Published on August 12, 2010

Charitable giving: paying for the cuts, or a pathway to the Big Society?

Philanthropy, and in particular financial charitable giving, is “so 2010”, says the Guardian’s editorial last Saturday. The politics of individual giving is certainly on the agenda of late, not least because of the news of the 40 American billionaires committing to a “giving pledge” and signing-up to give half of their fortunes to charity. How much of a ‘successful trend’ philanthropic giving has become is rather debatable, however. Back over in Blighty, and making slightly less of a glam splash across both the broadsheets and the tabloids, was last month’s suggestion from the Minister for Civil Society that all who are “financially able” should give 1% of their income to charity. This was the first step from the coalition government to push the charitable giving aspect of the Big Society, where as part of the five cornerstones needed to deliver the Big Society, ministers have pledged to “take a range of measures to encourage charitable giving and philanthropy”.

If this is one of the key methods the coalition government hope to help the voluntary sector cope with the slashing of the £13bn it spends each year on the charity sector, then they may be in for an unpleasant surprise. The latest Citizenship Survey has found that charitable giving has declined over the past five years, whilst the average donation per head has remained static. Recent research also found that donor recruitment has significantly fallen on both the street and the doorstep. And only a fortnight after Nick Hurd urged us to part with 1% of our income, research found that more than a fifth of people plan to significantly reduce the amount of money they donate regularly to charity. One-off individual giving to global disaster relief also appears to be suffering, with British public donations to the Pakistani flooding currently flowing at a slower rate than previous appeals, despite ex-PM Gordon Brown insisting this morning that there is not a giving or compassion fatigue in the UK.

So, if the government really does want charitable giving to become a part of the Big Society, what needs to change? What works and what doesn’t? Innovative and attractive ways for individuals to give must be sought, as well as assurances it will indeed make a difference. Donating by text for example provides an easy and accessible way for us to give, however news that as little as four-fifths of money donated by text reaches good causes will hardly inspire the British public to give more. The government needs to ask other key questions if it is serious in encouraging us to give more in times of austerity, for example who gives and who doesn’t? The Pathways through Participation project’s literature review concluded that the typical charitable givers are likely to be professional, white, females more than males, over 24, religiously affiliated and living in a childless household; interestingly it also found that higher earners are more likely to give, but not proportionately.

Key to the success of the Big Society, we also need to ask how the way people give to charity impacts on and links to other forms of participatory behaviour such as public engagement and volunteering. The Pathways through Participation project is exploring how and why trends of individual participation start, continue, and connect throughout the life course. Reacting to research such as this, the government may begin to get an idea how individual giving and other forms of participation can go beyond being a ‘trend’, and instead be shaped into part of a sustainable and enduring Big Society.

Eddie Cowling

2 Responses to “Charitable giving: paying for the cuts, or a pathway to the Big Society?”

  1. Aditya
    August 18, 2010 at 11:13 am

    Eddie,
    Interesting piece with some good sources. I do think that expecting people to give — their time, their effort, their money — to building some notional Big Society is unrealistic, politically and psychologically. Normally i would hesititate to link to a piece of mine, but since it is relevant:

    http://www.guardian.co.uk/commentisfree/2010/aug/17/rich-not-fund-cameron-compassion-strategy

    All best,
    Aditya

  2. Dr. Chris Olivola
    August 26, 2010 at 11:14 am

    Dear Eddie,

    Both your article and Aditya’s are very interesting and bring to light some important questions about the merits of shifting from mandatory (e.g., higher taxes) to voluntary (e.g., more appeals to donate) redistribution. As a social-scientist who studies charitable giving decisions, I thought I might offer a few insights from the research literature:

    Regarding whether the wealthy will respond to Cameron’s call, I would not get my hopes up, especially in the UK (compared to the US). Let me explain:

    Research suggests that people strongly prefer voluntary over mandatory giving (1). In fact, people (even British citizens) will go to great (sometimes irrational) lengths to avoid paying taxes (2). Furthermore, people respond to higher taxation by giving less (3). Since the tax system in the UK is more redistributive than in the US, the UK’s wealthy may believe that they are already giving enough by paying taxes. Having been socialized in a (relatively) redistributive society, they may feel that it is the British government’s role to redistribute wealth and deal with humanitarian issues, not their own responsibility. This contrasts with the US, where even low- and middle-class Americans (who stand to gain from redistribution) have a surprisingly strong aversion to the idea of centralized redistribution (witness the popularity of W. Bush’s tax cuts). There is also a culture of giving in the US which seems to go hand-in-hand with its libertarian streak.

