NVSQ Blog

How much of their income do people usually donate to charity?

Michaela Neumayr & Astrid Pennerstorfer, WU Vienna University of Economics and Business.

What amount of donations can you expect from people when fundraising for your organization? Who are the people who do not donate any money at all, and who are those who donate substantial amounts? Basically, charitable donations are considered to strongly vary across income classes, and fundraisers know that the amounts of individuals’ donations increase with their financial resources. But what proportion of income can you expect to be donated by people of different income groups? Which income groups are more ‘generous’, those with higher or lower incomes?

Such questions have been discussed in scholarly research since the 1990s and answers to these questions are surprisingly diverse and even contradictory. In the debate concerning the “charitable giving profile” all kinds of shapes have been proposed. Some argue that it follows a U-shaped curve, with individuals at both ends of the income distribution donating the highest proportions of their income. For the US, for instance, those below an annual income of 10,000 USD donate about 4.6% of their income, while those with an income higher than 150,000 USD give 2.2%, and those in the middle 1.4%. Other studies do not find that lower-income groups are more generous, but rather describe the charitable-giving profile as a flat curve with an upward slope for higher-income groups. Yet other studies doubt the upwards swing on the right-hand side and instead find higher relative donation levels for lower income groups. We could go on with an account of yet other assumed shapes of previous studies, but we stop at this point to tell you about our study.

Our study The Relation Between Income and Donations as a Proportion of Income Revisited: Literature Review and Empirical Application consists of two parts. First, we systematically review 26 empirical studies that investigate the relation between income and proportion of income given, trying to make sense of the variety of existing results. In this review, one important explanation for diverging findings is the great number of varying methodological approaches in the previous studies. Second, we use the findings of this systematic review for an empirical application on Austrian income tax data (n = 20,000). In this second part, we are able to demonstrate how the various methods that have been used in previous studies lead to diverging findings. Based on that, we are able to tell which of the previous findings can be considered certain.

Returning to the first part of our study, we find three major reasons why results of previous studies vary so much:

– The first refers to the sample analysed. When describing the charitable giving profile it is crucial whether specific parts of the population are included in the sample (e.g. non-donors) or represented by a group that is large enough to draw unambiguous conclusions (e.g. high-income groups). Additionally, we find that both representative survey data and administrative tax data have their advantages and flaws for use in analysis of the charitable giving profile.

– The second refers to the specification of variables. Previous studies have used different income and donation measures and this variation can also influence the result.

– The third refers to the method of analysis. The method how the charitable giving shape was determined varied greatly in previous studies ranging from mere visual inspection of donation/income ratios for different income classes, over bivariate to multivariate analyses.

In the second part, we take a sample of Austrian income tax data set to show how results regarding the charitable giving profile change when you vary the sample, define the variables differently or vary the statistical method. We find a visual inspection of the relation between income and the proportion of income donated to be especially unsatisfactory because results vary greatly depending on income class definitions and because visual inspection leaves a lot of room for interpretation. Results of various regression analyses point towards a U-shaped charitable giving profile. However, this is not what we find in the results when applying a more precise estimation technique (semi-parametric estimation), which displayed a downward-sloping relation for most income levels. We find this final method especially helpful for this question, as it allows to exactly describing the relationship between the income and proportion donated without any restrictions.

What can fundraisers take away from this for their practice? While our study has shown that results of previous analysis vary with the method in use, three conclusions regarding the relation between income and the proportion donated are safe to say. First, people in the lowest income group donate the largest proportion of income. While the share itself varies depending on the country context, it is always higher compared to other income groups within the respective country. Second, the profile of the charitable giving curve seems to be fairly flat for middle and high income groups. This means, middle and high income groups can be expected to give the same share of their income. Third, regarding the very high income groups the relation is more difficult to describe Important to note, this very high income group refers to the top 5-3% of the income profile only. Within this group, fundraisers still have to find out for themselves what amounts can be achieved, while for all other groups it is known statistically what proportions and thus amounts can be expected.

Click here to access the full NVSQ research article: Neumayr, M. & Pennerstorfe, A. (2020). The Relation Between Income and Donations as a Proportion of Income Revisited: Literature Review and Empirical Application, Nonprofit & Voluntary Sector Quarterly, https://doi.org/10.1177/0899764020977667.

Neighborhood Development Organizations – Tackling Neighborhood Disadvantage at the Intersection of Race and Resource Inequity

Bryant Crubaugh, Pepperdine University, Malibu.

