Research Roundup: The link between community diversity and sub-fund contributions
Research Roundup is a regular feature contributed by Dr. Alexandra Williamson of the Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) at QUT. Each month, Dr. Williamson brings us the latest research into community philanthropy from around the world.
What are we reading this month?
“Community Diversity and Donor Control: An Empirical Analysis of Contributions to Donor-Advised Funds at Community Foundations”
Who wrote it?
Dr Ellie Heng Qu, The Bush School of Government & Public Service, Texas A&M University, USA
Professor Laurie E. Paarlberg, Indiana University–Purdue University Indianapolis (IUPUI), USA
What’s their day job?
Ellie is an Assistant Professor (in Australia, we would call this role a Lecturer) in the Master of Public Service and Administration (MPSA) program.
Laurie is the Charles Stewart Mott Chair on Community Foundations; and Professor of Philanthropic Studies at the Lilly Family School of Philanthropy.
Who published it?
A highly ranked academic journal titled “Administration & Society”.
Where’s the research based?
The research examines a sample of 738 community foundations across the US (549 that offer DAFs to donors, and 189 that do not) that electronically lodged a Form 990 in 2013 and 2014. These forms are the US equivalent to an Annual Information Statement in Australia (but broadly, provide more and more detailed data than an AIS).
Their data on community level socio-economic variables, including ethnic and racial characteristics, come from the 2011–2015 U.S. Census Bureau American Community Survey 5-year estimates.
What’s it about?
The research examines contributions to donor-advised funds (DAFs) held by community foundations (in Australia, we often call these sub-funds or sometimes management accounts). By giving to a DAF, donors retain advisory control over their fund distribution based on individual preferences. This study shows that greater ethnic/racial diversity is significantly associated with higher levels of contributions to DAFs at community foundations but not with general contributions that are redistributed at the discretion of the foundation to respond to collective community needs.
Why should I read it?
Qu and Paarlberg’s study is the first to examine the relationship between ethnic-racial diversity and contributions to donor-advised funds. Its insights are especially interesting as they contradict traditional wisdom. Previous research had shown that greater diversity within a community was connected with lower private contributions (e.g. philanthropic donations) to public goods (e.g. for public or community benefit purposes). However, Qu and Paarlberg find that contributions to DAFs hosted by community foundations increase as local community ethnic-racial diversity increases, even when controlling for various community and organizational characteristics. Particularly fascinating is their discussion of in-group bias in diverse communities, and how this may influence individual donor preferences.
For an Australian audience, this paper is useful because it distinguishes between general contributions (those granted by a community foundation on behalf of the community’s collective interests) and contributions to DAFs (which in the US allow donors to retain control over their fund distribution based on their personal preferences). This distinction is not made in Australian community foundations’ Annual Information Statements, and indeed Australian public foundations don’t have to report on whether, and how many, sub-funds they manage.
Lastly, for those interested in the tension between a community foundation’s focus on collective community needs and DAF donors’ personal preferences, this paper is a fascinating read.
One short direct quote
“…unlike much research on charitable giving that focuses on individual and organizational levels, our study shows that philanthropy is a social act shaped by place-based characteristics” (p.784).
Okay, so where’s the link?
The full text of the article can be freely downloaded here.
Full citation:
Qu, H., & Paarlberg, L. E. (2021). Community Diversity and Donor Control: An Empirical Analysis of Contributions to Donor-Advised Funds at Community Foundations. Administration & Society, 54(5), 763-791. https://doi.org/10.1177/00953997211035721