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Data Summative: Income Levels vs. Charity Donations

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Susie Wang

on 15 January 2013

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Transcript of Data Summative: Income Levels vs. Charity Donations

Personal Income
Charity Donations By: Susie Wang Hypothesis There is a direct cause-and-effect relationship between personal income levels and amount of charity donations, where the increase of income leads to the increase in charity donations Introduction Government is making more cuts, public donations more and more important to sustain charities.

Donation Amounts in Canada:
$4.3 billion in 1997 to $8.3 billion in 2010

Average Income in Canada:
$30,600 in 1997 to $38,000 in 2010 Introduction The number of charitable organizations has risen from 22,000 in 1967 to over 80,000 today.
This increase is a direct result of the world’s rapid population growth, occurrences of natural disasters, and a rising need for education, health care, food, and many other worldly and community issues
Revenue Canada defines a registered charity as: a non-profit organization operating for the relief of poverty, the advancement of religion and/or education, or other purposes beneficial to the community as a whole in a manner which the law deems charitable This report will analyze and discuss the relationship between personal income and charity donations. As individual income increases, a person is more financially assured and thus becomes more willing to spend money on purchases and donations, thus leading to an increase in charity donations. Thesis In order for charities to maintain their functionality, they need to be aware of the factors which affect their funding, so that they can have a sustainable source of donations.
Helpful in planning and keeping Canadian charities’ funding sufficient so that they can continue to benefit the community and the world by relieving poverty, providing education and health services, and maintaining an overall aware and supportive society. Why is this important? Method:
Collect data from reputable sources (i.e. CANSIM database)
Organize into tables and figures via Fathom 2 and Microsoft Word
Calculate and analyze to determine trends
Compare with external research in case of extraneous/hidden variables

This is an iterative process - it is a repeated cycle which allows for the user to successfully gather and analyze large amounts of data CANSIM: Reliable and convenient source for up-to-date statistics and is updated daily by the Canadian government.
No bias/misrepresentation of data - government run
No sampling bias - all of the Canadian population is represented
Very unlikely response bias - formal government surveys which affect respondent's tax return amount An algorithm of collecting and analyzing data will be used: Analysis:
Variable 1 and Variable 2
Personal Income
Charity Donations Variable 1: Personal Income
One main factor which affects individual income is gender
In 2011, the average wage of Canadian women was only 82.6% of that of men.
Due to the continuous presence of gender bias in the workplace which results in women generally earning less than men. Data collected from 1997 to 2010; fourteen year span Average yearly income of all individuals in Canada, regardless of source (i.e. salary, lottery, collecting rent, etc.) Factor Affecting Personal Income Income before federal/provincial income taxes. Trend: increase of income, rise of over $10,000 from 1997 - 2010
Least-squares line has correlation coefficient of 0.97, means points are very close to the line, trend apparent
Overall increasing, recent drop in 2009 due to a hidden variable - 2008 economic turmoil
Stock market crash in 2008 led to countless people losing their jobs and started the Great Recession
Funds were low, unemployment rates skyrocketed, and the average income also dropped
But Canada’s economy is recovering and the income in 2010 of $52,000 is rising back up Variable 2: Charity Donations Total amount of charitable donations given to charities by Canadians per year

Charities included are those which are registered with the Canadian Revenue Agency (CRA) A discrepancy in the data: total donation figures from the CANSIM database also includes donations that were later denied by the CRA
Fraudulent donation amounts on line 340 of their personal income tax forms
i.e. In 2008 alone, the CRA denied over 2.5 billion dollars of fraudulent tax shelter gifting arrangement donations
Means that donation figures are approximate, but the trend is still valid since this discrepancy is present for all data Charity Donations - Con't Increasing at a high rate, from around 4.2 billion in 1997 to more than 8.2 billion in 2010
Correlation coefficient: r=0.94, shows a very strong relationship
Donation amounts dropped from 8.64 billion in 2007 to 8.19 billion in 2008, and then to 7.75 billion in 2009
Economic turmoil: many people in financial distress - decreased charity donations
2010: Recovering economy means a rise in charity donations Connecting the Two Variables:
Personal Income vs. Charity Donations Correlation coefficient: r=0.93, means that they have a strong correlation
Both variables are increasing, both decrease during the 2008-2009 recession
As personal income increases, people become more financially available, which leads to the increase of charity donations as well Supporting Factor of the Relationship Between the Two Variables:
Gender Trends In Canada, the average male consistently earns more than the average female, and also donates more Increasing trend of personal income and charity donations for both genders, but females are consistently earning less and donating less than males
Males earn more, therefore are able to donate more
Donations and income both experienced a drop in 2008 - Recession Female Donations:

Min: 1420690

Q1: 1799121

Median: 2227526.5

Q3: 2806976

Max: 2920275

Male Donations:

Min: 2852395

Q1: 3636560

Median: 4490288.5

Q3: 5361840

Max: 5728385 Further corroborates that income levels directly affect donation amounts. Supporting Factor of the Relationship Between the Two Variables:
Large Amount of Donors Have High Income An overwhelmingly large amount of donors have high income ($80,000 or more) In 2010, high income donors account for 53% of all donations while low income donors ($20,000 or less) account for only 3%
This illustrates that people with higher income have more to give and are more likely to donate, thus income levels are proved to directly affect donation amounts. Conclusion A clear cause-and-effect relationship has been determined between personal income and amount donated to charity
The independent variable of personal income causes the dependent variable of charity donations to change accordingly, where the rise in income levels directly causes the rise in donation amounts.

Relationship further supported by the various factors of both variables such as:
donation amounts & income by gender
amount donated by people with various incomes
recession caused a chain reaction in the two variables

Charities can make use of this relationship by targeting likely donors to continue donating, while encouraging less likely donors to start donating. Charities are an important and beneficial aspect to our society and it is crucial for the Canadian population to contribute to charitable causes.

$1 from each person in Canada would instantly raise $35 million for charity. Get donating! Thank you for listening!
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