New Boston Foundation study debunks the ‘myth’ of Massachusetts’ stinginess

Boston – Massachusetts has long been ranked as the second stingiest state in the nation according to the Generosity Index, a widely used list that ranks all 50 states according to how much local residents give to charity, published by the Catalogue for Philanthropy. But that charge is debunked as a “myth” in a new report commissioned by the Boston Foundation, which for the first time subjects the Index to scrutiny by nationally recognized sociologist and philanthropy expert Paul G. Schervish, Ph.D., the Director of the Boston College Center on Wealth and Philanthropy.

The Report, entitled Geography and Generosity: Boston and Beyond, was released today, Tuesday, November 8, at a forum at the Boston Foundation. Dr. Schervish presented a summary of his findings, dismissing the claim that Massachusetts is one the least generous states in the nation and suggesting a more rigorous way to calculate the level of giving in a particular state. He also called for a different way to understand the idea of generosity—not as a narrowly competitive status on the single incremental list, but as a complex attitude that factors in significant differences between states and regions in the country.

“Dr. Schervish has achieved something truly remarkable with this study,” said Paul S. Grogan, President and CEO of the Boston Foundation. “He has put our understanding of philanthropy onto a foundation of fact rather than hunch. And he confirms what many have suspected: the residents of Massachusetts give generously and well to causes and ideas that matter to them. In fact, this report invites us to change our understanding of ourselves.”

The report was commissioned in part because the Index of Generosity has proved so resonant. It appears in numerous articles in the Boston Globe, the New York Times and the Washington Post and as grist for cultural conversation on thousands of websites. It was offered as proof during the presidential election of 2004 by columnists and talk-radio hosts that George. W. Bush has a better grasp on core American values because the states that voted for him are clustered at the more generous end of the list.

What’s wrong with the Index 

Geography and Generosity includes an analysis of the Generosity Index—which is based on income tax returns—and determined that it is inaccurate in part because of a built-in bias against high-income states, such as Massachusetts, and for low-income states such as Mississippi, which has frequently come out as the most generous state in the nation on the Index.

When Dr. Schervish and his team used the same formula that was used by Dr. George McCully, publisher of the Catalogue for Philanthropy and the creator of the Generosity Index, they determined that even if Massachusetts residents had given 100 or 1,000 times the amount of money that was in fact donated to charity in 2004, and held giving by all other states constant, the state could not rise above number 23 on the Index. At the same time, the calculation suggested that the state of Mississippi would not fall below 26th place out of 50 even if residents of that state had given zero to charity in 2004.

John J. Havens, Senior Research Associate and Associate Director of the Center on Wealth and Philanthropy, cites what he believes to be three critical errors in the Index methodology:

• Average adjusted gross income is calculated for one group of people (all who filed income tax forms), while the average charitable deduction is calculated for a separate group—those who itemize their returns. Because the two groups are not the same, no meaningful ratio of generosity can be calculated using this data.
• The use of itemized returns adds doubt to any conclusions because while only 20 percent of residents in some states itemize their returns, the proportion in other states rises as high as 40 percent. In specific, 21 percent of residents of Mississippi filed itemized returns while 37 percent of Massachusetts residents did the same. This reflects a much higher cost of living in Massachusetts. In particular, the cost of housing in the Bay State is significantly higher than in Mississippi which would encourage more residents to itemize their returns. This underscores important differences in standards of living that have an influence on giving.    
• Also, tax returns do not capture the total income of all the residents of a state, and itemized tax returns do not capture the total charitable contribution they make. Those who are not required to file an income tax return, for example, are lost to the calculation of the Index.

Schervish and Havens cite other problems with the Index, as well: it does not take into account the significant differences in tax burdens in different states, other differences in the cost of living, or the differences in patterns in giving to secular and religious institutions and causes—all of which differentiate regions of the country as well as specific states.

A new measure of generosity 

The Center for Wealth and Philanthropy at Boston College has created a new way to measure charitable donations as a proportion of income. It measures the share of total charitable contributions donated by the residents of each state and compares it to the share of income earned by residents of the same state. In this case, income can be calculated in terms of gross income, net of taxes, adjusted for differences in the cost of living in different states. In this way, all the residents of a state are captured the same way for each calculation, and there is no intrinsic bias against high- or low-income states. As the Generosity Index purports but fails to do, this formula compares the capacity of state residents to give against their actual pattern of giving.

Using this alternative measure, a dramatic change in state giving is revealed. When data for the year 2000 was used to calculate “generosity” by this new methodology, Massachusetts placed far higher on a linear scale, rising to 6th place as opposed to 44th, which is where it is ranked on the Generosity Index for 2000. When data from 2002 was used, Massachusetts ranked 11th in comparison to 49th on the Generosity Index.

Moving away from rankings 

Schervish and his team stress, however, that any attempt to compare one state to another is at best a rough approximation.

“The alternative methodology presented in this report is one of many that could have been developed,” noted Dr. Schervish. “A different but also largely accurate methodology might have placed the residents of Massachusetts somewhat higher or lower than the measurements used here. Designating a specific rank conveys more certitude than a measure can in fact, accurately achieve.”

As John Havens, said, “It takes two numbers to tell what direction the wind is blowing—it doesn’t seem likely you could adequately describe an entire state’s giving patterns with one number.”

Also, any calculation of contributions as a fraction of potential giving measures, in fact, donations of money made, rather than generosity. The report notes that generosity can take the form of gifts in kind, of contributions of time spent in a charitable endeavor, or gifts of cash to family members—none of which would be captured by a scale that seeks to capture donations of money.

Schervish’s report calls for a new approach to the whole idea of charitable giving. Instead of what is described as a strategy of “chiding” people into giving using a scolding model that upbraids an entire population for not giving enough, it suggests focusing on the fact that every state has residents who contribute largely and residents who contribute small amounts, and developing practical programs that will increase giving as it currently exists.

By replacing scolding with inspiration, Schervish and his colleagues suggest three questions that can be used to change the conversation about philanthropic giving:

• What is important to do as an act of caring for others?
• What can you do better through philanthropy than through government or commerce?, and
• What enables you to identify with the fate of others, express gratitude for your own good fortune, and achieve deeper personal happiness, effectiveness and significance, for yourselves and others, at the same time?

The report is ultimately designed to give the philanthropic community information it can use to achieve a deeper understanding of individual giving as well as patterns within a state. And at the same time, it provides a new vision of how philanthropy can serve a broader community twice—through direct and indirect giving and through the cultivation of an attitude of incremental change rather than a competitive ranking of different communities in different circumstances.

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The Boston Foundation, one of the nation’s oldest and largest community foundations, has assets of about $700 million.  In 2004, the Foundation made $51 million in grants to nonprofit organizations, and received gifts of $41 million. The Boston Foundation is made up of 750 separate charitable funds, which have been established by donors either for the general benefit of the community or for special purposes. The Boston Foundation also serves as a civic leader, convener, and sponsor of special initiatives designed to build community. For more information about the Boston Foundation and its grant making, visit www.tbf.org , or call 617-338-1700.

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The Boston College Center on Wealth and Philanthropy is a multidisciplinary research center specializing in the study of spirituality, wealth, philanthropy and other aspects of cultural life in an age of affluence. Founded in 1970, the Center is a recognized authority on the relation between economic wherewithal and philanthropy, the motivations for charitable involvement and the underlying meaning of practice of care.