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Income Volatility and Wealth: The Effect on Charitable Giving
Abstract
Charitable giving in the United States provides a major source of funding for nonprofit organizations, but it is also a highly variable source of funding. A possible explanation for the substantial variability in giving lies in the measurement of income. In addition to permanent and transitory income, this article introduces the variability of income as a factor affecting charitable donations. The variability of income increases with the level of household income and varies by the source of income. In distinguishing types of income the authors are also able to shed some light on decision making by married couples. The effect of changes in permanent household income on charitable giving is significantly larger than that of transitory household income. Greater variability in the flow of annual household income has a negative effect on total giving. In addition, the authors find some significant differences in the impact on giving between the husband's and wife's earnings.
Journal
(2008)
vol37
no2
pages264-280
Categories
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Financing and Evaluting NGOs
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Fundraising
