December 2001

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2001 Generosity Index: Comparing Canadian & American Charitable Giving

by Jason Clemens & Joel Emes
with Karina Wood

A wide range of non-profit organizations, from national charities like the Salvation Army and the Canadian Cancer Society, to smaller community-based agencies like Sarnia-Lambton Rebound and Cornwall Alternative School,¹ are dependent on individual charitable donations for much of their funding. These organizations, along with thousands of others, constitute an important and growing sector of Canadian society. The Generosity Index is an attempt to measure the generosity that underlies a critical source of resources for those charities.

Overview of the Index

The Generosity Index quantifies generosity by examining formal, individual, financial charitable giving. The Index achieves this by looking at two specific indicators: the percentage of tax-filers who donate to registered charities, and the percentage of personal income² donated to charities. The first measure of generosity, the percentage of tax-filers donating to registered charities, is a measure of the extent, or breadth, of charitable giving. The second measure, the percentage of personal income donated to registered charities (in aggregate) is a measure of the depth of charitable giving. In addition, the study also presents the average value of charitable donations for each jurisdiction.³

Canadian results

Before comparing Canada with the US, let's examine the Canadian-only, inter-provincial results. Table 1 shows the results and ranks for the Canadian provinces and territories⁴ for all three measures of generosity for the 1999 tax year, the most recent year for which data is available.

Table 1: Canadian Results and Rankings

As in previous years, Manitoba ranks the highest for both the percentage of tax-filers donating to charities (28.9%) and the percentage of income donated to charities (0.91%). Nunavut ranked last of all Canadian jurisdictions with only 11.3 percent of tax-filers donating to charities. Newfoundland and Labrador was the lowest ranked province with 21.3 percent.

Nunavut again ranked last in terms of the percentage of personal income donated to charities with 0.23 percent. Quebec had the lowest percentage of income donated to charities of all the provinces with 0.30 percent.

The western provinces along with Ontario dominated the top of the list of average donations. Alberta and British Columbia topped the rankings with average donations per donor of $1,129. Quebec, again, ranked last with an average donation per donor of $425.

Canadian and US results: Who is more generous?

Before discussing the specific sub-national comparisons, it is instructive to review a national comparison based on the two measures. In terms of the percentage of tax-filers who donate to charities, there is little difference between Canada and the United States. Twenty-five-and-a-half percent (25.5%) of Canadian tax-filers donated to registered charities in 1999, while a slightly higher 27.9 percent of US tax-filers donated to charities.⁵

There is, however, a substantial difference in the percentage of income donated to charities. In aggregate, Canadians donated 0.64 percent of personal income to registered charities while Americans donated 1.58 percent of personal income to charities— nearly 2½ times more than Canadians.

There is a considerable gap between the value of average total donations between Canada and the US. The average total charitable donation in the States was US$3,441 compared with an average total donation in Canada of Cdn$915. The average Canadian donation translates into US$616 using the actual exchange rate or US$769 using Purchasing Power Parity (PPP). Put differently, the average total US charitable donation was 4.5 times greater than the average total Canadian charitable donation after converting using PPP.

More telling of the differences between Canada and the US are the sub-national, or provincial-state comparisons. Table 2 replicates the information from table 1 for all the US states and Canadian provinces and revises the rankings.

Table 2: Results & Rank for Charitable Contributions, Canada & USA

Percentage of tax-filers donating to charities

Maryland is the jurisdiction with the highest percentage of tax-filers donating to charities; 41.0 percent of its tax-filing citizens gave to charity—a full 12.1 percentage points higher than Canada's top ranking province, Manitoba, which ranked twenty-second overall. No Canadian province ranked in the top quintile⁶ for this measure of generosity. Only two provinces, Manitoba and Ontario, ranked in the second quintile. The remaining provinces were ranked as follows: 3 in the middle quintile, 5 in the fourth quintile, and the remaining 3 in the bottom quintile.

Percentage of income donated to charities

Of all the jurisdictions, tax-filers in Utah gave the largest percentage of income (3.76%) to charities. Utah significantly outperformed all other provinces and states on this measure as indicated by the substantial gap between it and the second place jurisdiction, the District of Columbia, whose tax-filers donated 2.34 percent of income to charities, a full 60.9 percent less than Utah.

Canadian provincial performance in this second measure of generosity was significantly poorer than for the first measure. The Canadian jurisdiction whose tax-filers give the largest proportion of their incomes to charity is Manitoba, which nonetheless ranked fifty- first (51^st) out of 64 jurisdictions. Worse still, using this measure, the entire bottom quintile is comprised of the remaining Canadian provinces and territories.

