Why is Charity Important: Motives and Implications of Charity

Introduction

In modern society, charity is carried out in various forms. Individual charity, which any person can engage in, is usually carried out in such forms as alms, volunteering, contributions to charity funds, and participation in various charity events. Private charity, which is nowadays conducted by entrepreneurs and commercial organizations, may be presented in the form of patronage of arts, sponsorship, grants, or the establishment of charitable foundations. The state also provides assistance to those in need in the form of guardianship, but there is no consensus in the literature on whether such activities of state structures can be considered charitable. Nowadays, charitable foundations that can be established in the commercial sectors and enterprises of the third sector (non-profit and non-governmental organizations) are increasingly involved in charity. Understanding why is charity important is crucial to fostering a more compassionate and supportive society.

Charitable foundations are divided into private, corporate, and community foundations. Private funds are created with funds received from private individuals, which are stored in banks or placed in shares, and capital income is used for charity purposes. Corporate foundations are also donor organizations that create and finance companies to manage their charitable programs. These funds are not independent, unlike private and community foundations, they directly depend on the goals and priorities that the company sets itself. Community foundations are foundations that are created to solve problems in a particular area. These funds accumulate funds for solving these problems coming from various sources, from private donations of the population to the funds of municipal budgets.

Internal and External Types of the Motives

Overall, motivation can be induced by internal and external stimuli. The first category is a type of motivation in which initiating and regulatory factors arise from the personal consciousness and are completely inside the behavior itself. On the other hand, external motivation is a motivation in which factors affecting a person’s behavior are outside the person’s consciousness or outside of his behavior. While comparing intrinsic and extrinsic motivations the former can be long-lasting and self-sustaining. As a rule, external motivation is used to achieve results that cannot be obtained by internal motivation (Ryan and Deci, 2000). Aside from external motives for charitable giving, which can be material rewards, tax cuts, or creating a fair name, there are internal motives for being a donor, for instance, a sense of the importance of such type of activities, inherent interest, satisfaction, and altruistic motives.

Motives of Charity

Different researchers argue about the true motives of donors. Thus, for example, a connection was found between charitable behavior and personality traits such as extraversion, integrity, and social coherence (Nettle and Liddle, 2008), a relationship with a tendency to empathy (Eisenberg, Miller, 1987), good mood combined with a focus on others (Gibbons, Wicklund, 1982), the importance of such values as religiosity (Clary, Snyder, 1991; Omoto, Snyder, 1993), the influence of situational factors (Latane, Darley, 1970) and components of motivation, such as a sense of personal contribution and positive emotions (Andreoni, 1989; 1990; Ribar, Wilhelm, 2002). As a result of the studies Zhukov (Zhukov,2002) grouped donors’ motives into three main categories 1) charity as the moral attitude of the donor (public duty, personal knowledge of the problems of people who need help, and understanding the need for state support in the field of culture, science, and education), 2) emotional reactions (compassion, pity and internal desire to help those in need), and 3) practical benefits (creating a positive image of the company, advertising, improving relations with the authorities and creating a good reputation for yourself).

Economic Aspects of Charity

In the macroeconomic aspect, charity is a state-independent mechanism for the redistribution of private funds in the interests of implementing socially useful programs. This is a kind of voluntary taxation mechanism in which “taxes” are paid voluntarily and not to the centralized “budget”, but directly to the budget of the program executor. A charitable resource can take any form: money, services, property, or labor. An important feature of charity is that, in addition to benefiting a specific person or group of people, it is socially beneficial in general, in other words, individual assistance to a specific person is at the same time assistance to the whole society. The whole society benefits from the fact that a particular person wins. This is possible if only the welfare of this person is the subject of public concern, the function and responsibility of society, state and self-government, namely each member of the society bears the burden of providing it.

The Effect of the Income Level on Charity

A positive correlation between income level and the amount of charitable giving was found. In USA, for instance, Auten and Rudney, using data on federal income taxes for the years 1971-1975 (Auten, Rudney 1990), studied this phenomenon. Furthermore, Jones and Posnett studied the expenses of British families from the same point of view (Jones, Posnett 1991). Researchers were interested in both the extent of involvement in donations and the size of contributions. This study showed that engagement reflects the influence of education, gender and prestige of the position, however, the level of donations is sensitive only to the level of family income. Family income, according to these authors, is a variable based on which you can predict the total amount of donations.

