Determinants of charitable donations by families in Canada: a regional analysis

Canada has recently changed the tax treatment of charitable donations, causing some uncertainty over how the level of donations may be affected. An analysis using a Tobit regression technique is applied to 5 regions of Canada - Atlantic Canada, Quebec, Ontario, the Prairies, and British Columbia. Four variables are found to be significant: 1. price, 2. income, 3. wealth, and 4. age. The analysis is applied to total charitable contributions and to religious contributions alone. The analysis shows that: 1. price and income tend to be more significant in explaining variation in charitable giving for all income groups in each region and for each income quartile in Canada as a whole, 2. where the price variable is significant, its coefficient is almost always negative, meaning the tax savings to donors are more than passed on to the charitable organizations, and 3. where income, wealth, and age are significant, these effects work in the expected direction.