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Social capital and community philanthropy: the impact of social trust and social networks on individual charitable behavior and community foundation development

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Social capital and community philanthropy: the impact of social trust and social networks on individual charitable behavior and community foundation development

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SOCIAL CAPITAL AND COMMUNITY PHILANTHROPY: THE IMPACT OF
SOCIAL TRUST AND SOCIAL NETWORKS ON INDIVIDUAL CHARITABLE
BEHAVIOR AND COMMUNITY FOUNDATION DEVELOPMENT

by

Lili Wang

A Dissertation Presented to the
FACULTY OF THE GRAUDATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
DOCTOR OF PHILOSOPHY
(PUBLIC ADMINISTRATION)

August 2007

Copyright 2007 Lili Wang
ii
DEDICATION

I dedicate this dissertation to my son, Daniel,
and my parents, Xinsen Gu and Zhifang Wang
iii
ACKNOWLEDGEMENTS
This dissertation would not have been possible without the support of two
great women in my life: my mother, Xinsen Gu, and my advisor, Dr. Elizabeth
Graddy. I am indebted to my mother who inspired me to go abroad and study for a
doctoral degree, made me believe in myself when I lost faith and encouraged me to
reach for the best. I would not be where I am now without her vision, persistence
and support of my education. In addition, she supported me enormously by taking
care of my son, Daniel, while I wrote this dissertation. Words hardly can express the
depth of my gratitude to my mother.
I also am truly grateful to Dr. Graddy not only for the academic guidance she
has provided during the dissertation process but also for the wisdom she has shared
with me in daily life. She not only has taught me how to research and teach but also
set an example as an outstanding professor who cares about students and always
pursues excellence in her job. During my studies in the program, Dr. Graddy
provided me opportunities to learn and grow in various positions—teaching, research
and management—in the academic environment. I consider myself lucky to have
her as my advisor and as a role model. I hope I can be as helpful to my students as
she has been to me in my future academic career.
My appreciation also goes to my dissertation committee members, Dr.
Richard A. Sundeen and Dr. Guilbert C. Hentschke, whose comments and
suggestions have improved the theoretical framework of my dissertation and
strengthened its arguments. I want to especially thank Dr. Sundeen for agreeing to
iv
serve in my dissertation committee at the last moment, and for taking time from his
sabbatical to read my dissertation and provide timely and detailed feedback. I am
very impressed by and appreciative of the humbleness and patience he has shown in
our collaborative research project. Working with him not only has increased my
knowledge of volunteering behavior but also improved my writing skills and boosted
my confidence. I am very grateful to Dr. Sundeen.
During my years of studies in the doctoral program, I was fortunate to have
opportunities to work for various research centers and programs at the University of
Southern California (USC). These working experiences not only have provided me
financial support but also sharpened my skills in research, teaching and management.
I must thank the professors who have supervised me in these various jobs. Working
for the Center on Philanthropy and Public Policy has shaped my research interests in
the nonprofit sector and eventually led to this dissertation. Part of this study was
funded by a grant from the center. I am grateful to the director of the center, Dr.
James Ferris, for his support, and for the references and recommendations he
provided for my applications to grants, fellowships and jobs. Working as a teaching
assistant for the International Public Policy and Management program at USC was a
rewarding experience. The faculty, staff and students of the program gave me a
sense of family. I must thank Dr. Joanna Yu and Dr. Joyce Mann for this great
opportunity. I also am thankful to Dr. Shui Yan Tang for his support during the
years I worked as the Master of Public Administration program assistant. I especially
appreciate him for involving me in organizing the 8
th
Public Management Research
v
Conference, which gave me the opportunity to interact with many leading scholars in
the public administration field.
Thanks are due to the USC Graduate School for providing a dissertation
fellowship, which allowed me to finish writing. I also would like to thank the Aspen
Institute and the Association for Research on Nonprofit Organizations and Voluntary
Action (ARNOVA) for a dissertation fellowship, which provided the opportunity to
exchange dissertation proposals with doctoral students from other institutions and
receive feedback from senior scholars in the field of nonprofit studies. My special
thanks go to Dr. Alan Abramson, Dr. Richard Steinberg, Dr. Leslie Lenkowsky and
Dr. Melissa Stone for their suggestions and comments on my dissertation proposal.
Dr. Steinberg also provided me sources of information on the research methods I
used for the data analysis of the study. I also must thank Dr. Eleanor Brown for her
prompt, tireless and very helpful responses to my questions on data analysis. In
addition, I appreciate the travel grant from the Nonprofit Academic Centers Council
(NACC), which allowed me to attend the decennial Benchmark3 Conference on
Nonprofit and Philanthropic Studies and learn from other scholars in the field.
Many staff members at the School of Policy, Planning, and Development
(SPPD) have helped me enormously during my studies and work at USC. I want to
thank Connie, Kattie, Carol, June, Olivia, Jean, Mia, Susan, Cynthia, Carman,
Daniel, Marisol, Ann and Frank for their excellent administrative assistance. I also
am thankful to my friends Michael, Erly, Emel, Sukuma, Hyunsun, Nutta, Zhou and
Bin for sharing their knowledge and experiences in the doctoral program.
vi
I dedicate this dissertation to my son, Daniel, for the joy he has brought to me
and the whole family. I wish I had more time to spend with him. I also dedicate this
dissertation to my father, Zhifang Wang, and my mother for their unwavering
support of my education. Last but not least, I want to thank my husband, Weirong
Zhu, for his love and support during my pursuit of a doctoral degree. I share the joy
of finishing the dissertation and getting a Ph.D. degree with him.
vii
TABLE OF CONTENTS