Tax Benefits

Let us now consider the factor of the provision of income tax benefits for donors. Studies have long been conducted aimed to explore the relationship between the amount of donations and benefits. In one of the first studies on this subject, Rice concluded in that tax deductions for charity are an important factor in determining the level of down payments (Reece 1979). Several recent studies have clarified and confirmed the findings of this scientist in accordance with modern tax laws (Peloza, Steel 2005). In contrast, Bradley, Holden, and McClelland showed that tax breaks in detailing do not always affect the amount of contributions (Bradley, Holden, McClelland 2005). While there is no other evidence for phenomenon, this fact can be considered as, possibly, a shift in the field of donor motivation.

The Effect of Gender on Charity

In a number of scientific works, researchers showed gender differences in the level of participation in charity (Odendah 1990; Havens, O’Herlihy, Schervish 2006). Some studies show that men donate more, while women do it more often (Jackson, Latané 1981; Weyant 1984; Andreoni, Brown, Rischall 2003; Bekkers 2004; Giving UK 2005). National philanthropic surveys in the USA (Hodgkinson, Weitzman 1992; 1994; 1996; Kirsh, Hume, Jalnadoni 1999) showed that women were more likely than men to advocate for contributions to the nonprofit sector. Therefore, according to a 1991 survey, the differences were 74% in women versus 70% in men; in 1993, 76 against 70%, respectively; in 1995 - 71 against 65%; in 1998 - 73 against 67%. M. Capeck opposed giving gender differences too great significance, however considering cases of transfer of inheritance rights, she nevertheless found that the number of unmarried women leaving a testament to the estate in favor of charity significantly exceeds the number of those who act in this way men (44 vs 32%) (Capek 2005). Eckel and Grossman, using an experimental approach, found that women are generally more altruistic than men (Eckel and Grossman 1998). On the contrary, Bolton and Katok, also relying on experimental studies, wrote about the absence of any difference in participation in charity among men and women (Bolton, Katok 1995). Meanwhile, Andreoni and Vesterlund offered an explanation of these conflicting results and showed that men tend to be more generous than women when the contribution is less, that is, the loss is less painful for the donor, while women are more likely to give when the price of the contribution is relatively high (Andreoni, Vesterlund 2001). To sum up, these authors argue that women, compared with men, are more interested in justice and equality, this consideration is consistent with the hypothesis that women are more socially oriented than men. Despite the fact that there are a lot of evidence, there is no general consistent and reliable theory of the influence of gender on the level of participation in charity.

The Effect of Age on Charity

Another factor that has traditionally been considered in the studies of private charity is the age of the donor. Its significance is understandable, since age characterizes the stages of the life cycle and, therefore, to a certain extent reflects the stability of the situation and the financial capabilities of a person. Summing up the results of various studies, Bekkers and Wiepking conclude that the usual conclusion about the relationship between the age and the size of donations is positive, but with a diminishing effect (Bekkers, Wiepking 2010:4). Some authors write that a positive effect is observed up to 75 years (Hodgkinson, Weitzman 1996; Andreoni 2001), after which there is a decrease, others find such a decrease from the age of 65 (Landry, Lange, Price, Rupp 2006).

The Effect of Education on Charity

Philanthropic scholars also pay much attention to the role of education. Based on material from Western countries, it is shown that more educated individuals show a greater propensity for donations and, ceteris paribus, donate relatively large amounts. For example, Banks and Tanner found that in the UK people who graduate from college participate in charity more often. Comparing two categories of people who are the same in all respects, except that some of them graduated from college and others only school, it was found that college graduates are 11% more likely to donate (Banks, Tanner 1999: 175). According to the same study, the amount of donations from people with higher education is also significantly higher: they donate 80% more to charity than their non-certified colleagues. In the analysis of charity activities of households, Yen also finds a similar relationship between level of education and charity. After analyzing the data from the 1995 consumer spending survey, he comes to the following conclusion: the intention to engage in charity occurs in those families that have a high income level and are headed by adults and educated individuals (Yen 2002: 839). Banks, Tanner, and Yen use similar econometric methodology for analyzing the relationship between educational attainment and charitable activities and recognize the impact of variables such as age and income on educational attainment. That is why it is difficult to analyze the relationship between education and charity, not taking into account the mutual influence of all indicators.

