countries, a habit that conforms to the American ideal of individual freedom and general distrust of centralized authority.

Despite the decline in religious affiliation and church attendance over the last few decades in the US, charitable giving has held relatively steady at about 2% of GDP. This suggests that, while statistics indicate that the faithful give more to both religious and secular organizations, there is more than just faith driving the impetus to help the less fortunate. Given the local flavor of donations, though, perhaps it is more apt to think of it not so much as aiding others but as “community improvement,” something that taxes support elsewhere in the world.

More broadly, maybe the point for most people is not to maximize the impact of their gift for the target recipient but rather to maximize what economists would call their own utility function, which invariably includes a measure of their own satisfaction. Giving locally, where the results can be personally viewed on a regular basis likely boosts that utility, even if, for instance, the amount of money that provides one meal in the US could provide many more in another part of the world where there is also no government-provided safety net in place and starvation, not just malnutrition, is a real threat. Concomitantly, we don’t walk by the starving refugees in Bangladesh (to use a clichéd-sounding but currently relevant example), but we do see the homeless in our own communities. Allaying the suffering of those we regularly interact with directly dispels our own daily distress at their misfortune, while it is easy for us to forget about the potentially far more devastating situations of those we don’t see.

Peter Singer, a renowned philosopher, teaches a course at Princeton University (also available free on Coursera) that specifically examines what he calls “effective altruism,” or maximizing the impact of philanthropy. He summarizes his thoughts in a TED talk, focusing on how much farther any given amount of money goes in poorer countries. In his view, we are as morally responsible for the plight of the refugees above as for the local homeless population and should therefore give where our donation will achieve the most good.

Of course, he also includes in his appeal an argument that we should give because studies have shown that philanthropy makes people happier and more satisfied with their lives. Overall, that is an obviously selfish motivation, but he doesn’t indicate whether those studies have differentiated satisfaction by the geographic propinquity of the recipient to the donor, which would possibly increase the selfishness quotient. Additionally, in the US, redirecting our charitable giving away from local causes would further accentuate our society’s inequality, something that would depress happiness. So, with several different factors at work, it isn’t actually clear that Singer’s inclusion of “increased satisfaction with life” would hold.

Nevertheless, he makes a good point: giving more weight to giving locally in rich countries implies inherent tribalism. We are valuing the lives of those close to us more than those far away. In the end, what is it that we are trying to accomplish with our charitable donations? Are we trying to improve the world as a whole, or just our corner of it? In the US, at least, we need to be honest: in general, we aren’t giving to help others, we are giving to help ourselves.