DEDICATION .............................................................................................................ii
ACKNOWLEDGEMENTS ........................................................................................iii
LIST OF TABLES ......................................................................................................ix
LIST OF FIGURES .....................................................................................................x
ABSTRACT:...............................................................................................................xi
CHAPTER1: INTRODUCTION .................................................................................1
1.1 Research Background...................................................................................2
1.2 Research Questions of the Dissertation......................................................10
1.3 Methodology ..............................................................................................15
1.4 Contribution and Significance of the Research Topics..............................16
1.5 Overview of Chapters ................................................................................18

CHAPTER2: SOCIAL CAPITAL AND CHARITABLE GIVING..........................20
2.1 Literature Review.......................................................................................20
2.2 A Conceptual Framework of Charitable Giving ........................................25
2.3 Data and Methodology...............................................................................37
2.4 Model Estimation and Results ...................................................................42
2.5 Conclusion .................................................................................................46

CHAPTER 3: COMMUNITY FOUNDATIONS AND SOCIAL CAPITAL...........49
3.1 Model Development...................................................................................53
3.2 Data and Research Design .........................................................................65
3.3 Analysis......................................................................................................74
3.4 Conclusion and Implications......................................................................78

CHAPTER 4: THE ROLE OF COMMUNITY FOUNDATIONS IN BUILDING
SOCIAL CAPITAL ..........................................................................................82
4.1 Community Foundations’ Action in Building Social Capital....................84
4.2 Research Design and Model Development................................................96
4.3 Data ..........................................................................................................102
4.4 Analysis....................................................................................................104
4.5 Conclusion and Implications....................................................................107

viii
CHAPTER 5: CONCLUSION.................................................................................110
5.1 Major Findings.........................................................................................113
5.2 Theoretical and Practical Implications.....................................................116
5.3 Limitations ...............................................................................................118
5.4 Future Research........................................................................................121

BIBLIOGRAPHY:...................................................................................................123
APPENDICES .........................................................................................................133
Appendix A:.........................................................................................................133
Appendix B: .........................................................................................................134
ix
LIST OF TABLES

Table 2.1: Descriptive Statistics of the Variables in the Analysis .............................40
Table 2.2: Tobit Regression on Religious and Secular Giving..................................43
Table 3.1: Descriptive Statistics.................................................................................72
Table 3.2: Standardized OLS Regression Coefficients for Per Capita Gifts
Received by Community Foundations.....................................................75

Table 4.1: Descriptive Statistics...............................................................................103
Table 4.2: Two-Stage Least Square Estimates for Social Trust and Per Capita
Gifts Received by Community Foundations..........................................105
x
LIST OF FIGURES
Figure 1.1: Theoretical Framework ...........................................................................14
Figure 2.1: Model of the Determinants of Charitable Giving:...................................36
Figure 3.1: Growth of Community Foundations in the U.S.: 1990-2003 ..................50
Figure 3.2: Model of the Determinants of Community Foundation Development....65

Figure 3.3: Geographic Distribution of Counties Included in Analysis ....................67
Figure 5.1: Theoretical Framework of the Dissertation...........................................112
xi
ABSTRACT
With shrinking public funding and fierce competition for government grants,
nonprofit organizations are forced to diversify their funding sources and rely more
on charitable gifts from individual donors as well as grants from private and
community foundations. Understanding individual charitable behavior and
philanthropic institutions’ fundraising and grant-making activities becomes critical to
the survival and development of community-based nonprofit organizations.
Empirical studies show that social capital contributes to a wide range of positive
social, economic and political outcomes. This dissertation explores the impact of
social capital—measured by social trust and social networks—on individual
charitable behavior and on institutional philanthropy, mainly community foundation
development.
Individuals’ charitable giving includes religious and secular giving. Using
the national sample of the 2000 Social Capital Community Benchmark Survey
(SCCB), the study finds that social trust, bridging social network and civic
engagement increase the amount of giving to both religious and secular causes. In
contrast, organizational activism only affects secular giving, and informal social
networks do not matter for either secular or religious giving. In addition,
volunteering activity positively affects both religious and secular giving. Moreover,
those who are homeowners, happy about their lives, married and religious, and those
with children in the family give more to religious causes. These factors do not seem
to make significant differences in secular giving.
xii
Community foundations are grant-making public charities that serve defined
geographic areas. Much of their donations comes from the communities they serve.
Using the SCCB local sample and community foundation financial data, the study
finds that community-level social trust but not social networks significantly increases
gifts to community foundations. The number of years community foundations have
established themselves in a region and the population density also increase the gifts
received.
Case studies show that community foundations can help build social capital
through educating the community about social capital, making social capital-oriented
grants, fostering civic engagement and supporting grassroots nonprofit organizations.
However, an empirical test using a simultaneous equation model fails to find the
impact of community foundation fiscal capacity on social trust.

