Panel Paper: Sustained Support? Analyzing the Response Function of Charitable Giving Following a Natural or Man-Made Random Shock

Thursday, November 6, 2014 : 10:15 AM
Dona Ana (Convention Center)

*Names in bold indicate Presenter

Jaclyn D. Petruzzelli, Shena R. Ashley and Stuart Bretschneider, Syracuse University
In the year following Hurricane Katrina, charities raised $3.3 billion for relief and recovery efforts. Similar spikes in philanthropic giving were recorded in the year following the terrorist attacks of September 11th, 2001, the 2004 Indian Ocean earthquake and tsunami, and the 2010 Haitian earthquake. Beyond the first year after a disaster, however, we know little about the trends in charitable contributions to organizations that were involved with relief and recovery efforts. Using data from the National Center on Charitable Statistics, our analysis employs econometric models to construct response functions for philanthropic revenues during the year of and the year following natural or manmade disasters that occurred between 1998 and 2003. The paper will focus on two related effects: a net positive impact on giving to related sectors of the non-profit community and a potentially net reduction in contributions to non-profit sectors unrelated to responding to the disaster. These hypotheses are based on the expectation of both an income effect and a substitution effect. Increased giving to one type of activity is likely to result in reduction to other charitable organizations over time. The paper will also investigate the pattern of response for both effects over time. Here we anticipate an inverse pattern where shocks will increase giving well above previous levels immediately, but over time, giving will drop back to, and potentially below, normal levels before returning to equilibrium. An opposite pattern is expected for unrelated sector organizations where we anticipate immediate drops in giving followed by a return to equilibrium levels over time.

Full Paper: