Giving time or giving money? On the relationship between charitable contributions

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Abstract

This paper studies philanthropic behaviour in terms of money and time contributions for charitable organisations. Using a unique dataset, which is representative of the German population, we examine the pure contributions of individuals who give either money or time as well as joint contributions of individuals who give both money and time. We find that the sequential decisions to give to charity and how much to give can be explained by different socio-economic characteristics. We report particularly pronounced gender differences among pure contributions, an interesting pattern of human capital variables such as income and education, and possible differences in the type of philanthropic goods.

Introduction

In many countries, a considerable proportion of individuals show philanthropic behaviour in terms of monetary donations and volunteer labour supply; governments and charitable organisations are also involved in this market for charity (List, 2011). Behavioural economics study the driving forces for charitable giving (Andreoni, 1990, Ariely et al., 2009, Bénabou and Tirole, 2006, Brown et al., 2017, Freeman, 1997, Yen and Zampelli, 2014) and a growing literature states important correlates that go beyond the effects from income and tax-price elasticities (Bekkers, 2010, Smith, 1994, Wilson, 2012, Wilson and Musick, 1997). There is broad consensus that donations and volunteering are utility-enhancing goods that are rather heterogeneous in demand (Brown et al., 2019).

The relationship between donations and volunteering is commonly explored by their complementarity or substitutability. However, the underlying process of (i) whether to give and the subsequent choice on (ii) how much to give as well as (iii) the distinction of individuals who provide money and/or time are issues that need closer examination. The present paper aims at exploring these sequential decisions and the types of donors. We use data from an online survey with about 1000 participants, which are a representative sample of the German population, that were asked about giving money and time to charitable organisations. Using these data, we examine if the first choice (whether to give) and the second choice (how much to give) stem from the same underlying process. In addition, we analyse the connection between money and time donations by examining joint donors, who give money and time, and pure donors, who give either money or time. Commonly deployed socio-economic variables control for influencing determinants and reveal interesting patterns among the different types of philanthropic givers. These findings may be relevant to better understand individual giving behaviour and the impact of governmental decisions (Schiff, 1984). Charitable organisations may be interested in who gives but even more in who gives how much (Bryant et al., 2003).

The rest of the paper is organised as follows: Section 2 briefly reviews the relevant literature. Section 3 explains our data and the empirical strategy. Section 4 presents the results. Section 5 concludes.

Section snippets

Related literature

Charitable contributions can be categorised into two major types: giving money and giving time. For a considerable period, economists studied monetary donations, while, maybe due to less extensive data availability, volunteer labour supply was not considered as of interest to the field of research (Rose-Ackerman, 1996). With respect to political interference on the charitable market this shortcoming could have consequences. If time and money contributions are substitutes — interchangeable goods

Data and empirical strategy

As the German Socio-Economic Panel does not provide detailed information on giving time and money at the extensive and the intensive margin, we use for our analysis data from an online survey. The survey participants were recruited by a certified research company from an online panel of approximately 90,000 individuals living in Germany. A total of 1019 subjects were chosen to ensure that our data are representative of the German population with respect to gender, age, religious affiliation,

Empirical results

First, we examine if the outcomes of donating money and volunteering time are related after conditioning on regressors, which would occur via cross-equation correlation of the errors. We estimate a system of two equations that model a binary choice to donate (y1) and a binary decision to volunteer (y2) as a latent variable for each outcome, allowing for the correlation of errors ρ by deploying seemingly unrelated bivariate Probit regression (Feldman, 2010); Hartmann and Werding, 2012; (Bauer

Conclusion

The paper examines the decisions to give money and/or time towards charity. Using a representative sample of 1000 individuals of the German population, we disentangle the decisions of donors, volunteers and joint givers, who give money and time. Our data suggest that the majority of contributors donate money, followed by joint giving, and a few people provide volunteer labour only. A more sophisticated analysis shows that unobserved characteristics are only weakly correlated among time and

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