1

CHAPTER 1: INTRODUCTION

“I see the rebirth of this nation rising out of the nation’s communities … The next
America will be forged in America’s communities. That’s where the fabric of our
society is being re-woven.”
John Gardner
(Former United States Secretary of Health, Education and Welfare)

In the last two decades, the rapid growth of the nonprofit sector and the
increasing involvement of nonprofit organizations in social services have
significantly changed the landscape of American society. It is now widely
acknowledged that the nonprofit sector can provide a good alternative for public
service delivery (Hansmann, 1980; Boris and Steuerle, 1999). More importantly,
community-based nonprofit organizations have become key players in addressing
community needs unmet by the public sector. They are the backbone of American
civil society and are the safety net for local residents who have no or limited access
to public services. Therefore, developing mechanisms to promote nonprofit sector
development, especially community-based nonprofit organization development, and
to improve its capacity are important research topics in the public policy field.
On one hand, according to the National Center for Charitable Statistics
(NCCS), there are about 1.4 million nonprofit organizations listed on the Internal
Revenue Service’s official roster in 2006, a 23 percent increase from a decade ago.
1

On the other hand, the nonprofit sector is facing growing challenges of decreasing

1
Internal Revenue Service, Exempt Organizations Business Master File (2006, May) and (1996, June).
The Urban Institute, National Center for Charitable Statistics.

2
and unstable government funding. The Bush Administration’s budget proposals for
fiscal year 2006 and beyond suggest a reduction of federal spending on programs of
interest to nonprofits outside of health and income assistance by 12 percent below
FY 2005 levels as of FY 2010. It is estimated that over the entire FY 2006 to FY
2010 period, non-health nonprofit agencies will lose a total of $10 billion in federal
support (Abramson and Salamon, 2005). In addition, government funding is offered
increasingly in the forms of contracting, voucher or insurance schemes, which
require nonprofit organizations to compete vigorously for funding among themselves
and with for-profit vendors (Young, 1997).
With the expected shrinking of funding and the fierce competition for it,
nonprofit organizations need to rely more than before on charitable gifts from
individual donors as well as grants from private and community foundations.
Therefore, understanding both individual charitable behavior and the fundraising and
grant-making activities of philanthropic institutions becomes critical to the survival
and development of many community-based nonprofit organizations. In this context,
I became interested in seeking the factors that affect individual philanthropy—an
individual’s charitable giving decisions—and institutional philanthropy, especially
community foundation development.

1.1 Research Background
Community philanthropy—the act of giving back to one’s community by
volunteering time and talent or by donating money or goods—is a long-standing
3
tradition in the United States. According to Giving USA 2006, about 70 to 80
percent of Americans contribute annually to at least one charity, and the amount of
individual charitable giving in the United States has reached nearly $190 billion in
2004 (American Association of Fund-Raising Counsel, 2006). Therefore,
understanding the determinants of an individual’s charitable giving decisions is
critical to the growth of the nonprofit sector in the United States.
Individual philanthropic behavior, however, remains a puzzle to many social
scientists due to the dominant view of human nature in rational choice theory, which
portrays individuals as self-interested. When people have a choice to contribute to
the public good, the rational choice is not to give or volunteer because the benefits
cannot be consumed directly by the donor or the volunteer. In addition, one extra
contribution does not make a noticeable difference for the collective outcome. Forty
years ago, Mancur Olson (Olson, 1965) first pointed out the discrepancy between the
rational choice view of human beings and unselfish behavior in society. This
problem is now known as the “collective good problem” or the “participation
paradox” (Bekkers, 2004). In the past few decades, scholars in the fields of
economics, sociology and psychology have tried to explain individual philanthropic
behavior from different lenses.
Influenced by rational choice theory, economists often seek factors that
trigger philanthropic behavior from the potential benefits people enjoy through
volunteering and donating, such as tax incentives and the effect of “warm glow”
(Clotfelter, 1985, 1997; Reece & Zieschang, 1985; Brown and Landford, 1992).
4
However, this self-interested model of man still fails to explain how people assign
value to “their donation,” why some people would care enough about the “warm
glow” feeling to give while others do not, and why people decide to give even
though the personal gain from a contribution to the collective good may not
outweigh the cost involved for the individual actor. The limitation of the pure
economic explanation of charitable behavior is that it overlooks the fact that
individuals’ values are socially constructed. The expected benefits, or the value of
“warm glow,” an individual enjoys through charitable donations are affected by his
or her social networks, prior experiences, organizational involvement, and other
social and psychological factors.
Psychologists often use experimental methods to explain individual
philanthropic behavior. They view the decision to contribute to collective goods as a
result of personality characteristics associated with pro-social behavior, the
perceived efficacy of contributions (Bekkers, 2004), feelings of empathy and so on.
The conclusions reached from experiments, however, are not often supported in “real
life.”
Sociologists tie social conditions with individual philanthropic activity.
Exposure to requests to donate, an individual’s organizational involvement and
community size are factors associated with the decision to contribute. However, the
findings associated with the impact of those factors on philanthropic behavior are not
all consistent (Bekkers, 2004).
5
In view of the different theoretical explanations of charitable behavior and
the discrepancy of empirical results for charitable giving, further studies on this
subject and a synthetic view of an individual’s decision to donate are necessary.
At the institutional level, the community foundation is a major form of
community philanthropic organizations. Community foundations are publicly
supported grant-making charities that serve a defined geographic area. They receive
donations from local residents, private foundations and other sources; manage their
funds though investment; and then provide grants to nonprofit organizations that
serve various causes in the area. They are both direct and intermediary funding
sources for many community-based nonprofit organizations. With the proceeds of
their unrestricted funds, community foundations directly award grants to nonprofit
organizations that provide services matching the missions of the community
foundations. They help distribute grants to local nonprofit organizations that donors
have chosen through the management of donor-advised funds, donor-designated
funds and private foundation pass-through grants. Therefore, the development and
financial capacities of community foundations—a special form of philanthropic
institution and a focus of this study—are important to the growth of community-
based nonprofit organizations in a region.
In the last decade, community foundations are one of the fastest growing
forms of organized community philanthropy in the United States and in the world.
According to the Foundation Center statistics, the number of community foundations
in the United States has more than doubled from 328 in 1990 to about 700 in 2003;
6

