250 Years After Independence, New Index Asks Whether Government Is Stifling America’s Charitable Spirit

In his seminal work ‘Democracy in America,’ Alexis de Tocqueville praised what he called the ‘equality of conditions’: namely, that because the United States lacked a rigid, inherited aristocracy, it had a level of social mobility and personal freedom unheard of in the deeply stratified nations of 19th-century Europe. The lack of traditional, powerful authorities led Americans to form voluntary civic, political, and social organizations to accomplish things without the aid of government.

Tocqueville published ‘Democracy in America’ in two volumes, one in 1835 and one in 1840, roughly 60 years after America declared independence from England. Now, after the 250th anniversary of that independence, and 186 years after Tocqueville’s observations about American society, the Philanthropy Roundtable has released its first-ever ‘Free to Give: A State-by-State Regulatory Index‘ to show where the American instinct to help our neighbors is still thriving, and where government regulations have put a chokehold on charitable works.

The Index ranks all 50 states, looking at 33 variables that are broken down into sub-indexes that include the Broad Policy Environment Subindex (Occupational Freedom, Tax Competitiveness, Subnational Economic Freedom), the Nonprofit Freedom Subindex, and the Donor Confidence Subindex.

When those variables are taken into consideration, the data are clear: the top five states have 122 charities per $1 billion of GDP, while the bottom five have just 63. 

The top five states include Montana, Wyoming, South Dakota, Iowa, and Indiana. Those states, by and large, tend to lean red politically. As of 2026, each of those states has a Republican trifecta in state government.

Meanwhile, the bottom five are the deep blue states of Connecticut, New York, Washington, New Jersey, and California. These states currently have a Democratic trifecta in state government. 

In the same country, among the same generous people, there are nearly twice as many charities in the top five states as in the bottom five. The difference is policy, and that policy often translates into red tape.

The Index tracks almost two dozen ways in which states make it difficult to start and run a charity. This includes registration hurdles, audit mandates, and solicitation rules. The bottom five states treat things like food banks with the same scrutiny as a hedge fund.

Donor privacy is another major factor in the Index. Montana ranked number one on donor confidence, while New York came in at number 42, and California was dead last at number 50. That’s no surprise: California demanded donor lists for more than a decade, and ended up posting about 350,000 forms through a ‘security hole. In 2021, California’s donor policies were struck down by the Supreme Court (AFP v. Bonta).

“California demanded donors’ names and home addresses for a decade — just in case they were later suspected of breaking the law. Ultimately, they used the data in less than one percent of investigations and then failed to keep this constitutionally confidential information secure. When a state treats generosity as a suspect activity, it gets less of it,” said Philanthropy Roundtable Senior Vice President Claudia Cummings.

Privacy is paramount to protecting donors of all political persuasions. In 1958, the Supreme Court ruled in NAACP v. Alabama that it was unconstitutional for southern states to demand NAACP member lists. Before the Supreme Court ruling, NAACP membership fell by nearly half. In California, a waitress who donated to the 2008 Proposition 8 marriage ballot measure was harassed until she lost her job. Public figures like George Eastman and Steve Jobs often made anonymous donations. In New Jersey, the Supreme Court recently ruled in favor of First Choice Pregnancy Centers after the state’s Attorney General issued broad subpoenas against the pro-life organization demanding, among many other things, donor lists.

Given the current political climate, it’s understandable why donors to nonprofits and other causes would want and expect privacy. A Cato survey found that half of respondents who identified as ‘strong liberals’ would fire employees who donated to President Trump, and that one-third of respondents who identified as ‘strong conservatives’ would do the same with anyone who donated to Joe Biden.

New Jersey ranked 49th on the Index, by the way, and in a New Jersey Globe op-ed, Erica Jedynak wrote that the Garden State’s regulations were harming civil society:

New Jersey has just 68 charities per billion dollars of our state GDP, compared to states that made the top 5 of this index, which average 122 charities per billion dollars of GDP.

In many ways, this shouldn’t come as a surprise. We’ve long known that so many of the precursors to charitable giving and the wealth creation that enables them are under fire in the Garden State.

For more than 15 years, New Jersey has been in the top 10 states with the highest outbound migration, with an exodus of retirees in particular. With household giving levels highest among those aged 60 and above, and research showing that personal connection to community is a key driver of charitable giving, this undoubtedly hurts the organizations that serve people in need across our state.

It’s bad enough that organizations find themselves competing with the currents of New Jersey’s tax and spend policies to support their work. To add insult to injury, high fees and a maze of registration and filing requirements disincentivize the little guys from coming together to solve problems they see in their neighborhoods.

In New Jersey, if an organization wants to hire a fundraiser to help support their work – because their neighbors with the means to give continue to flee in droves – the state still has to get its hands in the process. On top of having to pay the piper by way of fees other states don’t have, they have to file their contracts with the state. Meanwhile, the top-ranked state for Montana has very few fees or registration requirements. Unlike New Jersey, they trust adults to be adults and do business with each other honorably.

Compare that to Indiana, which ranked fifth:

Across our state, charitable donors and business leaders invest in everything from workforce development and education to faith-based organizations, mental health solutions and neighborhood revitalization.

Our philanthropic strength is not an accident. It is the product of citizens who care deeply about their communities and public policies that give them the freedom to act.

The Free to Give Index found that the five highest-ranked states average nearly twice as many charities per billion dollars of GDP as the five lowest-ranked states.

States that reduce unnecessary barriers to charitable activity, protect donor rights and maintain a healthy economic climate tend to see more people pursuing private solutions and a greater level of nonprofit formation.

Indiana performs particularly well because it combines a strong overall policy environment with relatively light regulatory burdens on charitable organizations and meaningful protections for donors. These policies may not generate headlines, but they help create the conditions that allow Hoosiers to flourish.

The Index could not come at a better time. Not only is the 250th anniversary of America a perfect opportunity to ask if the generous spirit of the American people is alive and well, but it is also a great bulwark against the rising tide of Democratic Socialism rearing its head in parts of the country. Those Democratic Socialists are claiming the only way to help Americans is through massive amounts of government spending, centralized planning, and control.

The Philanthropy Roundtable’s Index proves the exact opposite is true. Fewer regulations and less government involvement lead to more charitable giving and more community-based help for Americans in need.

“When people are free to solve problems in their own communities, they do,” said Cummings. “If the states are laboratories for democracy, those at the top of the Index serve as a model for fostering civil society.”

The Index is also a roadmap for governors and legislators who may want to improve charitable giving and nonprofit work in their state. To do that, Cummings said, there are steps those legislators can take.

“Start with trust,” she said. “Protect donor privacy in statute, then go line by line through every barrier you’ve put in front of charities and ask whether it stifles voluntary action and philanthropic problem solving. The states at the bottom of this list stifle citizens from pursuing solutions. The states at the top of the list let them thrive.”

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