The Effect of Religious and Ethnic Diversity on Charitable Giving

The propensity to donate and the average donation from donors are related to the ethnic makeup of the community.

In Canada, increased ethnic and religious diversity within neighborhoods is associated with a lower level of individual donations to churches and charities. This finding emerges from analysis of data reported on individual tax returns.

In Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving (NBER Working Paper No. 17618), James Andreoni, Abigail Payne, Justin Smith, and David Karp find that a 10 percentage point increase in ethnic diversity corresponds to a drop of about 14 percent in donations. A 10 percentage point increase in religious diversity is associated with a decline in donations of about 10 percent. As a result, the authors conclude, continuing demographic changes in North America and Europe may reduce charitable donations and have "significant and sizeable effect on charitable services provided through voluntary contributions of individuals."

Both the propensity to donate and the average donation from donors are related to the ethnic makeup of the community. In high income and low education neighborhoods, the largest contributors to the overall drop in charitable donations as diversity increases are non-minorities and Blacks. As religious diversity increases, Catholics appear to donate less, and the effect of religious diversity on donations per adult is more pronounced.

--Linda Gorman