Neighborhood equity requires more than the inclusion of nonprofits. How is the relationship between neighborhood development organizations and neighborhood disadvantage dependent on race, resources, and residential mobility? The answer to this question is vital as cities attempt to correct structural inequalities and rely on nonprofit organizations in their plans.

For example, Chicago’s mayor, Lori Lightfoot, is attempting to tackle two persistent, decades-old issues within Chicago: violence and concentrated poverty. Throughout her first two years in office, nonprofit leaders have been meeting with and standing at her side. In February, before the onset of Covid-19 in the US, Chicago’s city leaders and nonprofit organizational representatives met to discuss plans to reinvest in long divested corridors in the West and South sides of the city, hoping to spur job growth and help long-isolated communities escape concentrated poverty. More recently, as Chicago has seen a continued increase in gun violence, Lightfoot has responded to calls with a formalized plan to lean on nonprofit organizations to help reduce violence, though the plan so far has not included significant steps away from traditional policing.

Whenever a major initiative makes its way to a mayor’s desk in the US, community nonprofits are likely to have had a role in getting it there and likely have a role in implementing the solution. Nonprofits are routinely lauded for taking local knowledge into account, for supporting city governments in times of financial strain, and for helping bring people together to shape their efforts. However, community nonprofits do not universally and evenly serve the entire city. When they are tasked with administering social programs instead of the government, they often run at a deficit and lack the funding needed to adequately administer social programs.

It is clear that nonprofit organizations have a large role to play in city administration, but I am left asking: does this role help alleviate inequalities or does it perpetuate them?

In my analyses of Chicago from 1990-2010, I ask how neighborhood development organizations (NDOs) are associated with varying levels of neighborhood disadvantage—a composite measure of impoverished families, rates of unemployment, families receiving public assistance, single-mother households, and vacant units. Traditional social research and popular accounts of this process would lead us to expect that nonprofit organizations are likely to lower disadvantage through processes of developing community trust, increasing neighborly care, and connecting neighbors to external resources. In general, I find that NDOs are associated with decreasing levels of neighborhood disadvantage. But this general pattern does not fit all neighborhoods.

In predominately Black neighborhoods, NDOs do not have this same association. Instead, having more NDOs in predominately Black neighborhoods is associated with increasing disadvantage. This is not a story of predominately Black neighborhoods lacking NDOs. Predominately Black neighborhoods have more NDOs on average than predominately non-Black neighborhoods, by a rate of nearly 2 to 1, as seen in the figure below. Yet when it comes to resources given to NDOs, from any public or private source, we can see that predominately Black neighborhoods are being left out by a rate of over 6 to 1. My results show that when it comes to reducing neighborhood disadvantage, having over 500,000 dollars of NDO income in a census tract in a year is associated with decreasing neighborhood disadvantage—approximately one fifth of a standard deviation of neighborhood disadvantage. Unequal and inequitable funding of Black NDOs is stunting their opportunity to address neighborhood disadvantages.

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Residential mobility and potential gentrification also impact the strength of the relationship between NDOs and neighborhood disadvantage. NDOs may encourage gentrification through their focus on beautification, historical preservation, and economic redevelopment, all factors that may disrupt the social fabric of a neighborhood. These processes are not random but are also dependent on the racial makeup of neighborhoods, with predominately Black neighborhoods being more likely to lack external investments and remain in a disinvested state. In the figure below, I show how neighborhoods with significant residential mobility, NDOs are associated with declines in neighborhood disadvantage. This suggests that as neighbors are moving out in neighborhoods with more NDOs, there is a replacement of disadvantaged neighbors with advantaged ones.

So, why does this matter? In a moment when Mayor Lightfoot and mayors across the United States are attempting to tackle large issues such as concentrated poverty by relying on nonprofit organizations, these findings should give us pause.

Given these associations between NDOs and neighborhood disadvantage, more of which I discuss in my article, I see two paths forward. First, when mayors propose the further use of nonprofit organizations like NDOs for neighborhood development or social service administration, funding needs to be equitable. Black communities in Chicago are organized and ready to tackle the large issues that have isolated and disadvantaged many of their neighborhoods, but without equitable funding that gives a disproportionate share of funds from these new programs to those that need it most, resource gaps will still be present and no amount of neighborhood organizing can overcome that disadvantage compared to their neighboring communities.

