by Jim Stanford, 16 December 1998

Christmas is a time for giving, and Microsoft founder Bill Gates has certainly done his bit. Gates and his wife generated worldwide headlines recently by donating $100 million (U.S.) to children's health programs. That's a lot of money. But nobody noted that as a share of his personal fortune (estimated at $60 billion U.S.), this grand gesture was no more generous than someone with an average-sized RRSP account (about $45,000 in Canada) giving all of $75 to the Salvation Army.

And imagine that the U.S. government imposed just a 1 percent annual tax on financial wealth to pay for (say) children's health programs. This would raise six times as much from Gates every year, as his one-time act of philanthropy.

Charity has become more important in the wake of the downsizing of social programs, and the subsequent income tax cuts being engineered by many provincial governments (soon to be joined by their federal counterparts). With Canadians devoting less through compulsory taxes to care for the needy, the demands are growing on private charities to pick up the slack. Who gives in Canada, and how much?

The answers are surprising. Where charity is concerned, there is a well-established reverse relationship between how much one makes, and how much one gives.

Statistics Canada consumer data from 1995 (most recent available) show that the richest 20 percent of households, with average income of over $110,000, allocated 2.9 percent of their income to gifts and contributions.

Ironically, the rate of giving increases steadily as household income falls. The poorest fifth of households, with an average income of just $13,000, donated 4.6 percent of their income to gifts and contributions. Charity, it seems, is the opposite of taxation: the less you make, the more you pay (see table).

A similar trend is visible across provinces. No province gives more generously than hard-hit Saskatchewan to worthy causes: the average household there donated to charity at a rate 40 percent higher than in Ontario, where personal incomes are the highest in Canada. The same trend is even reflected in the battle between the sexes: despite earning an average of 30 percent less than men, women's rate of charitable giving is one-third higher than men's.

Canada's corporations apparently follow the same motto: "make more, give less." Before-tax corporate profits grew by $47 billion between 1992 and 1997. But corporations devoted only $370 million of this windfall to charitable and political causes. As a result, the rate of corporate giving declined by about one-quarter over this period, to just over 1 percent of before-tax profits.

With more of Canada's social infrastructure (hospital wards, university classrooms, and cultural events) sporting corporate logos, it may seem that business is stepping forward to fill the void left by government cutbacks. But the numbers tell a different story: new corporate giving between 1995 and 1997 offset just 2 cents of every dollar that was cut from federal government program spending during the same time.

The replacement of tax-funded social programs by voluntary charitable initiatives is likely to not only result in the chronic underfunding of those services (since it is unlikely that individuals will donate as much in charity as they would otherwise be required to pay in taxes). It will also shift the relative burden of paying for those programs onto those with big hearts, but small wallets.

It's supposed to be better to give than to receive. How strange, then, that the giving and the receiving in Canada seem to go in opposite directions.

Sources for data:
  Statistics Canada Catalogues 11-210, 13-213, 13-217, 62-555, and 71-542.