their assets have grown from $4.6 to $16.9 billion; and their grants have increased
from $0.3 to $1.3 billion.
2
Worldwide, the number of community foundations has
increased from fewer than 440 in 1990 to 1,064 in 2003 (Sacks, 2004).
The growth of community foundations nationally and internationally has
provided new opportunities for community-based social change. Sustaining that
promise requires the presence of financially strong community foundations in a
region. Community foundations rely on endowments, individual charitable
donations, and grants from private foundations or other sources to achieve their
missions, and they face considerable competition for those resources. Consequently,
attracting charitable donations has been the primary focus for many community
foundations (Graddy and Morgan, 2006), especially for young and small-scale
community foundations. Much of these donations comes from the communities
within which the foundations focus their activities (Hero, 1999). This tie between
community foundations and the communities they serve suggests that specific
community characteristics may be critical for the growth and development of
community foundations. The nature of this connection, however, is not well
understood. To what extent does the demographic composition of the community
matter? To what extent will the social trust and civic engagement of the residents
affect the gifts received by community foundations? These questions are not yet

2
The Foundation Center, 2005. The amount is in constant 1981 dollars based on annual average
Consumer Price Index, all urban consumers, as reported by the U.S. Department of Labor, Bureau of
Labor Statistics, as of February 2005.

7
addressed in studies of community foundations. Recent developments in social
capital research provide a new perspective to address these questions.
Studies on social capital began to flourish after Robert Putman sounded the
alarm of declining social capital in the United States in his “Bowling Alone” article
(1995). In recent years, social capital, like its counterparts of financial and human
capital, has been offered as an analytical tool to explain variances in the performance
of individuals, organizations and communities (Oztas, 2004). For individuals, Lin
(2001) finds that social capital enhances the likelihood of getting better jobs. For
communities, Putnam argues that communities with high levels of social capital are
more prosperous and successful in implementing government reforms (Putnam et.
al., 1993). In addition, various empirical studies in the past decade have
demonstrated that social capital contributes to a wide range of positive social,
economic and political outcomes, such as economic development and poverty
alleviation (Putnam, 1993; Fukuyama, 1995; Woolcock, 1998; Narayan, 1999;
Skidmore, 2001), improved school performance (Helliwell and Putnam, 1999),
decreased crime (Galea, et. al 2002), and better health (Kawachi, et. al 1999a).
Recently, scholars have begun to link social capital to the field of nonprofit
studies. At the individual level, Brooks (2005) argues that social capital could make
people generous. He measures social capital as group involvement, social trust and
political engagement, and finds that these three aspects of social capital all increase
the level of religious and secular giving. Brown and Ferris (2007) also study the
impact of social capital on individual charitable behavior. They measure social
8
capital as network-based social capital and norm-based social capital, and find that
both network-based and norm-based social capital matter for secular giving, while
only the former matters for religious giving. The inconsistent findings in the
literature warrant further studies of the impact of social capital on individual
charitable giving. At the community level, Saxton and Benson (2004) find that
community residents’ political engagement and “bridging” social ties but not levels
of interpersonal trust have significant impacts on the growth of nonprofit foundations
in a community. These findings shed some light on the potential impact of
community social capital on community foundation development.
Despite the significant development of social capital literature in the past 10
years, the literature review shows that the following theoretical and empirical issues
about the concept of social capital remain to be addressed.
First, how is social capital measured? Empirical researchers in the field of
economics, sociology, political science and international development have
developed different proxies to measure social capital (Fukuyama, 1999; Knack and
Keefer, 1997; Narayan and Pritchett; Vella and Narayan, 2006). For example,
Narayan and Pritchett (1999) studied the role of social capital in influencing
household outcomes in rural Tanzania. In the study, they constructed the social
capital variable as the weighted average of answers to questions that measure
membership in various groups, the characteristics of these groups and general trust-
related attitudes. In a cross-country analysis, Knack and Keefer (1997) used two
proxies of social capital—the level of civic cooperation in a country (measured by
9
averaging answers to questions, such as “Is it ever justified to cheat on taxes if you
have the chance?”) and trust (measured as the percentage of survey respondents in a
country said that most “people can be trusted”). Although in recent years, the
emerging consensus is that social capital is a multifaceted concept—which normally
includes social network, social trust and norms of reciprocity—scholars rarely agree
on the exact measurement of social capital, as we can see from the Brooks and
Brown and Ferris papers.
Second, is social capital a micro-level or a macro-level concept? In other
words, is social capital an individual asset or a collective asset? Some studies treat
social capital as a micro-level concept and emphasize the impact of social capital in
fostering information exchange, resource sharing and personal advancement (Lin,
1999), while others treat social capital as a macro-level concept and test its influence
on economic development (Kaldaru and Parts, 2005). According to Brehmen and
Rahn (1997), social capital is an aggregate concept that has its basis in individual
behavior, attitudes and predisposition. The question is if social capital can be viewed
both as a micro- and macro-level asset, how can we link the two levels together?
Third, what factors foster the development of social capital in a region? Many
studies have focused on defining, measuring and examining the consequences of
social capital, yet the sources that generate or promote social capital remain an
unexplored field (Hooghe and Stolle, 2003). Recently, scholars have tied the
nonprofit sector to the formation of social capital. Isham and his coauthors (2006)
argue that volunteering for nonprofit organizations could help build social capital
10
through an increased sense of social connectedness and civic capacity. Feldstein and
Sander (2001) argue that community foundations facilitate interactions among
residents and thus build social capital. No empirical evidence, however, exists to
support the argument.
In view of the development and limitations of the social capital literature and
the gaps and discrepancies in the individual philanthropic behavior and community
foundation literature, I first will construct a measurement of social capital in this
dissertation—social trust, bridging social networks, informal social networks, civic
engagement and organized group activism—and then develop a theoretical
framework to examine the connection between social capital and community
philanthropy both at the individual and institutional level.