Second, this should make us question programs and policies that rely on nonprofits for implementation altogether. Given that social service provision often operates from a deficit when administered through nonprofits and the results here, nonprofit administration of neighborhood development and other social programs is likely to reproduce the inequalities already present. In attempting to tackle the large structural inequalities of the day, Mayor Lightfoot and others need to address the roots of the problem that even equitable funding may not address. Without dismantling the structural conditions that produced concentrated disadvantage and violence in the first place, nonprofits are unlikely to be able to make a substantial and structural impact.

Click here for the original NVSQ article – free access to the full text until the end of May 2021!

Generating satisfying volunteer experiences: How to design National Days of Service volunteer projects

Stephanie Maas^1,2,Lucas Meijs¹, Jeffrey Brudney³

¹Erasmus University Rotterdam, The Netherlands, ²Vrije Universiteit Amsterdam, The Netherlands, ³University of North Carolina Wilmington, USA.

The way in which people volunteer is changing. An increasing trend is event-based, short-term activities, such as National Day of Service (NDS) volunteering events, rather than long-term, traditional or ongoing volunteer commitments. NDS events are common across the globe, for example, 9/11 Day, Make a Difference Day and Martin Luther King Jr. Day in the United States, Sewa Day in 25 different countries, Mandela Day in South Africa, and NLdoet in the Netherlands – just to name a few. All of these examples are nationwide volunteering events in which individuals and groups support nonprofit organizations by contributing their time to one-day service projects. In NDS events volunteers may cook for the elderly, maintain buildings, gardens and playgrounds, support a fun afternoon for people with disabilities, and so forth.

These events mobilize large numbers of people to engage in volunteer service, creating enormous amounts of donated labor to help communities. But organizers of NDS events also intend to enhance the profile and create an ethic of volunteering. Intentions to continue volunteering typically depend on volunteer satisfaction, and volunteer managers are interested in achieving retention. This goal is not easy, due to the limited contact time between volunteer and volunteer management; moreover, general volunteer management practices used for long-term volunteer commitments might not work. Nevertheless, nonprofits can plan, structure, and organize NDS projects far in advance to enhance satisfaction of volunteer participants. So, how to design a NDS volunteer project to promote volunteer satisfaction?

To answer this question, we conducted semi-structured interviews, participant observations, and focus groups in the context of a NDS event in the Netherlands: NLdoet. Data emanate from nonprofit organizations, volunteer centers, participant observers and volunteers involved in NLdoet.

The answer: Host nonprofit organizations can elicit volunteer job satisfaction by designing NDS projects that create 1) a sense of added value, 2) support productivity, and 3) make volunteers feel comfortable. You now might ask: how to create this sense of added value, support productivity and make volunteers feel comfortable within a NDS?

First, simply put, to create a sense of added value NDS volunteers must feel that they add value and have meaningful experiences: Organize a volunteer activity that is meaningful, has real impact and affects beneficiaries, the nonprofit and/or the community at large. Moreover, the volunteer activity should be a suitable and logical choice as a NDS project. An organization should pick or create a NDS activity that shows importance, urgency and necessity — something that cannot be done regular staff and volunteers. One example is repairing the fence of a Petting Zoo, especially when it is clear that the regular volunteers are already overloaded with keeping the Petting Zoo open; or creating a wall-painting in a residential care environment, based on the understanding that the organization lacks the budget to do so professionally.

Additionally, to create greater impact, NDS volunteers should be provided the opportunity to interact with beneficiaries or clients. In addition, providing feedback to the one-day volunteers – either by nonprofit staff, regular volunteers and/or the beneficiaries themselves — and recognizing their efforts also create a sense of added value. Tell them how the organization will profit from the work done at the NDS! And of course, give them a pat on the back, a thank you or other small momentos.

Second, to support a sense of productivity toward NDS volunteers, the chosen one-day service project should have a clear beginning and end with a visible result. Most importantly, it should be completed at the end of a long day. When the volunteer project cannot be completed, or the result of volunteer efforts is unnoticeable the next day, a lack of fulfillment can surface. Necessary equipment and tools should be available and working properly, as operational problems may frustrate volunteers. Likewise, host nonprofits should make decisions about structuring NDS projects in advance, to ensure that NDS volunteers start immediately and can focus on carrying out the work at hand. Interestingly, a satisfying NDS project should feel a bit heroic; volunteers will welcome some muscle strain in the evening or the next day after completing a project that could only be completed by working hard.

