Diversity detrimental when it comes to charitable giving

[img_inline align=”right” src=”http://padnws01.mcmaster.ca/images/salvationarmykettle.jpg” caption=”Researchers have found that religious and ethnic diversity drives down Canadians’ charitable donations. Previous research suggests the trend may be the result of individuals’ unwillingness to contribute to charities that benefit ethnic or religious groups other than their own. Photo by Melissa Baldwin/Flickr.”]Researchers at McMaster have found that Canadians' religious and ethnic diversity has a
detrimental effect on charitable donations.
Abigail Payne and David Karp, in the Department of Economics, along with the
University of California, San Diego's James Andreoni and Wilfrid Laurier's Justin Smith,
found the more diverse a neighbourhood, the less its members give to charity.
Using personal tax returns and data on charitable giving over a 10-year period, the
researchers found that a 10 per cent increase in ethnic diversity reduces charitable
donations by 14 per cent. The same increase in religious diversity results in a 10 per
cent decrease in donations.
That means that a 10 per cent increase in neighbourhood diversity results in the
average household, which typically reserves about $200 per year for charities, giving
$27 less.
Previous research suggests the trend may be the result of individuals' unwillingness to
contribute to charities that benefit ethnic or religious groups other than their own.
The effect is most noticeable in areas with high income but low levels of education.
The research, among the first of its kind in Canada, has important implications for the
country's charitable sector.
“Understanding the economics behind charitable giving is important for a number of
reasons,” said Payne. “This work impacts how charities fundraise and what messages are
sent to donors about the delivery of goods. It also raises questions about the role
government plays in the delivery of those same goods.”
The researchers say the findings are similar to trends found in other countries, where
the level of government-provided goods and services also tends to decrease with
increased diversity.
“Our results imply that the recent and continuing demographic changes across North
America and Europe may have a significant and sizable impact on charitable services
provided through voluntary contributions of individuals,” the researchers wrote in their
working paper, published by
the US-based National Bureau of Economic Research. “As communities grow more
diverse, charity revenue may fall. This raises further public policy concerns, especially in
urban areas, as religious and ethnic diversity inevitably grow.”
Payne said future research will focus on whether diversity drives down donations to all
types of charities equally or if certain types are affected differently.