1.2 Research Questions of the Dissertation
In this dissertation, I am mainly interested in examining the impact of
individual social capital on charitable decisions and the impact of community social
capital on community foundation development. I also will examine whether
community foundations can help build social capital. More specifically, I will
explore the answers to the following three sets of questions, respectively.
First, who is likely to give and does an individual’s social capital and
volunteering activity encourage charitable giving?
The literature on philanthropic giving has identified some typical
socioeconomic and demographic characteristics of donors, such as that men
11
contribute a higher share of their income than women, married people donate more
than single people, and whites give more than minority members (Wolpert, 1997).
The literature has improved our understanding of to whom nonprofit fundraisers
should target for donations. However, donor behavior is not determined solely by
socioeconomic and demographic factors. It is also affected by contextual factors that
may not vary consistently with socioeconomic attributes (Wolpert, 1997), such as the
effect of being solicited for a contribution, which could be caused by an individual’s
social network.
In addition, studies in experimental economics have found that individual
behavior correlates with individual attitudes and the relationships between players
(Glaeser et al., 2000). This finding can be applied to explain philanthropic behavior.
The existing social networks among people—such as bridging social ties, formal
group involvement and informal social interaction—may increase the opportunities
for individuals to engage in philanthropic activities and thus foster giving behavior.
In addition, social trust will affect individual attitudes toward donations and the
social impact of donations. Studies on collective action have shown that trust is an
important ingredient to facilitate activities that pursue the public good. Studies on
charitable giving also show that trust is important to nonprofit-sector fundraising
(Sargeant and Lee, 2004). Therefore, I posit that social trust will promote giving
behavior. Moreover, individuals who engage in volunteer activities frequently tend
to develop connections to the organizations they volunteer in and thus are more
12
likely to donate when asked. The literature review also shows that individual
charitable behavior also is related to religious beliefs and psychological inclinations.
Overall, individual charitable decisions are jointly determined by an
individual’s social capital, volunteering activity, human and financial resources,
religiosity, psychological inclination and demographic features.
Second, does community social capital, such as social network and social
trust among residents, matter for the development of community foundations in a
region?
The community foundation is a unique form of public charity. Its focus is
geographically bound, thus it serves a defined community. The foundation receives
charitable gifts, which it invests and then uses the proceeds from the investment to
support programs and local nonprofit organizations that serve community needs and
reflect donors’ wishes. Given this unique bond between a community foundation
and the area it serves, I expect the level of social capital in a community to affect
directly the amount of gifts received by community foundations. I expect higher
levels of social capital to allow community foundations to bridge across social
networks and gain access to funding streams inside the community. Social capital
also allows community foundations to build on the social trust in the region to
develop donor trust. Thus, in a region with high levels of social capital—where
residents participate in local voluntary organizations and community activities, and
trust others in the community— the residents are more likely to donate to local
community foundations to collectively address community-based problems. In
13
contrast, in a region with low social capital—where residents do not trust others and
do not participate in community-based social activities—the residents are less likely
to donate to local charities. In this sense, the social capital of a community is a
major resource for the development of community foundations
The impact of social capital on community foundation development has to be
placed in a broader model of the determinants of such development. The amount of
gifts received by community foundations is also associated with how long
community foundations have been present in the community, the number of
community foundations in a region, the competition for funds in the community, and
the socioeconomic and demographic characteristics of the community that are known
to affect philanthropic giving.
Third, does a community foundation’s financial strength promote the social
capital of a community?
As Robert Putnam (1995) has shown in his “Bowling Alone” article, social
capital—a community resource—could decline if no institutions reach out to
residents, involve them in community activates, build connections among them, and
foster a sense of trust and belonging. A community foundation is one of the
community-based institutions that help generate social capital. Feldstein and Sander
(2001) have argued that community foundations could facilitate interactions among
residents, businesses and the public sector, and thus build social capital. In the past 5
to 10 years, more and more community foundations in the United States have begun
to define their goals as building social capital in communities by engaging in social
capital-building activities and focusing on social capital-generating grants. I will use
cases to demonstrate the community foundations’ efforts to build social capital.
So far, no empirical studies have been done to test the impact of community
foundations in building social capital in the United States. In this dissertation, I fill
in the gaps in the literature by developing a theoretical model of the relationship
between community foundations and the level of social capital in a region, and
testing whether the fiscal capacity of community foundations would help increase the
social capital in a community.
The theoretical framework of the dissertation is summarized in the following
diagram:
Figure 1.1: Theoretical Framework
14

