Finding the Next Major Donor: The Relationship between Financial Planning Horizon and Charitable Giving

Abstract

Previous research has studied the characteristics associated with the presence and amount of charitable giving. However, few of these studies have explored the relationship between financial planning horizon and philanthropic donations, especially large donations. Using cross-sectional and longitudinal analysis of the Health and Retirement Study data, this paper explores the factors associated with charitable giving over time with a particular focus on financial planning horizon. This paper concludes that American adults who have longer financial planning horizons are more likely to make charitable donations compared to those whose planning horizon is short, i.e., less than six months. Among donors, major gifts are associated with long-term financial planning horizon, wealth, religious activity frequency, volunteer experience, and education.

Keywords: Charitable Planning, Financial Planning Horizon, Behavioral Finance, Financial Decision Making

JEL Classification: D12, G02, D31, D64