Do gloomy economists encourage people to stop giving?

Media coverage of philanthropy matters because it sends a message that the topic is important and worthy of national debate. The Financial Times has long been one of the best papers to cover philanthropy, and last Saturday they had a piece cheerfully entitled: ‘Even in a recession, giving can go up as well as down’:

But the piece goes on to describe 3 different types of motivation: ‘pure altruism’, social pressure and those who do it to feel good and get a ‘warm glow’ – and argues that only altruistic givers will increase their donations during a recession. Despite the cheery headline, it gloomily concludes, “All the economists I spoke to were pessimistic about the outlook for charitable giving in a recession”.

Glad as I was to see the piece in print, it seems to me the FT focuses on individual donor motivations at the expense of recognising other significant  factors, especially the norms that we hold as a society about giving. Since the year 2000, a huge amount of effort and public money has been spent on building a ‘culture of giving’ in the UK. The central thrust of government policy is encouraging people to think of supporting charity as a perfectly normal, even obligatory, part of life, as it is in the USA. Living in a society in which giving is “what everyone does” and is a simple, routine habit, can counter-balance, or even outweigh individual motivations.

But the opposite is also true – a society that’s pessimistic about the outlook for charitable giving and insists that donations will inevitably decline risks promote the opposite norm: “everyone else is cutting their donations, so I will too”. 

As I’ve said before, the current economic situation is clearly dire, but publicly panicking risks creating a self-fulfilling prophecy and even talking ourselves into a giving recession.

Of course charities worry about not having the resources they need to do their good work. But the research shows that there isn’t a straightforward relationship between economic conditions and the amount of philanthropic spending that takes place. People don’t make donations just because they can afford to do so; if they did then every rich person would be a philanthropist, and unfortunately they’re not!

Contrary to the reductionist approach taken by many economists, as depicted in the FT, philanthropy is not simply a financial transaction. It is first and foremost a social act that enables individuals to create and communicate a positive identity, whilst meeting their own need to live a successful, significant and meaningful life that is affirmed by others.

Despite the tough times we are in, people still have a need to look good, feel good and do good, so there is no reason to assume that the new age of philanthropy will not persist.

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