Every year or so, a report comes out detailing exactly how much money Americans gave to charitable causes the previous year. And every year, without fail, it kicks off the same conversation.
According to Giving USA, Americans donated $592.5 billion in 2024. Nearly $600 billion-with-a-B. In a single calendar year. Only in the United States. That figure represents a 3.3% increase in real, inflation-adjusted dollars from the previous year—an increase driven pretty much entirely by individual donors and corporations.
And yet, every single time reports like these come out, there’s inevitably some accompanying commentary boldly declaring that it isn’t enough. Comparisons get drawn between what was given and a corporation’s total profits, or between a billionaire’s donation and their net worth. When a disparity between those numbers is revealed—aha!—it’s treated as evidence of wealth hoarding, or indifference, or the moral failure of people who have too much. After all, it’s their social responsibility to give back to their communities!
Let’s leave aside the reality that corporate profits are used to pay dividends to investors, fund capital investments, and support research and development. Let’s ignore that net worth is not the same thing as the contents of a checking account, and that individuals and corporations pay income taxes on those profits and earnings before any of this generosity enters the picture. Even setting all of that aside, there is no other country on Earth with the same level of philanthropic giving as the United States. No one gives away as much money as Americans.
You could argue that this giving is self-serving, since the bulk of charitable donations is tax-deductible. You could assert that all this generosity is ultimately a kind of whitewashed tax haven, no better than an offshore account.
But does that matter?
The tax-deductibility objection is worth taking seriously for a moment because it raises a real point. As we explored in our taxation installment, the tax code is full of incentives designed to steer behavior in certain directions, and charitable giving is very much on that list. People respond to incentives—we’ve established that—and there’s nothing cynical about using a deduction that exists specifically because the government wants to encourage the behavior it rewards. If someone builds a hospital wing because it lowers their tax bill and also because they care about their community, the hospital wing still gets built. The patients don’t particularly care about the donor’s internal calculus.
But the tax argument, compelling as it can sound, is a distraction from a much more interesting question. One that doesn’t get asked nearly often enough.
In popular conversation, philanthropy is treated as an unambiguous moral good. Giving is virtuous. And profit? Profit is what you apologize for on the way to announcing your foundation’s latest initiative. In popular moral accounting, the charitable gift is the good part, and the capitalism that produced it is the unfortunate backstory. The two are assumed to sit at opposite ends of some ethical spectrum—the making of money over here, the spending of it on good works over there, and a thick line between them.
Except there’s no line. Because one produces the other, in that order, every time.
Consider what we discussed in our previous installment. The only reliable path to financial success in a capitalist system is to create value for other people. Profit is the measure of how well a business is doing that. You don’t accumulate enough to give away by hoarding—you accumulate it by solving problems for enough people, at a price they’re willing to pay, reliably enough that it adds up over time. The path to profit in capitalism runs directly through serving others.
And that service is doing real work long before anyone cuts a check to a nonprofit. Think about what it actually means: more goods available at lower prices, jobs with paychecks that people use to pay rent and raise families, and innovation that raises living standards for people who never have a single conversation about capitalism in their lives. The smartphone in your pocket contains technology that would have cost millions of dollars and required a room full of equipment just a few decades ago. Capitalism made it cheap enough for essentially everyone to own one. That’s not a side effect or a happy accident. That’s the mechanism working exactly as intended—and it’s doing an enormous amount of good in the world before philanthropy enters the picture at all.
Then, once enough value has been created and enough profit accumulated, some of it goes to a food bank. Or a children’s hospital. Or a university endowment. Or a nonprofit that makes content about economic freedom—full disclosure, Free To Choose® Network, which produces this series, is one of those organizations.
Nonprofit organizations exist outside the economic framework of capitalism. They do not sell products or services for a profit—the category name is pretty clear on this point. These institutions offer tools, resources, training, and sometimes direct financial support to others at little or no out-of-pocket cost. But they still have employees and vendors who need to be paid. Without profits to cover those bills, they rely on donations to keep the lights on.
How well they serve their stated mission and how worthy that mission is are open to interpretation. What isn’t open to interpretation is that their existence relies on others freely giving of their own wealth. And that wealth requires profit to exist.
Organizations that spend considerable energy critiquing capitalism are, in large part, funded by capitalism. Commentators who look at $592.5 billion and call it insufficient are relying, whether they realize it or not, on the very system they’re criticizing for remaining productive enough to generate that kind of money in the first place.
You can’t celebrate the gift and condemn what made it possible. Well, you can—clearly—and there are certainly aspects of the current American economy that warrant concern and criticism, as evidenced by previous installments in this series. But that criticism should be clear-eyed and honest. People can and should make their cases, even the ones against capitalism. Just be aware of who is putting someone else’s money where their mouth is.
Learn more about capitalism here.