Community Foundation
Presence & Competition
in the Region
Community
Demographics
Community
Social Capital
Community
Foundation’s
Financial Strength
Individual Social Capital
(Social Networks and
Social Trust)
Individual
Demographics,
Religiosity,
Psychological
Inclination
Personal
Donation
Volunteering
Individual Philanthropy
Institutional Philanthropy
15

1.3 Methodology
To address the three main questions of the dissertation, I use secondary data
collected from various sources. The primary data source is the 2000 Social Capital
Community Benchmark (SCCB)

survey dataset. Robert Putnam and other scholars
of the Saguaro Seminar of the John F. Kennedy School of Government at Harvard
University led the SCCB survey. The survey, averaging 26 minutes, was the largest
scientific investigation of social capital and civic engagement ever conducted in
America. It was conducted nationally as well as in 41 U.S. communities by
telephone using random-digit-dialing during July to November 2000.
3
A total of
29,203 people were surveyed. The local sample size ranges from 500 to 1,500 in
each community, and the national sample includes 3,003 interviewees. Roughly 260
variables were generated from the questionnaire.
4
In this dissertation, I use the
following categories of variables: the social capital indexes, charitable giving and
volunteering variables, individual demographic features and religiosity.
Community foundation data—which includes the geographic region that a
community foundation serves, the number of years the community foundations have
existed in a region, the number of community foundations serving a county,
community foundations’ assets and gifts received, and the amount of gifts to
community foundations’ competitors—are collected from major nonprofit research

3
Except for the West Oakland, California survey, which ran from December 2000 to February 2001.
4
Additional details on the survey are available at www.cfsv.org/communitysurvey.

16
data sources, including the Foundation Center, Council on Foundations, the National
Center for Charitable Statistics (NCCS), Guidestar.org and the Grantmanship Center.
The collected community foundation data are later merged with the SCCB dataset
based on the community foundation’s geographic service area.
In addition, data on community demographic characteristics—such as
population density, the ethnic composition of a community, education level of
community residents, percentage of elderly population, homeownership, percentage
of single person households and people in poverty—are collected from the American
Fact Finder publications of the U.S. Census Bureau.
Three distinct multivariate analysis methods are applied to answer the three
research questions, respectively. The Tobit regression analysis is used to test
whether social capital and volunteering affect individual charitable contributions to
secular and religious purposes. The ordinary least square (OLS) regression method
is used to examine the factors that affect community foundation development and to
test whether social capital matters. The simultaneous equation model method is
applied to test whether community foundation financial capacity affects the level of
social capital in a region, as indicated by Feldstein and Sander (2001).

1.4 Contribution and Significance of the Research Topics
Individual charitable behavior, the financial development of community
foundations and the community foundations’ social impact are important research
topics in the field of nonprofit studies. The research findings have significant
17
practical implications for nonprofit management, specifically in the areas of
fundraising, building community and nonprofit foundation relations, and making
social change through community-based institutions rather than through government
bureaucracies.
The research findings also contribute to the literature on charitable giving,
community foundations and social capital. The findings of the first question provide
a new perspective on the relationship between volunteering, social capital and
individual giving behavior. Theoretically, I combine the sociological and
psychological interpretations of charitable giving behavior. I find that social trust,
bridging social capital and formal group involvement are important determinants of
charitable giving. Community residents are more likely to provide monetary
contributions when they are connected to each other, trust others, trust authority and
share common interests in improving the quality of life in the community. I also find
that volunteering activity and psychological inclination increase the amount of
charitable giving as well.
In addition, the findings help establish the linkage between the financial
development of community foundations and the community context, which includes
not only demographic characteristics but also social capital resources—measured as
social trust and various social networks—and competition from other community-
based charities. I find that a trusting community is favorable to the development of
community foundations. This finding extends the current donor trust literature,
which states that donors’ trust of a certain nonprofit organization determines the
18
success of fundraising of the organization. The results of my research show that
community-level trust or general social trust is also vital to nonprofit fundraising, in
this case, to community foundation fundraising. The findings also show that social
capital in a community can be converted to financial capital.
Moreover, the findings of the third research question shed light on whether
and how community foundations can convert financial capital into social capital, and
therefore contribute to the social capital formation literature. Each community
foundation has its own unique programs to help build social capital. Those programs
generally involve educating the community on the concept of social capital, fostering
civic engagement, making social capital-oriented grants and supporting grassroots
nonprofit organizations that serve the community. Through these programs and
activities, community foundations build networks, trust and a sense of belonging in
the community. The financial capacity of a community foundation may constrain its
influence on social capital building in a region.

1.5 Overview of Chapters
Social Capital and Community Philanthropy is organized into five chapters.
In the introductory chapter, I provide an overview of the social capital literature,
which shows the development of the social capital concept, its application to studies
on various social issues and the limitations of the current social capital research. I
also summarize the three main research questions of the dissertation and the
contributions of the study. In Chapter 2, after reviewing the individual philanthropic
19
behavior literature, which covers theories of donor motivation and demographics of
giving patterns in the United States, I develop a conceptual framework that
incorporates the impacts of social capital, volunteering, religiosity and psychological
inclination on individual giving behavior. I then test the framework using the Tobit
regression analysis. In Chapter 3, the review of the literature on community
foundation development presents the history and significance of community
foundations in shaping a region as well as the major sources of community
foundation funding. Social capital, measured as community-level social trust and
four social network proxies, is added to the organizational and demographic factors
in explaining the development of community foundations. I test the theoretical
model using OLS regression. Chapter 4 demonstrates the role of community
foundations in shaping the social capital of a region using both case illustration and
empirical analysis—the simultaneous equation method. Chapter 5 summarizes the
major findings of the research, suggests the implications of the results to public
policymaking, discusses the limitations of the research and presents future projects.
20
CHAPTER 2: SOCIAL CAPITAL AND CHARITABLE
GIVING