Average donation (local currency)

The results for a third indicator of generosity (although this indicator is not included in the Index calculation) is the average value of charitable donations. The results are even worse for the Canadian provinces than in the previous measures. All 13 Canadian jurisdictions are ranked in the lowest quintile. Even more striking are the differences in average donations. Wyoming tops the list of US states as the value of average total donation its citizens make is US$7,799. The average tax-filer's donation in Wyoming is $6,670 higher than that from Canada's top ranked provinces of Alberta and British Columbia (where the average donation is Cdn$1,129) even before the currency differences are calculated.

Clearly, Americans in almost all states give considerably more to charities than do Canadians, both in terms of the value of the average donation and the percentage of income donated.

2001 Generosity Index

In order to provide a way to more easily understand the data on inter-jurisdictional giving, we have compiled the Generosity Index, as we have done in previous years. Table 3 presents the provincial and state Generosity Index scores, including the percentage of tax-filers who donated to charities along with the percentage of income they donated to those charities, as well as the overall index score.

Utah tops the list of the jurisdictions rated, with a score of 9.0 out of a possible 10.0. Maryland ranks second with a score of 7.5. The highest-ranking Canadian jurisdiction is Manitoba at thirty-third position with a score of 3.9, less than half of Utah's score. Manitoba is the only Canadian province to rank in the middle quintile. All of the remaining Canadian jurisdictions rank either in the fourth quintile (5 provinces) or the bottom quintile (4 provinces and 3 territories).

Table 3: Generosity Index Scores for Canada and the USA

Conclusion

In general, this edition of the Generosity Index and its predecessors are intended simply to provide empirical data regarding charitable giving, not to comment on the findings. That said, it is clear that Canada's Western provinces and Ontario perform relatively well compared with the other Canadian provinces and territories. In addition, all of the Canadian provinces fare relatively poorly compared with the American states. In particular, the states give substantially more to charities, both in terms of the percentage of income donated and the actual dollar value of the donations than do Canadian provinces and territories. These observed findings, along with findings from previous years, argue strongly for greater research into the causes and explanations for charitable giving.

Notes

1 Sarnia-Lambton Rebound and Cornwall Alternative School are two Donner Canadian Foundation Awards for Excellence in the Delivery of Social Services award recipients that are not affiliated with any national or provincial organization.

2 The measure of income used is personal income by state or province.

3 The average donation information is presented for interest only and is not used in the calculation of the Generosity Index score.

4 This is the first year in which territories were included in the Generosity Index.

5 It is likely that this measure of generosity underestimates US results because of the nature of the US tax system. Tax-filers in the US can file one of two return types: itemized or non-itemized. Only those filing an itemized return can claim charitable donations. Thus, a whole group of US tax-filers may or may not donate to registered charities but are precluded from claiming those donations. Adjusting for this difference in the tax system would, in all likelihood, increase the percentage of Americans donating to registered charities. At the very least it is something we have to recognize when making this comparison.

6 The jurisdictions were divided into 5 groups of nearly equal size based on their performance in each of the variables. Each group is referred to as a quintile since each contains roughly 1/5 of the total number of jurisdictions. The quintiles are not exactly equal since 64 cannot be evenly divided by 5; the fifth quintile has one-less jurisdiction than the other four.

References

Clemens, Jason and Johanna Francis (2000). "Canadian and American Monetary Generosity." Fraser Forum (December).

Clemens, Jason and Dexter Samida (1999). 1999 Private Charitable Generosity Index. Public Policy Source #34. Vancouver, BC: The Fraser Institute.

Internal Revenue Service (2001). IRS Statistics of Income Bulletin. Washington, DC (Spring).

Revenue Canada (CCRA). Tax Statistics on Individuals. Ottawa, Ontario. Series: 2001.

Statistics Canada (1998). Caring Canadians, Involved Canadians: Highlights from the 1997 National Survey of Giving, Volunteering and Participating. Cat. #71-542-XIE (August).

Urban Institute (2001). Profiles of Individual Charitable Contributions by State, 1997. Washington, DC: Urban Institute.

_____ (2001). Analysis of data from IRS Statistics of Income Bulletin. Supplied to authors via fax. Washington, DC: Urban Institute.

Jason Clemens (jasonc@fraserinstitute.ca) is the Director of Non-Profit Studies at The Fraser Institute. He has a Masters Degree in Business Administration from the University of Windsor.

Joel Emes (joele@fraserinstitute.ca) is Senior Research Economist at The Fraser Institute. He has an M.A. in Economics from Simon Fraser University.

Karina Wood (karinaw@fraserinstitute.ca) is Project Co-ordinator for the Donner Awards Program at The Fraser Institute. She has a Bachelor of Applied Science from the University of Western Sydney.

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