In 2017, $410 billion was contributed to nonprofit organizations, and 70 percent of that giving came from individuals. Charitable giving is an important source of revenue for nonprofits. Although on average, only 13 percent of nonprofit organizations’ income comes from charitable donations , this average conceals substantial variation. Some nonprofits use donations to supplement fees they charge or government support they receive, but others rely on donations almost entirely. Charitable giving is strongly supported by and subsidized through the U.S. tax system.
A charitable gift is essentially a relationship between a donor and a nonprofit. So to understand charitable giving, we need to examine the traits and motivations of individual donors (the supply side), the characteristics and activities of nonprofits (the demand side), and the external social, economic, and political forces that influence the individual–nonprofit relationship.
Why does an individual choose to make a donation to a nonprofit? Individuals may donate to receive some sort of private benefit from their donation. When people donate, they can receive rewards ranging from concert tickets to schooling for their child to a building named after them. They may also receive social acclaim, entrée to an elite gathering, or renown for their wealth
But what about those who give to achieve more than private gain? Researchers ask whether people donate from altruism — a desire to increase others’ well-being or the public good — or because they want to achieve a “warm glow” — a sense of satisfaction just from making the gift.
Neuro-imaging studies suggest that both motivations exist. The same neural pathways are activated when people make payments to themselves, when they see a charity receive money, and when they choose to donate money to a charity. So people get both altruistic and warm-glow satisfaction from giving to charity.
But motivations still vary: some people experience a stronger neural response when they see a charity receive money than when they receive money themselves. Altruism versus warm glow is a useful way to distinguish two different motivations that both result in charitable giving.
The most proximate cause of a charitable gift is being asked to give. So when we ask what characteristics make some people more likely to donate than others, the answer is often about which characteristics make it more or less likely that the person will be asked to donate in the first place.
In the simplest sense, the larger a person’s network, the more likely it is that he or she will be solicited. But it isn’t just ego-to-alter-network ties that increase solicitation chances: memberships in voluntary associations, religious groups, or other “communities of participation” embed people in recruitment networks that make them more aware of opportunities to donate and nurture the social connections that facilitate solicitation. And when other people in one’s network are giving, there is social pressure to contribute as well.
Take involvement in religious organizations. Belonging to a religious organization, attending religious services, and participating in smaller religious gatherings are all associated with higher rates of charitable giving.
Although all major religions instruct on morality and teach adherents to care for others, it is not this “conviction” aspect of religion that matters for charitable giving. More important is that religious groups provide “community”—the organizational context where giving is mobilized.
Religious organizations provide “a place to hear about needs in the community, social networks that can be used to recruit volunteers, and subgroups that plan helping activities”. And participating in religious groups isn’t just associated with giving to religious organizations and causes; it’s also associated with secular giving. But it’s not simple attendance that’s associated with secular giving—it’s deeper participation in groups within the church and the networks those groups create. A similar dynamic helps explain the often-reported association between participating in voluntary associations and charitable giving. Or consider education, which is strongly linked to charitable giving. Education increases awareness of need and can lead to increases in income. But more importantly, education also draws people into group memberships that increase the likelihood that they’ll be asked to donate.
Charitable giving generally increases with income. This relationship is often described as a U; giving is highest among both lower- and higher-income people as a proportion of their income.