Passing the Plate

“For where your treasure is, there your heart will be also.” – Luke 12:34

This morning, CNBC reported that a group of 51 German millionaires and billionaires founded a Club of the Wealthy and wrote to Chancellor Angela Merkel proposing to give up 10 percent of their income in the form of a “Rich Tax” for 10 years to consolidate the budget. The business network went on to poll viewers: “Would such a ‘rich tax’ plan ever work in the United States?” Prior to publishing this post, I will check the CNBC poll and give you the results.

The idea of a “Rich Tax” got me thinking about our country’s long-term financial issues and what we might do to get on firmer footing. The German’s “Club” that is willing to give defines “wealthy” as being at least a millionaire. The truth is that relative to the rest of the world, we Americans are very wealthy. There are those among us who struggle financially, but the majority of U.S. citizens are at least described as middle-class and have all we really need.

Published in 2008, the book Passing the Plate: Why More Christians Don’t Give Away More Money, by Christian Smith and Michael O. Emerson detailed the authors’ research on the giving of a specific subset of Americans. The book’s introduction begins:

“This book attempts to help solve a riddle: why is it that American Christians give away so relatively little of their money? Contemporary American Christians are among the wealthiest of their faith in the world today and probably the most affluent single group of Christians in two thousand years of church history. They have a lot of money. Nearly all American Christians also belong to churches that teach believers, as stewards of the belongings with which God has blessed them, to give money generously for the work of God’s Kingdom. Most Christians belong to churches that teach tithing—the giving of 10 percent of one’s income. Most American Christians also profess to want to see the gospel preached in the world, the hungry fed, the church strengthened, and the poor raised to enjoy lives of dignity and hope—all tasks that normally require money. And yet, despite all of this, American Christians give away relatively little money to religious and other purposes. A sizeable number of Christians give no money, literally nothing. Most of the rest of American Christians give little sums of money. Only a small percent of American Christians give money generously, in proportion to what their churches call them to give.”

My purpose in bringing this book and its contents to your attention is not to take a shot at Christians. The authors focus on this group for their own reasons. Because I claim to be a Christian, I feel I have the right to present the results of the authors’ work without bias.

The authors do three calculations, using different sets of assumptions, as to how much more money American Christians as a whole could be giving away. Primarily, the authors assume that Christians give in accordance with what their belief-system says they should give. Of the three calculations, the one I found to be the most reasonable concludes that American Christians could give an additional $85 billion per year to charitable causes. For a moment, let’s assume the $85 billion estimate is accurate and not only would American Christians make that commitment, but also increase their giving 3% each year. Over twenty years, the result would be an additional $2.84 trillion given away. Over 30 years the number would be over $4 trillion. Amounts such as these would have a dramatic impact throughout the world, including the possibility of triggering a return to sound financial footing in the United States. After all, many of the government’s current programs could well be characterized as charity.

One of the weaknesses of the authors’ study is that there is no accounting for the unintended consequences of such a large increase in charitable giving. Some portion of that giving would result in less consumer consumption and, therefore, lower economic growth. In addition, because charitable contributions are tax deductible, the initial impact on the Federal deficit could be negative. It is possible, however, that the negative impact on Federal and state budgets could be mitigated if the giving is spent on programs that replace government expenses or future obligations.

Some of the findings in this study include:

• 20 percent of American Christians give no money whatsoever to charity
• A small minority (the top 5%) of givers among American Christians gives most of the dollars (59.6%)
• The average giving of American Christian is about 3% of pre-tax income
• The median American Christian gives only about 0.6% of income (see note below)
• There is little relationship between the level of personal income and the percentage of income given among American Christians
• Among givers, the lowest 20% in household income gives the highest percentage of their income to charitable organizations
• Although growth in per capita income increased significantly during the 20^th century, the average percentage of income given away by American Christians declined.

Note: Averages can be significantly skewed up or down by relatively few large outlier numbers. In the case of giving, the average is not really a good representation of how much American Christians give because a relatively small number of the total givers give a huge percentage of the total dollars. Therefore, the median is a better representation in this case.

The authors conclude that they believe most American Christians possess the financial ability to give away 10% of their after-tax income, but giving among American Christians is not generous for the following reasons:

1. Many have not seriously studied and thought about the theological and moral teachings of their faith traditions.
2. Churches tend to settle for low expectations of their members in regard to financial giving.
3. Some potential givers lack confidence in charitable organizations.
4. There are no real consequences or costs as a result of stingy giving.
5. Most practice giving on an occasional or situational basis, rather than as a part of a disciplined, routine part of managing the money they have and earn.

The authors conducted a poll that asked Christians what they would do if their church “required” them to tithe 10 percent of their after-tax income and found few ready and willing to do so. Only 7 percent of churchgoing Christians who do not already tithe 10 percent of after-tax income indicated that they would begin doing so if their church specifically made that a requirement. A whopping 76% said flatly they would not tithe, opting instead to either ignore the requirement, transfer to a different church, or drop out of church life altogether.

The poll also found that American Christians generally explained their not giving more money with two reasons. First, they do not want to be required by organizations, including their churches, to do anything with their money. The second most commonly stated reason for not giving more is people believe they could not afford to do so, which the authors argued is untrue. These two perspectives reflect the American nature of independence (not wanting to be told what to do), along with the decision to let one’s desired standard of living drive giving, rather than one’s decision on what to give driving the standard of living.

Probably the most discouraging finding was that earning higher income does not translate into more generous giving. In fact, higher income tended to coincide with giving a smaller percentage of income. The authors state, “It is lower, not higher, income earning Christians who tithe more, would be more likely to start tithing if asked, would be more supportive of a tithing requirement for church membership, and who trust the churches and good causes to which they give money.” One explanation for why this happens has to do with a quirk human wiring (see Breaking Up Is Hard To Do).

I want to reiterate that this post is not meant to take a potshot at Christians. One of the more positive findings is that American Christians gave away a substantially higher percentage of their income than non-religious people. So, we can conclude that faith does make a positive difference in giving.

The larger issue has to do with our country’s financial future. Our economic system over the last 30 years has been based on using debt to consume products and services today at the expense of the future generations. To mend our situation, we are going to have to be willing to sacrifice. This could start with American Christians who have the means to give trillions of dollars over the next few decades to remove some of the financial burden our governments face. One way or another, we Americans are going to have to solve our future financial problems. It would be much better to voluntarily make the needed changes rather than wait for a crisis that would force unwanted solutions upon us.

CNBC Poll Results: “Would such a ‘rich tax’ plan ever work in the United States?”

7 of 10 people who responded said “No.”

RXH