Charitable giving is a part of civic life in American society. According to
Giving USA 2006, about 70 to 80 percent of Americans contribute annually to at
least one charity, and the amount of individual charitable giving in the United States
(US) has reached nearly $190 billion in 2004 (American Association of Fund-
Raising Counsel, 2006). In the past 10 years, the United States also has witnessed
dramatic growth in charitable organizations—about 870,000 501 (c)(3) public
charities are listed in the Internal Revenue Service’s official roster in 2006, a 70
percent growth from 1995 (National Center for Charitable Statistics, 1995, 2006).
The charitable explosion and the economic downturn at the beginning of the 21
st

century have raised great concerns about the fierce competition among charities in
fundraising. Many small charities are virtually on the edge of survival daily. In this
context, understanding the factors that promote an individual’s willingness to give is
critical to the survival and the financial strength of charitable organizations.

2.1 Literature Review
Thanks to the dominant view of human nature based on rational choice
theory, which portrays human being as self-interested, individual charitable behavior
remains a puzzle to many social scientists. According to rational choice theory,
when people have a choice to contribute to the public good, the rational choice is not
21
to give because the donor cannot directly consume the benefits. In addition, one
extra contribution does not make a noticeable difference for the collective outcome.
Forty years ago, Mancur Olson (1965) pointed out the discrepancy between the
rational choice view of human beings and unselfish behavior in society. This
problem is now known as the “collective good problem” or the “participation
paradox” (Bekkers, 2004). Since then, individual charitable behavior has raised
great interest from scholars in the fields of economics, sociology and psychology.
They have tried to explain the behavior from different lenses.
Influenced by rational choice theory, economists often explain charitable
behavior based on the potential benefits people enjoy through donating, such as tax
incentives and the effect of “warm glow” (Clotfelter, 1985, 1997; Reece &
Zieschang, 1985; Andreoni, 1990; Brown and Landford, 1992). They draw an
analogue between the consumption of certain goods and charitable giving. When the
price of donation lowers (i.e. the marginal tax rate lowers the cost of giving), people
choose to purchase more of the product (i.e. donate more). In addition, charitable
behavior is considered as not purely altruistic. People donate because they enjoy the
pleasure that derives from the very act of making a gift. The economic explanation
of charitable behavior has certain flaws. First, the tax incentive argument fails to
explain why donors who do not itemize their tax returns and thus do not enjoy tax
benefits still would choose to donate. It could be that an individual’s decision to
donate is beyond their knowledge of the tax credit. Second, the economic model of
charitable behavior exhibits a certain narrowness as it pays little attention to the role
22
of friendship, propinquity and social networks in charitable giving (Clotfelter, 1997).
In other words, the pure economic explanation of charitable behavior overlooks the
fact that an individual’s values are socially constructed. The expected benefits, or
the value of “warm glow,” an individual enjoys through charitable donations are
affected by his or her social networks, prior experiences, organizational involvement,
and other social and psychological factors.
In contrast to the economic perspective, the psychological explanation of
charitable behavior links it to individual personalities and the perception of nonprofit
organizations. The decision to contribute to collective goods is viewed as the result
of pro-social or altruistic personality characteristics (i.e. agreeableness, extraversion,
emotional stability), the perceived efficacy of contributions, feelings of empathy and
so on (Schervish, 1997; Bekkers, 2004). To explain individual philanthropic
behavior, psychologists often use experimental methods. The environments of the
experiments are carefully controlled so that scholars can focus on one or a few key
factors that might affect charitable behavior. Because the findings of psychological
impacts on pro-social behavior are often derived from experiments, the conclusions
reached might not be supported in “real life.”
Another significant contribution to our understanding of charitable behavior
comes from the sociological perspective. It emphasizes the importance of the social
environment, norms and social networks in promoting charity. Exposure to requests
to donate, an individual’s organizational involvement and community size are factors
associated with the decision to contribute (Schervish and Havens, 1997). The
23
findings associated with the impacts of those factors on charitable behavior, however,
are not consistent (Bekkers, 2004).
In view of the different theoretical explanations of charitable behavior and
the discrepancy in the empirical results on charitable giving, further studies on this
subject and a synthetic view of an individual’s decision to donate are necessary. The
recent development of the concept of social capital has provided a new opportunity
for us to examine the impact of social forces on charitable giving behavior.
Social capital refers to the “networks, norms, and social trust that facilitate
coordination and cooperation for mutual benefits” (Putnam, 1995:67). Like its
counterparts of financial and human capital, social capital has been applied
increasingly as an analytical tool to explain variances in the performance of
individuals and organizations (Oztas, 2004). Empirical studies have demonstrated
that social capital enhances individuals’ chances of getting better jobs (Lin, 2001),
promotes economic development (Fukuyama, 1995; Putnam, 1993), helps
government reform (Putnam et. al., 1993), improves school performance (Helliwell
and Putnam, 1999) and makes people healthier (Kawachi, et. al 1999a).
Only a handful of studies, however, have examined the relationship between
social capital per se and individual philanthropic behavior—the voluntary
contribution of time and/or money to public goods. In addition, these studies have
different interpretations of how social capital, volunteering and giving are related—
whether volunteering and giving are components of social capital or beneficial
consequences of social capital. For example, Narayan and Cassidy (2001) used
24
volunteering and/or giving as one of the indices to measure social capital. However,
Putnam argued: “Doing good for other people…is not part of the definition of social
capital” (Putnam, 2000), separating philanthropic behavior from social capital. Goss
(1999) treated volunteering as a function of several types of social capital and found
that most increase volunteering. Brown and Ferris (2007) found that individuals’
associational networks and their trust in others and in their community were
important determinants of giving and volunteering, respectively. Brooks (2005)
argued that testing the impact of social capital on volunteering may really be
“measuring the associations between various types of social capital.” Therefore, to
establish a link between social capital and charity, he only focused on monetary
contributions and found that different social capital types—measured in terms of
civic group involvement, social and racial trust, and political engagement—have
differing levels of impact on giving. Shervish and Havens (1997) found that people
who volunteered to one or more philanthropic organizations and who participated in
religious organizations gave more of their household income. In view of these
discrepancies, I will re-examine the relationship among social capital, volunteering
and giving. I will focus on two separate but related aspects of giving—religious and
secular giving, respectively. Previous research on charitable giving have
demonstrated some differences in the determinants of religious and secular giving,
such as education, marital status, citizenship and race (Brook, 2005; Brown and
Ferris, 2007). The findings, however, are not consistent. In the following section, I
25
will use a same set of predictors for both secular and religious giving, and test
whether the determinants have different impacts on secular vs. religious giving.
The focus of this chapter is individual charitable giving behavior. I posit that
both social capital and volunteering promote charitable giving, controlling for
individual demographics, human and financial capital, religiosity and psychological
inclination to give. Social capital is measured by an individual’s social trust, bridging
social network, informal social network, civic engagement and organized group
activism. Next, I will develop theoretical models of charitable giving—for both
secular and religious giving—which incorporate social capital indices and
volunteering activity. Then, I apply the Tobit regression method to test the model
using data from the 2000 Social Capital Community Benchmark Survey. Finally, I
discuss the implications of the findings.

