The Giving Type? Heterogeneous Donation Styles and Lessons for Tax Policy
Abstract
This paper explores a novel dimension of charitable giving behavior in observational data: the structure and timing of donations themselves. Some people give to charity regularly, through automatic monthly contributions of fixed amounts. Others give to their favorite charities annually, at year end or on Giving Tuesday, which gives those donors better-timed tax deductibility and more control over amounts given, but with greater behavioral and transaction costs from the act of making the payment. Still others give, but do not do so regularly or consistently. The way people choose to give has real implications for charities themselves, which are better able to budget, plan, and build capacity when gifts are more consistent and predictable.Our study exploits a fundraising database of over one billion donation events from tens of millions of individual donors to hundreds of large, donor-driven charities, over many years. In 2022 alone, the donations recorded in the database account for $7.3 billion in charitable contributions from over 24 million individual donors. We describe the share of giving in the data from recurring monthly donations, from annual giving at specific times such as year-end or Giving Tuesday, and from irregular donors. We report changes in the relative share of these giving types within charities over time, and we estimate predictive models for the extensive and intensive margins of giving as a function of giving history and giving style.
We then estimate heterogeneous effects of the 2017 Tax Cut and Jobs Act on donation amounts, timing, and giving style using a causal random forest (Athey et al 2019) and the social-value network random forest (Williams et al 2023). The paper concludes with a discussion of policy lessons for fundraisers and policymakers on the relationship between tax policy, level and manner of giving, and revenue volatility for charitable organizations.