What To Know About American Philanthropy

It’s Not All About Population and Economic Strength

The United States is one of the world’s strongest economies, has one of its largest populations, and is home to the most billionaires of any country.  Is American philanthropic dominance simply a question of statistics? Not really.

The US has around 300M residents who gave over US$499B to charitable causes in 2022. In comparison, the approximately 300M residents of six of Europe’s heavyweight economies collectively gave less than $100B in 2019.

And the over $200B Americans contributed towards cross-border causes accounted for 12.68% of gross national income, at least 4% higher than Qatar, Saudi Arabia, and the rest of the high-income countries covered in the Indiana University Lilly Family School of Philanthropy’s 2023 Global Philanthropy Tracker. 

A Historical Culture of Do-It-Yourself Public Good

Self-reliance has been a hallmark of American culture since its earliest days. The first settlers of the new world had little or no institutional safety net, and traditionally took it upon themselves to help others in need. In his 1895 book, “Democracy in America,” French Historian Alexis de Tocqueville noted that Americans were not able to rely on a strong government, aristocracy, or church to solve public problems. Instead they had a notable tendency to voluntarily come together to found hospitals or schools, for example.

Especially in comparison to most European countries, to this day the United States government is known for providing relatively less institutional support to its citizens. For example, Americans are expected to personally finance their higher education and health care to a far greater extent than Europeans are.

A “New Money” Mindset

Another distinguishing feature of American culture is widespread celebration of “rags-to-riches” millionaires, the first of whom rose from humble beginnings to accumulate significant wealth through business dealings during the country’s 19th-century industrial boom. Notable examples include steel magnate Andrew Carnegie and oil tycoon John D. Rockefeller.

Whereas many of Europe’s wealthiest individuals of the time came into their wealth through inheritance or through longer-established businesses and thus had a longer-term perspective on wealth preservation and charity, the newly minted American business titans took a more immediate approach to giving back to the society that had enabled them to thrive. Both Carnegie and Rockefeller donated large chunks of their wealth to charitable initiatives during their lifetimes and remain among the most famous philanthropists.

While “activist” philanthropy exists worldwide today, its tradition is strongest in the United States. Recent American philanthropists like Facebook founder Mark Zuckerberg have pursued “philanthrocapitalism” through the use of the limited liability companies – as opposed to foundations – in order to invest in for-profit initiatives aligned with their charitable goals.

Superior, Unified Tax Incentives

According to the Indiana University Lilly Family School of Philanthropy’s 2022 Global Philanthropy Environment Index, the United States edged out Western Europe for the world’s best philanthropic tax incentives. Tax laws related to philanthropy can vary from state to state in the United States, but they are relatively uniform in comparison to those of different European countries.

While both Europe and the United States have comparable GDPs of around $22T, no one European countries’ GDP comes close to that of the United States. Unified, favourable tax treatment of charitable donations in one of the world’s single largest economies, especially combined with American cultural attitudes around helping others, goes a long way towards making the United States the philanthropic powerhouse it is.