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International giving analysis finds no significant link between a number of taxation measures and the amount people donate to charity

2 February 2016

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Government spending and overall tax burden appear to bear no significant correlation to how much money people in a country give to charity, according to new international data analysis by the Charities Aid Foundation (CAF) looking at 24 countries.

Gross Domestic Philanthropy: An international analysis of GDP, tax and giving’, looks at available data for 24 countries to examine some of the factors affecting the link between GDP and charitable giving.

The report looks at measures including overall tax burden, top tax rate, average income tax, corporation tax,  government expenditure as a percentage of GDP and employer social security charges.

Only employer social security charges appeared to show any correlation with charitable giving in these counties.

It reveals that, of the countries reviewed, the USA gives away the largest portion of its GDP to charity, followed by New Zealand, Canada, and the UK.

The report is published today by CAF, a charity which promotes charitable giving and provides financial services and social finance to not-for-profit organisations.

The snapshot of available international comparative data on charitable giving and taxation, examines data from countries accounting for around 75% of global GDP and 53 % of the world population.

It updates findings previously published by CAF in 2006 around international comparisons of charitable giving as a percentage of GDP, which looked at data from 12 countries.

The key findings from this analysis are:

  • From the measures looked at, there appears to be no significant correlation between levels of taxation and government spending and the amount given to charity, with the exception of employer social security charges.  This was based on analysis of tax burden, the top tax rate, employer social security charges, government expenditure as a percentage of GDP, the corporation tax rate, average rate of employee social security charges and the average income tax level at an aggregate level.
  • From the 24 countries looked at, the top four countries in terms of charitable giving by individuals as a percentage of GDP are the United States of America (1.44%) , New Zealand (0.79%), Canada (0.77%)  and the United Kingdom (0.54%).
  • The UK is the top European country for charitable giving by GDP of the countries looked at, followed by Italy (0.30%), the Netherlands (0.30%), Ireland (0.22%) and Germany (0.17%).
  • Those who volunteer their time are also more likely to give monetarily to charity.

Adam Pickering, international policy manager at CAF, said: 

“Across the 24 nations we studied, we found no significant link between government spending, income or corporation tax and the proportion of GDP donated by individuals.

“This suggests the relationship between the amount of taxes people pay and the amount they give to charity is not as clear-cut as some may have thought. The factors which motivate people to give, and influence how much they give, are incredibly complex.

“The lack of standardised reporting on charitable giving makes it difficult to arrive at definitive conclusions. But we hope this analysis leads to further, more informed discussions about the impact economic factors like tax and overall GDP have on charitable giving.”

CAF’s sixth annual World Giving Index, published in November looked at three ‘giving’  measurements for over 140 countries worldwide, donating money to a charity; volunteering time to an organisation and helping a stranger or someone you do not know.

Our new paper reveals there is a positive correlation with the recorded levels of giving across these 24 countries as a percentage of GDP and levels of participation among those living there who say they have recently  donated money, volunteered time and helped a stranger.

Notes:

  • A full copy of the report ‘Gross Domestic Philanthropy: An international analysis of GDP, tax and giving’ – can be found here
  • The increased availability of data and translation software online has allowed us to increase the analysis from 12 countries in 2006 to 24 in 2016. The aim of this paper is not to provide all the answers but to act as a document which will stimulate further discussion and understanding around this important issue.
  • As in 2006, there is still a lack of truly comparable data at an international level. In line with the 2006 analysis, information has been collected from surveys carried out in a number of countries. Data has been selected which identified giving by individuals, but excluded giving via other means such as legacies, businesses and government.  CAF has made a reasonable effort to ensure that the figures selected for use are nationally representative, accurate and comprehensive. However, it may be that more robust data sets are available for individual countries which we have not been able to gain access to. If this data can be provided, we would welcome feedback on this in order to continue to enhance the depth and coverage of this document and understanding on the subject.
  • In order to improve analysis of this topic, we would encourage countries, where possible, to:
    • Collect standardised data, by the relevant national statistical agency.
    • Increase the availability of data online.
    • Publish in the appropriate official language(s) and, where possible, a single language globally to assist with international dissemination.
  • The World Giving Index can be found here

 

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