Valentina Dimitrova-Grajzl, Peter Grajzl, A. Joseph Guse, J. Taylor Smith
January 20, 2016
Abstract
Since giving to religious organizations constitutes a substantial portion of total charitable giving, an understanding of the determinants of religious giving is a vital policy concern. Drawing on a novel congregation-level panel dataset, we examine whether religious giving is driven by preferences for racial group affinity, that is, loyalty to one’s own racial group. To address endogeneity concerns, we combine a fixed effects estimation framework with an instrumental variable approach. We find robust evidence consistent with the racial group affinity motive: a decrease in the percent of whites in the local community is ceteris paribus associated with a decrease in the total giving receipts collected by predominantly white congregations. The magnitude of this effect does not vary with the extent of racial residential segregation in the community. The effect, however, is driven by the congregations in urban (as opposed to rural) communities. We offer a possible explanation for this result.