The Effect of a Major Catastrophe on Unrelated Charity Donations

Abstract

The 9/11 attacks claimed many lives and caused severe damages, but people responded with great support to the victims, among other things through financial contributions. This paper investigates whether donations to charities supporting the victims came at the expense of donations to other charities, a concern raised but not previously empirically studied. Using detailed panel data on donations to a culture and education charity, a difference-in-difference approach is used to compare donations from people in states with different impact intensity of the attack. While donations to the organization were record low in October 2001, the results show that donations from the more affected states did not decrease more than from less affected following the attack. The findings are robust to different measures of how affected a state was and for different time frames, but an overall effect applicable to all states cannot be rejected.