Americans Feel The Need to Give

Wealthy people tend to give a lot, a generosity which sometimes helps compensate for the gigantic failures of public aid.

U.S. foundations are the most generous in the world. Last year, 75,000 of them gave away 45.6 billion dollars (32,5 billion euros). This figure is on the rise despite the current economic crisis, directly linked to the traditional generosity of Americans, who each year donate more than 300 billion dollars (214 billion euros). France is far behind, with 6 billion Euros and 30 times fewer foundations than the number found in the U.S.

“This is the case despite the fact that the French system of providing fiscal advantages for donations is one of the most advantageous in the world,” points out Perrine Daubas, in charge of the legal and fiscal section of the organization France Générosités. Based on a system of whole tax cuts rather than a reduction of taxable income or tax write-off, a donation costs less to a French taxpayer than his U.S. counterpart. “However,” the expert adds, “studies conducted in Canada show that fiscal incentives are not sufficient to bring an increase in donations. These incentives are aimed mainly at a group of people already well informed on how best to manage their finances.”

“French people give less because they feel more overall financial pressure,” explains Michel Garcin, president of the executive board of the French American Foundation in France. In other words, the weight of the public system and its high tax withholdings overpowers that of private donations. The opposite is true of U.S. citizens who, not benefiting from a powerful public service system, feel more of a need to give. This is where President Barack Obama would like to find leverage in order to recover this private source of income and re-inject it into a strong public health and social system.

A System of Foundations Has Been Put in Place

In the United States, the need to donate is accompanied by a sense of duty, explains Michel Garcin: “Philosophically, numerous decision makers feel that they must give back, in part, for what society has given them in the past.” It’s the life story of philanthropic self-made men such as Andrew Carnegie, John Rockefeller, Bill Gates, Warren Buffet and George Soros.

A system of foundations, managing a capital worth over 600 billion euros, of which only capitalized interest is donated, was put in place in the U.S. Private business foundations are thus distributing 4.4 billion euros a year; regional foundations, 4.6 billion euros; private family foundations, 33 billion euros. Among them, the Bill and Melinda Gates Foundation has a net capital of 60 billion dollars. Some, such as Steven Spielberg’s Wunderkinder Foundation, have been badly hit by the Madoff scandal, but it is yet too soon to tell how badly the others will be affected by the crisis.

Today, explains Hugues Sibille, former inter-ministerial delegate to the ministry of social economy (1), the hour is that of “venture philanthropy.” Imagined by a new generation of philanthropists, its aim is to “move from an approach based on donations to one based on investment, with a measurement of the return on investment in projects that are led by entrepreneurial logic.”

(1) 2009 report on money worldwide, by the organization on financial economy (AEF).