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An Economic and Ethical Approach to Charity and to Charity Endowments

Abstract We examine how and why donors divide gifts between people in the present (across distance) and between the present and future (across time). US donors tend to give less to charities that benefit the poor and more to charities that benefit the non-poor (such as museums, universities, and arts organizations). Many of these wealthier charities have created endowments that benefit not only present persons, but also future persons. We develop a shorthand framework for linking time to distance in charitable allocations that incorporates a “proximity preference,” i.e., charity that prefers those who are nearer to us whether by reason of physical distance, psychic-identity, or temporal distance. Even though ethical considerations suggest that recipients' level of need should be the dominant factor in allocating gifts, donors also express preferences, ceteris paribus, for benefits arriving sooner rather than later, and for recipients who are ``closer'' rather than farther away.