The Effect of Religion on Charity

The results of studies of massive private donations demonstrate the high importance of the religious factor. In the sociology of religion, there is a large amount of literature on the relationship between religious activity and donations (Wuthnow 1991; Jackson, Bachmeier, Wood, Craft 1995). Moreover, the role of religion in the implementation of philanthropic practices is being studied in other scientific disciplines.

A positive relationship between church attendance and philanthropy is noted in almost every article devoted to the study of this issue. The religious factor explains a lot both in the motivation of philanthropic behavior, and in the selection of objects of support from donors. For example, using data from the US tax office, researchers found that more than three-quarters of the donations that Americans make with incomes of $ 50,000 or more go to religious organizations (Anft, Lipman 2003). In addition, as Steinberg and Wilhelm showed, donations to religious organizations are made by 21% of Americans who do not profess a single religion (Steinberg, Wilhelm 2003). It is important to note that the authors excluded from this analysis respondents who did not disclose information about their religion or found it difficult to answer this question. Interpreting these data, the mentioned authors hypothesize that charity, as such, is associated with a religion, which in itself encourages people who do not profess any religion to make donations, and those who profess any religion are ready to donate much more.

Possible Problems in Charity

Despite the fact that charity is a popular phenomenon nowadays, not every country has a well-structured system. Let us take Russia as an example and highlight some problems in charity. The main ones are 1) unfavorable taxation system for donors; If it was legislatively approved that funds allocated for charity went to the expenses of the enterprise, thereby reducing taxable profits, then there would be much more contributions and donations. For instance, the USA became the first country in the world to make charity advantageous when, in 1921, the amount of taxes on the donated amount was reduced, 2) unstable economic situation, which at any moment can turn into losses and require unplanned expenses and investments. Therefore, you always need to have a reserve in order to cover losses, and 3) distrust of public organizations. In can be because everyone clearly remembers the troubled times of Perestroika, when a huge number of fraudulent enterprises were created.

Why Charity Is Important: Benefits of Charity

Overall, there are two views on the interdependence of a person’s level of happiness and his or her attitude to charity. The first is stating that people help others become happier. Elizabeth Dunn, professor at the University of British Columbia and co-author of the book Happy Money, proved the dependence of happiness not only on income but also on spending. Thus, out of 600 respondents, regardless of income level, those who indicated donations to charity as expenses were considered happier. (Dunn and Norton, 2014). Afterward, scientists compared the level of happiness in two states as diverse in economic and social levels as Canada and Uganda. The results were confirmed: people both felt happier when they spent pro-socially versus on themselves. Thus, the emotional benefits of helping others are inherent in all human beings, regardless of their social status and economic well-being. (Aknin et al., 2013). Moreover, an analysis of the survey included 130 different countries that showed that financial generosity is one of the top six life satisfaction predictors worldwide. The second view on the dependence of happiness and charity is that happy people make donations more actively. In 1972, Isen and Levin demonstrated that happiness increases donations, in other words, they showed that participants were more likely to help others after experiencing positive events, for instance receiving cookies.

Literature Review

The theoretical and methodological foundations of the study served as fundamental concepts and hypotheses presented in classical and modern works of researchers. The practical significance of the study lies in the fact that it develops and supplements the theoretical and methodological base for the study of charity by establishing the special features of this activity, revealing the significance of the basic ideas of the socio-economic activities of charitable organizations. The main provisions, conclusions, and recommendations proposed in the dissertation research can be used for the effective development of charitable organizations. Mainly if we know what motivates people to participate in any kind of charity we can effectively increase donations. The majority of the existing researchers are conducted only in particular area, for example, charitable givings in the UK, Russia, in the USA. This work is based on gathering information and identifying similarities and differences from all over the world. The following survey includes questionnaire of people from different countries. This can add a deeper understanding of the pure motives of donors to the already existing researches. Furthermore, interviews will be based on the talks with a woman from a charitable organization in Russia and with the chief executive of the “Public Opinion” foundation, who is a sociologist, so she will help us by providing an analysis of the participants of charity.

Conclusion

Frankly speaking, the current socio-economic situation in Russia is accompanied by unfavorable factors of social development associated with the manifestation of negative trends, such as increased social differentiation, increased poverty, and significant income inequality. In such conditions, the number of socially vulnerable groups of the population in need increases. Analyzing this information, this research work can be said to be up-to-date and will contain information that has not yet been widely discussed. In addition, one of the main objectives of the interview will be to clarify why these donors have chosen to dedicate their lives to these activities.  

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