As the holiday season nears, we prepare for big family and friend get-togethers, hearty meals, and perhaps some time to reflect on the year that was. It's also the time of year when giving in the form of charitable contributions and volunteer work comes into focus.
'Tis the season
According to the latest statistics from the National Philanthropic Trust, a whopping 95.4% of all U.S. households give to charity. Data from Giving USA Foundations' inflation-adjusted figures show that Americans have essentially doubled their giving over the past three decades to $335.2 billion, or just shy of $3,000 per household. Put another way, charitable contributions were equal to about 2% of U.S. GDP in 2013.
What's even more notable about the latest giving statistics is that they were driven by individuals, who accounted for $241.3 billion of the $335.2 billion, rather than corporations, bequests, and foundations. NPT notes that eligible religious groups received close to one-third of all charitable contributions, while education, human services, and grantmaking foundations received 16%, 12%, and 11%, respectively.
Finally, 62% of high-net-worth individuals cited "giving back to the community" as their primary motivation for their donation. In other words, people are giving more to those who need it, and their motivation is largely based on improving the lives of those around them. This is what truly makes America the greatest country in the world.
America's seven most charitable states
But when push comes to shove, a few states are better "givers" than others -- at least based on the latest WalletHub study, which looked into the multiple facets of giving, including donations of money and goods, as well as volunteering.
WalletHub's analysis of eight separate giving metrics determined that these seven states are the most charitable in the U.S.:
- South Dakota
In sum, the Heartland of America has your back! Utah was the runaway most charitable state with the highest volunteer rate in the country, the highest percentage of donated income, the highest percentage of residents who claim to have donated their time, the highest percentage of residents who claimed to have donated money, and the highest median contribution to charity. Statistically, Utah's percentage of donated income was four times higher than that of New Hampshire, which ranked last in the category, and Utah's median contribution to charity was three times higher than that of Rhode Island, which ranked 50th in this area.
Idaho was another standout with the second-highest growth in charitable giving between 2006 and 2012, as well as the third-highest volunteer rate in the country.
The many purposes of giving
One more reason to consider making a donation right now, before the new year hits, is that it can help reduce your taxable income. Although donations won't return a dollar-for-dollar tax deduction, they can sizably lower your taxable income based on the amount of your donation.
The form your donation takes matters, too. No one will stop you from donating cash directly to an eligible organization, but Foolish Director of Investment Planning Dan Caplinger offered a better idea late last year: donating your appreciated stock.
Instead of paying potentially hefty capital gains on a stock you own that has appreciated in value, you can consider donating some or all of your shares to an eligible organization of your choice. The best part is that you won't be liable for any taxes on the money you've gained, and you'll receive the current market value (not your buy-in price) for the stock you donate as a taxable income deduction. As Dan notes, though, if you've held your shares for less than a year, and your shares have gone up, you're only allowed to deduct what you paid for your shares, rather than what they're now worth.
On top of that tax break, donating money or time can play an integral role in improving your health and/or happiness.
In a study conducted in 1999 by the University of California, Berkeley, researchers observed that elderly people who volunteered for two or more organization were 44% less likely to die over a five-year period than non-volunteers (and this percentage factored in a number of controls such as age and overall health). Researchers ultimately suggested that giving can potentially improve health and reduce stress.
Furthermore, a 2008 study from Harvard Business School professor Michael Norton and his colleagues determined that it truly is better to give than to receive. Norton's study found that when subjects gave money to someone else, they experienced greater happiness than they did by spending money on themselves instead. A 2006 study from the National Institutes of Health corroborates this point, finding that the act of giving stimulates regions of the brain responsible for pleasure, trust, and social connection.
If you're looking for a good way to potentially boost your happiness, decrease your taxable income, and, most importantly, improve the lives of people in need, consider giving back to your community this holiday season.