    For these reasons, I’m skeptical about the success of appealing solely to the notion of “Big Society”. That’s not to say that we cannot find ways to promote giving. So how can we (or Cameron, for that matter) promote giving among the wealthy? Many insights can be gleaned from the research literature, but let me offer three examples that I find most likely to be effective (references provided below):

    First, the government (or another body) could publicize (e.g., in an annual report) how much the UK’s wealthy are giving (on an individual basis). This might shame them into giving more and, we’d hope, promote a healthy amount of competitive giving (4, 5).

    Second, research suggests that people are willing to give, but “not right now” (6). In other words, we’d rather put off giving till some future time when we have more money (much like we’d rather put off exercising till later, when we have more time). Of course, that time will never come, so people keep putting off giving forever. Fortunately, we can take advantage of this by having people commit, ahead of time, to giving a portion of their money in the distant future. For example, they might sign a contract to give a portion of their future monthly earnings to charities. This delaying of donations makes the pain of giving less salient (7).

    Third, we can appeal to self-interests –a surprisingly powerful force, even when it comes to giving (8)– by highlighting that giving is associated with greater happiness (9).

    These are just a few of the many ideas for promoting charitable giving that are coming out of the psychology and behavioral economics literature (10). Given Cameron’s fondness for the behavioral economics approach (11), his government should find these idea appealing. Personally, I would love to see them applied.

    Sincerely,
    Chris

    References:

    (1) Harbaugh, W. T., Mayr, U., & Burghart, D. R. (2007). Neural responses to taxation and voluntary giving reveal motives for charitable donations. Science, 316, 1622–1625.

    (2) Sussman, A. B., & Olivola, C. Y. (2010). Axe the tax: Taxes are disliked more than equivalent costs. Manuscript under review.

    (3) Eckel, C. C., Grossman, P. J., & Johnston, R. M. (2005). An experimental test of the crowding out hypothesis. Journal of Public Economics, 89, 1543–1560.

    (4) Cialdini, R. B., & Goldstein, N. J. (2004). Social influence: Compliance and conformity. Annual Review of Psychology, 55, 591-621.

    (5) Rachel Croson & Jen (Yue) Shang (in press). Social Influences in Giving: Field Experiments in Public Radio. In D. M. Oppenheimer & C. Y. Olivola (Eds.) The Science of Giving: Experimental Approaches to the Study of Charity. New York: Taylor and Francis.

    (6) Pronin, E., Olivola, C. Y., & Kennedy, K. (2008). Doing unto future selves as you would do unto others: Psychological distance and decision making. Personality and Social Psychology Bulletin, 34, 224-236.

    (7) Meyvis, Tom, Daniel M. Oppenheimer, and Aronte Bennett (in press), Pre‐Commitment to Charity. In D. M. Oppenheimer & C. Y. Olivola (Eds.) The Science of Giving: Experimental Approaches to the Study of Charity. New York: Taylor and Francis.

    (8) Ratner, R.K., Zhao, M., & Clarke, J. A. (in press).“The Norm of Self-Interest: Implications for Charitable Giving.”. In D. M. Oppenheimer & C. Y. Olivola (Eds.) The Science of Giving: Experimental Approaches to the Study of Charity. New York: Taylor and Francis.

    (9) Anik, Lalin, Lara B. Aknin, Michael I. Norton, and Elizabeth W. Dunn. (in press), Feeling Good about Giving: The Benefits (and Costs) of Self-Interested Charitable Behavior. In D. M. Oppenheimer & C. Y. Olivola (Eds.) The Science of Giving: Experimental Approaches to the Study of Charity. New York: Taylor and Francis.

    (10) D. M. Oppenheimer & C. Y. Olivola (Eds.) The Science of Giving: Experimental Approaches to the Study of Charity. New York: Taylor and Francis.

    (11) http://blog.ted.com/2010/02/16/the_next_age_of/

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