Economic analysis

Economists: diversity drives down charitable donations in Canada

Heterogeneous communities less keen on giving, new paper finds

Kathryn Harper/Flickr

With Santa soon to climb down (the believers’) chimneys, a new study found rather un-Christmassy evidence that ethnic and religious diversity tends to drive down charitable giving in Canada.

McMaster University’s Abigail Payne and David Karp, Wilfrid Laurier University’s Justin D. Smith, along with James Andreoni from the University of California, San Diego, found that a 10 percentage point increase in a neighbourhood’s ethnic diversity leads the average household to give $27 less per year to charity, out of an average donation of about $200. That’s a 14 per cent drop. Increases in a neighborhood’s religious diversity also tend to make households stingier—albeit to a lesser degree. A 10 percentage point increase reduces donations by $20, or 10 per cent.

The authors reached their conclusion after comparing data on charitable donations with census data covering a 10-year time span. The numbers showed that, as immigration drove up diversity, it also tended to drive down donations.

A few more politically incorrect findings: high-income households with lower education levels–which probably means the “nouveau riche”–are the most sensitive to changes in the ethnic compositions of their neighbourhoods; Catholics (particularly wealthy, highly-educated ones), meanwhile, tend to give or withhold the most depending on variations in the religious diversity of their hood.

Also interesting: families who habitually give to charity continue to donate regardless of who their neighbours are–though the amounts change based on the ethnic and religious make-up of the community. On the flip side, the neighbourhood scrooges are unaffected by what people living down the block look like and believe in–they continue not to give.

Of course, it’s possible that something else–an unrelated variable the authors didn’t notice–rather than diversity caused those changes in Canadians’ charitable behavior over the past decade. That seems unlikely though. The findings, as the authors themselves highlight, are similar to other studies in various countries that conclude that heterogeneous communities tend to spend less on public goods—like roads and schools—and register a lower involvement in social activities—like contributing to local fundraising events. This paper shows the trend holds true for charities as well, and that Canada is no exception.

Obviously, the research does not per se constitute an argument against immigration and multiculturalism, which have plenty of other economic advantages, especially when it comes to the production of private goods. It just points to something policy makers and NGOs should probably know to plan for.

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