How Close to Home Does Charity Begin?
Creators: name: Brown, Pike
name: Knowles, Stephen
name: Grimson, Duncan
name: Brown, Pike
name: Knowles, Stephen
name: Grimson, Duncan
Publisher: name: Unknown
Year: 2020
Subjects: subject: Environmental Economics and Policy
subject: charitable giving
subject: declining radius of altruism
subject: field experiment

description: The majority of donors prefer to donate to charities with domestic foci rather than to charities with international foci. This finding is evident in observational, survey, and experimental data, implying a declining radius of altruism. In this paper, we analyse whether this declining radius of altruism also applies within countries; that is, are domestic charities given equal preference or do people prefer to give to local charities rather than charities based elsewhere in the country? If the latter, how quickly does the radius of altruism decline? In New Zealand, 8.7% of private charitable donations are allocated to international development (Cox et al., 2015), suggesting that New Zealanders strongly prefer domestic charities. Similar results have been found for the US (Casale and Baumann 2015), the UK (Mickelwright and Schepf 2009; Atkinson et al. 2014), and Canada (Rajan et al. 2009). To distinguish between location of charities and types of charities, Knowles and Sullivan (2017) incentivise survey participation by offering respondents a choice of earmarking donation to World Vision (a charity assisting families in need in developing countries) or the Salvation Army (a charity helping families in need in the home country) and find that 72% of New Zealanders selected the latter. The literature on locational preferences over charities within countries is less extensive, although Herzenstein and Posavac (2019) find that undergraduates at an East Coast university in the US preferred researchers to donate to East Cost charities over West Coast charities. Our research differs from Herzenstein and Posavac in that we conduct a field experiment with farmers who are tied to the land rather than a laboratory experiment with highly mobile university students. More importantly, we analyse whether people from 16 different regions of New Zealand are more inclined to give to two different types of charities (environmental and farmer welfare) in two different parts of the country (Otago and Bay of Plenty), enabling us to analyse in more detail how the radius of altruism diminishes the further away people live from where a charity is based. Our field experiment was incorporated into the Survey of Rural Decision Makers, a large-scale, web-based survey of farmers, foresters, and growers across New Zealand that has been conducted bi-annually since 2013. For the 2017 wave, participation was incentivised by offering a choice of charities to which respondents could earmark $10 donations upon completion of the survey. For a subset of respondents, the choice set consisted of four charities, two of which are located in the Otago region in the South Island and two of which are located in the Bay of Plenty region in the North Island. For each region, one of the two charities was an environmental charity and the other a farmer welfare charity. The two Otago charities were the Yellow-Eyed Penguin Trust and the Rural Support Trust for flood relief in Otago. The two Bay of Plenty charities were the Kaharoa Kōkako Trust and the Bay of Plenty Rural Support Trust for flood relief in the Bay of Plenty. The North Island kōkako is entirely restricted to New Zealand’s North Island while the yellow-eyed penguin breeds only as far north as the Banks Peninsula on New Zealand’s South Island; as such, the two species are geographically distinct, as were the two flooding incidents. Participants were provided with a brief description of the charity and a link to the charities’ web sites. Our results show there is a significant locational bias. Not only do people prefer to donate to charities in their own area, but the further away a charity is the less likely they are to support it. For example, people living in Otago are 50 times more likely to choose the Otago-based charity than are North Island based residents. Further, those living in regions bordering Otago are 14 times more likely to choose the Otago charity than are North Island based residents and those living elsewhere in the South Island are three times as likely as a North Island resident to support the Otago based charity. These results hold for both charities that support environmental causes as well as charities that support farmer welfare. As such, there is a very strong declining radius of altruism with respect to charitable giving. Two implications are immediately evident. First, survey researchers who wish to motivate participation via charitable contributions would be well served by including charities of local significance. Second, charities that support protection of endangered species should focus fundraising efforts in their own backyards.