Diversity and Donations: The Effect of Religious and Ethnic Diversity on Charitable Giving

Using 10-year neighborhood-level panels derived from personal tax records in Canada, we find that local ethnic and religious diversity are inversely related to charitable donations. A 10 percentage point increase in ethnic diversity is associated with a 14% reduction in donations. The same increase in religious diversity implies 10% lower donations. The ethnic diversity effect is driven by non-minorities, especially in high income and low education areas. The religious diversity effect is driven by Catholics, especially in high income and high education areas. Interestingly, despite its depressive effect on dollars donated, diversity appears uncorrelated with the likelihood of giving.