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Wednesday, May 11, 2005

The Real Generosity Index (Catalog for Philanthropy)

1:15 PM

A month or so ago a conservative in a chat room linked me to the Catalogue for Philanthropy's Generosity Index. It apparently shows that the "Blue" states in the 2004 election are far less charitable than the "Red" states.

The actual purpose of the Catalog for Philanthropy and the Generosity Index is "to raise public awareness of, and respect for, philanthropy; [and] to increase and improve charitable giving, for more and more cost-effective, benefaction and satisfaction." They are located in Massachusetts, which apparently has a very low amount of charitable giving compared to wealth, and they aimed to prove this. This is a valid and valuable purpose. However, it only works if their Generosity Index is accurate.

I decided to find out if it was accurate. I downloaded the data they used (U.S. tax return data from 2002) and started playing with it (I am no statistician, by the way).

The Generosity Index, it turns out, is based on two figures. The first is the average income in the state, as determined by tax returns. This is the "Having" rank of a state. The second number is the average dollar amount of donations, based on itemized tax returns. This determines the "Giving" rank of a state. The Generosity Index then compares these two numbers (subtracting the Giving rank from the Having rank) and comes up with the final Generosity Index ranking.

This is the table you come up with using their method:

The Original Generosity Index

Original Generosity Index
(click image for larger version)

Don't worry that you can't read the information (unless you click the image), just take note of the colors.

I will lay aside the iffy nature of determining charitable giving by tax returns, as it is, at least, a measure of charity, and as the Catalog readily admits it's not a perfect data-set. I will also set aside the question of whether Red states give more money to churches than other charities, and as a result give less money overall to needy people, environmental protection, and medical research organizations.

I realized that there is a severe problem with the Generosity Index. This problem has to do with this second figure, the dollar amount of the average donation. This figure is essentially meaningless (at least on its own) as it doesn't take the percentage of people donating into account; but the Catalog for Philanthropy uses it as its sole indicator for "Giving." To illustrate this problem, New Hampshire (the 50th most charitable state) might have 1 person giving $1,000 and 10 people giving $100 each (average donation of $181). Mississippi (the 1st most charitable state) might only have 1 person giving $1,000. Thus Mississippi would come out on top as the highest "Giver" even though the largest donation was the same, the money raised by New Hampshire was greater, and the number of people in New Hampshire who gave was greater.

The argument of the Catalog for Philanthropy is that they are comparing donors in each state to each other; donors in each state, they assume, will be similar to each other, and a drastic example, as above, is unlikely. However, this is not borne out: The percentage of people who give in each state is, indeed, highly variable, and it turns out that Blue states have a greater percentage of people giving than Red states, by far. To return to our example, it turns out that 20% of Mississippians donated and 30% of New Hampshirans donated. So it is quite possible that Red states have fewer smaller donors and this is skewing the results. It stands to reason that when more people are donating in a state, they are likely donating smaller amounts, rather than equal or larger amounts.

So, it should be obvious that the Generosity Index is severely flawed.

It is possible to look at other figures in the data-set to get an idea of generosity in the state. These show a different result than the Generosity Index:

Here is the state ranking by percent of the state that donated:

Percent of the State That Donated

Percent of the State That Donated

So immediately we have an alternative viewing of the data. This shows that the Blue states are in the "lead" and a greater percentage of people in the Blue states give money.

If a greater percentage of Blue state residents give to charity than Red state, how much money do they give in total?

Total Donations Statewide

Total Donation Statewide

This shows a more even dispersion than the original Generosity Index, with several blue states on top, and several at the bottom. Because the total amounts of money given by Blue and Red states are similar, we can infer that Blue state residents give less, individually, than Red state residents, but they give in greater numbers, to equal or even surpass the totals of the Red states.

This can be shown by looking at the the average donation statewide, including non-donors:

Average Donation Statewide

Average Donation Statewide

So here you have the listing of states by average donation of everyone in the state. It shows the Blue states with a slight "lead," but the dispersion is fairly even. This shows that even though the Blue state residents give in greater numbers than the Red state residents, their individual donations must be lower, because the average donations are similar. Another way of putting this, is that the Red state residents give in fewer numbers, but they give greater amounts, which offsets the lower donation "turnout."

The average donation statewide may reflect the "Giving" tendencies of the states, but it doesn't take into account the wealth of the states. If you compare this new "Giving" rank with the "Having" rank used by the Catalog for Philanthropy (which is the average income in the state) you end up with this New Generosity Index:

New Generosity Index Based on Average Donation Statewide

New Generosity Index Based on Average Statewide Donation

This still puts Red states on top, but there are more blue states in the top 25. I feel it is a more accurate representation of the data than the original Generosity Index.

There is one more figure that gives a better representation of the generosity of the states: This is the percent of a state's income that is donated. If you use this figure, you don't need a "Giving" rank or a "Having" rank; you just have the relative amounts donated:

Percent of Income Donated

Percent of Income Donated

This shows a slight "lead" for the Red states, but the data is far more dispersed than the original Generosity Index. 7 of the 19 Blue states are in the top 25 vs. 0 in the top 25.

For clarity, compare with the original Generosity Index:

Percent of Income Donated vs. Original Generosity Index

Percent of Income DonatedOriginal Generosity Index


As I am not a statistician I am not sure if my charts are the most accurate representation of generosity in America. I do think they are more accurate than the original Generosity Index chart. I also think that someone wanting to see the generosity of the states would appreciate seeing all of these charts rather than just one; percent of people who donated, total donation, average donation statewide, and percent of income donated are all valuable stats. The average dollar donation really has little relevance to a discussion of generosity of the state. And, as I have shown, it is questionable if the average dollar donation means anything. Unfortunately the current Generosity Index is inaccurate and misleading because of this. Any journalist should think twice before referencing this Index without a caveat.

It does appear that several Blue states are not giving as much as the Red states and there does seem, based on this data, that the Red states "lead" the Blue states overall in giving. But the contrast is not as stark as the Generosity Index would indicate.

Now it should also be made clear that this data is a measure of charitable giving, and is based on itemized tax deductions of donations. Many people (as many as 70%) don't itemize their donations. It may well be that Red states' donors may not itemize as often as Blue states' donors and this accounts for the discrepancy in the "percentage of people who donate" figure. However, it may also be, of course, that many people in Blue states also didn't itemize their tax deductions.

I contacted the Catalog for Philanthropy and presented them with my concerns. They responded at length, but they have decided not to alter their Generosity Index at all (as far as I know).


Here is the data-sheet for your interest, in Microsoft Excel format: generosity_index_data.xls.


"Generosity Index" and "Catalog for Philanthropy" are trademarks of Catalog for Philanthropy.


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