Great Recession Changed Attitudes Towards Charity: Study

By Mark Lieberman

Managing Director and Senior Economist

 

It’s not surprising that charities become more important during times of economic stress when the wealthy are called upon to make more donations to support favorite – or even not favorite — causes. Therefore, the findings of three Texas A & M economists that charitable giving fell during the Great Recession – and not just because money was tighter – does come as a surprise.

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In a paper released earlier this week by the National Bureau of Economic Research — The Great Recession and Charitable Giving – the trio,  Jonathan Meer, David H. Miller, and Elisa Wulfsberg, found sharp declines in overall donative behavior that is not accounted for by shocks to income or wealth.”

Meer, Miller and Wulfsberg looked at both the amounts given and the likelihood of making a donation, finding that giving had fallen during the Recession and, as significantly that it had not recovered by 2012, three years after the Recession ended, according to NBER which dates business cycles.

“These findings,” they concluded, provide evidence that other factors like changing attitudes toward giving or increased uncertainty, explain much of the fall in giving during the Great Recession.”

Their research covered the period leading up to the Recession.

“Giving begins to decline by 2008,” they wrote, “though the inclusion of income and wealth controls … account for much of this impact. By 2010, though, the likelihood of giving has fallen sharply, by 8.8 percentage points…to 4.5 percentage points.”

And, they added, “despite a partial recovery of the economy by 2012, the probability of giving falls even further relative to 2000 levels.”

The amount given also “falls dramatically during and after the Great Recession,” they found.

“Shocks to income and wealth do not account for this drop,” the authors concluded, “suggesting that broader shifts in attitudes towards giving or increased uncertainty are at work.”

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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