How Charitable Are Americans?

Person putting a twenty dollar bill into donation tin
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Americans are good at making money -- but we're also good at giving it away.

In 2011, we came in first place as far as generous nations go in the Charities Aid Foundation's World Giving Index. However, in recent years we've slipped.

Australia took the cake for giving in 2012, followed by Ireland, Canada, and New Zealand. The U.S. came in fifth place.

America's charitable giving can be emotional, highly variable, and downright astonishing. Here are the facts, as well as tips on how to be an effective philanthropist.

Who's Most and Least Generous

The World Giving Index takes a survey-based approach and, according to the survey, 42 percent of Americans said they'd volunteered in the last year, 57 percent reported donating money, and 71 percent reported helping a stranger.

%VIRTUAL-article-sponsoredlinks%But not all Americans give equally. The Chronicle of Philanthropy has crunched numbers on charitable deductions data, and the results are fascinating. Mormon tithing seems to lifted Utah -- the average household gives away 10.6 percent of its discretionary income, the highest level in the nation. It's no single state fluke, either. More religious parts of the U.S. are also more generous. And a new study released in October found that 23 percent of Jewish Americans include charities in their wills -- almost twice the percentage of non-Jews.

Politics also appear to correlate to charitable giving. The eight most giving states all voted for John McCain in the last presidential election, while the seven least charitable states voted for Barack Obama.

And don't let anyone tell you Southern hospitality isn't real. Mississippi, Alabama, and Tennessee follow close behind Utah's first place, while Vermont, Maine, and New Hampshire bring up the rear.

But The Chronicle's most intriguing numbers come from an examination of our nation's richest and poorest neighborhoods. Of the wealthiest 1,000 ZIP codes, only nine of them also appeared on the top 1,000 list for share of income donated.

Interestingly, households earning more than $200,000 a year that are clustered in wealthy neighborhoods are less generous with their paychecks than average. While they accounted for 41 percent of total charitable donations, that absolute number only adds up to 2.8 percent of discretionary income. That's lower than the overall giving rate in 98.9 percent of all but four of the country's 344 metropolitan areas.

Making It Count -- for You and the World

How much you give is only part of the equation of making donation dollars really make a difference. "Every little bit helps" isn't necessarily true when it comes to charities. There are plenty of ineffective organizations out there, and some that are so inefficient with the money they raise that they're may be causing more harm than good.

Identifying responsible charities can be tricky, but it's worth the work. Pick your charities like you pick your stocks -- excellent management, effective strategy, and long-term value added for all stakeholders are three signs of a solid organization. is a good starting point, but firsthand experience or advice from a trusted friend can often go just as far.

Tax-deductible donations are a nice draw, and investors can make their stocks go further by chalking off the full amount of earnings to charities -- without having to deduct capital gains.

Start Making a Contribution

While the richest Americans may be able to give more on a dollar-for-dollar basis, you can start with any amount. Allocating a specific percentage of your income, no matter what size, is a surefire way to start making a difference.

Some folks feel the urge to give back to their communities, while others look abroad at the global inequalities that exist. You might have a connection to something that's affected you or a friend, or perhaps you feel strongly about a statistic that strikes you as being unjust. Whether it's people, places, or problems in general, there are plenty of opportunities.

Also, giving doesn't have to mean money. While it's not tax-deductible, volunteering your time and expertise can sometimes go even further. Not everyone's in a position to donate funds, and lending a helping hand can move mountains for some organizations.

The U.S. may have slumped to fifth place in last year's World Giving Index, but we've got every ability to make up lost ground. Find what works for you, stick to a strategy, and do your part to make some surprising statistics for next year's report.

You can follow Motley Fool contributor Justin Loiseau on Twitter @TMFJLo and on Motley Fool CAPS @TMFJLo.

Originally published