Lastly, how to make volunteers feel comfortable? NDS volunteers typically are not engaged with and are largely uninformed about the host nonprofit organization. Host nonprofits can make volunteers feel comfortable by providing sufficient social support and having sufficient staff members or regular volunteers present at the NDS to assist and answer questions. Furthermore, limiting volunteers’ autonomy and responsibility over the NDS project and interaction with beneficiaries also makes NDS volunteers feel more comfortable. Compared to ongoing volunteers who have background and experience at the host nonprofit, NDS volunteers prefer that the organization exercise greater direction over their work.

When both volunteers as well as the host organization look back on the NDS with satisfaction, the event is definitely a success. The above are only a few suggestions on how to design a NDS volunteer project to elicit satisfying volunteer experiences. If you want to know more about how to design a one-day service project to promote volunteer satisfaction, please check out our recently published full paper here.

Original open access NVSQ article: Maas, S.A., Meijs, L.C.P.M. & Brudney, J.L. (2020). ‘Designing “National Day of Service” Projects to Promote Volunteer Job Satisfaction’. Nonprofit & Voluntary Sector Quarterly. DOI: 10.1177/0899764020982664.

FACT CHECK: Is there a crisis of trust in nonprofits?

Cassandra Chapman, Matthew Hornsey & Nicole Gillespie

University of Queensland

Unless you’ve been living under a rock, you’ve probably heard that there is a crisis of confidence in the charity sector. In recent years a series of high-profile scandals have rocked the sector, including the Oxfam sexual exploitation scandal and the suicide of an elderly British donor Olive Cooke, who had received an estimated 3,000 charity appeals in the year before her death.

Scholars, practitioners, and the media have lamented falling trust in charities and worried about the ramifications for the nonprofit sector. Trust is known to be an essential ingredient for fundraising success. Drops in charity confidence could therefore threaten the survival of the sector as a whole.

My colleagues and I study charity scandals and trust in nonprofits. Through a series of experiments, we have demonstrated that scandals emerging within nonprofits have dire consequences for transgressing organizations. In fact, nonprofits lose trust and consumer support at faster rates after a scandal than commercial organizations do.

It’s clear that scandals damage trust in particular organizations. But do highly publicized scandals also damage trust in the sector as a whole?

To answer this question, we accessed global data collected as part of the Edelman Trust Barometer. Each year, Edelman survey people around the word and ask, among other things, how much they “trust NGOs in general to do what is right”. Edelman shared data from 294,176 people in 31 countries over a period of 9 consecutive years.

We analyzed these data in a way that had not been done before. Specifically, we looked at trust trends after taking into account individual differences (i.e., the fact that some kinds of people are more or less trusting) and country differences (i.e. the fact that some countries are generally more or less trusting and that different countries may show different trust trends over time).

Spoiler: There is no global crisis of trust in nonprofits

Our analysis shows no significant decrease in trust over time. In fact, once we accounted for individual and country differences, trust in NGOs has actually increased slightly around the globe between 2011 and 2019.

It’s true that some people and countries show different trends. For example, the increase in trust was sharper among men, people aged under 40 years, and people with higher education, income, and media consumption. Although some countries showed small increases and some showed small decreases in trust, none of these trends was substantial in size. In other words, there is no was no evidence that trust in NGOs has changed meaningfully in any of the 31 countries over the last decade.

So why do the public still trust nonprofits despite the scandals?

The short answer is we don’t know. The data allowed us to identify if trust was changing over time but not why.

We have some ideas about what might be going on though. Charities, generally speaking, have reputations for being moral. We suspect that this good reputation functions as a kind of “trust bank” that buffers charities from the effects of scandals. Perhaps over time the sector makes deposits in the community trust bank through their good works in society. When scandals emerge within individual organizations, this may draw down some of the community trust that has built up over time but have very little impact on reserves of trust in the overall sector.

What does this mean for nonprofit managers?

If the good deeds of charities cultivate trust banks from which they can safely draw on in times of crisis—an idea that has not yet been evidenced—then a key strategy will be to ensure all successes are communicated both to the supporter base and to the wider public. Nonprofit leaders should also encourage other organizations within the sector to do the same. When the nonprofit sector works together to highlight their good works, the entire sector may benefit in the future when unexpected scandals erupt within the community.

Click here for the original NVSQ article– free full text access until the end of 2020!