Monday, January 7, 2013

Debunking the Myth that the Wealthy Gave Less to Charity in 2012

By now, you may have seen the seemingly ubiquitous headline that the wealthiest donors reduced their giving in 2012.  Starting with a piece in the Chronicle of Philanthropy, and since covered in the Huffington Post and Salon, among others, the takeaway seems to be that the wealthiest donors reduced giving by 30% in 2012.  The problem with this headline is that the claim is wrong.

Let's examine the numbers: According to the Chronicle of Philanthropy data, the twelve largest gifts to charity in 2011 amounted to $2.645 billion.  In 2012, the twelve largest gifts amounted to $4.870 billion.  This is an increase of 84%.  How did this get interpreted as a decrease of 30%?  Well, the three largest gifts in 2012, by Warren Buffett, each amounted to $1.03 billion.  For some reason, those interpreting the data have decided that the top three gifts in 2012 are too big to count (even though the entire exercise is counting the largest gifts).  So, the solution was to compare the top 12 gifts in 2011 (#s 1-12) with the 12 after the Buffett gifts in 2012 (#s 4-15).  This comparison yields a decrease in 2012 (not exactly 30%, but that's another story).  However, it hardly seems fair to compare the largest gifts in one year with those near the largest in the next -- of course you'll see a decrease when doing this.  Even if you think the top three gifts by Buffett skewed the data too much, we should at least be comparing apples to apples.  So, let's throw out the three Buffett gifts, and compare what's left of the top 12 in each year (i.e., use #s 4-12 for both 2011 and 2012).  In that event, the total in 2012 is $1.780 billion, as compared to $1.230 billion in 2011, an increase of 45% in 2012.

In other words, no matter how you slice it, the top donations in 2012 exceeded those in 2011.

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