2.2 A Conceptual Framework of Charitable Giving
Generally, past research on charitable behavior finds that financial resources,
human resources, religiosity, psychological inclinations and demographics affect
one’s decision to donate and the amount to donate (Hodgkinson and Weitzman, 1996;
Clotfelter, 1997; Schervish, 1997; Wolpert, 1997; Mesch, et. al. 2006). In this study,
I add two dimensions to the model—individual social capital and volunteering—and
posit that individual charitable giving is an outcome of the combined forces of social
capital, volunteering, human and financial capital, religiosity, psychological
inclination and a set of demographic factors.
26

Social Capital:
Social capital is a multifaceted concept. It generally includes social network
and social trust aspects. As discussed in Chapter 1, current social capital literature
shows a variety of definitions of the concept. Scholars could use the same “social
capital” concept but mean totally different things. Therefore, it is necessary to state
the definition of social capital used in this study. In this chapter, social capital refers
to an individual’s social networks with friends, families and organizations, and social
trust to others and authority. More specifically, I use five indices to measure social
capital, which includes four measures of networks—bridging social networks,
informal social networks, civic engagement and organized group activism—and one
measure of trust—social trust. Overall, social capital is hypothesized to have a
positive impact on charitable giving. As Putnam argued in his book Bowling Alone,
“social networks provide the channels through which we recruit one another for good
deeds, and social networks foster norms of reciprocity that encourage attention to
others’ welfare” (Putnam, 2000:117). The question is whether any kind of social
network—i.e. formal vs. informal, bridging vs. bonding, membership vs.
participation—would have similar impacts on both religious and secular charitable
giving.
Social capital generally includes bonding and bridging social networks
(Putnam, 2000). The former refers to networks among homogenous groups of people,
while the latter refers to social networks among heterogeneous groups. The bridging
27
social network represents the extent and diversity of social relations in which people
engage. Individuals who have friends from various social backgrounds and
hierarchies are expected to be more open and respectful of differences. They are also
more likely to support a variety of charitable causes or issues that might affect their
diverse social networks. Therefore, I expect:
H1: Individuals with more bridging social networks will donate more.
Informal social networks measure the interaction among family, friends and
others. These types of interaction foster a sense of reciprocity and caring among
people, which are deemed to be virtues that lead to philanthropy (Martin, 1994).
Therefore, I posit:
H2: Individuals with more informal social networks will donate more.
Civic engagement measures formal group involvement. Normally,
individuals involve themselves in formal groups because they believe in the mission
and causes of the group. Membership in various organizations can involve people in
a wide variety of giving (Radley and Kennedy, 1995). Through group involvement,
individuals build a sense of connection. This “sense of being connected with another
or categorizing another as a member of one’s own group,” is a main determinant of
helping (Jackson, et al., 1995:74) because the combination of personal beliefs and
associational ties brings the needs of others into one’s purview (Schervish, 1997).
The 1996 Giving and Volunteering survey also found that group involvement were
highly correlated with the likelihood that a household makes a charitable
contribution (Hodgkinson & Weitzman, 1996). Therefore, I posit:
28
H3: The more groups an individual is involved in, the higher the amount of
charitable contribution.
Organized group activism shows the extent of civic participation. Being a
member of an organization is different from actually attending local community
events, club meetings and public meetings. If being a member shows the breadth of
an individual’s social network, actual participation in organized group activities
indicates the depth of the network. The face-to-face interaction with others
strengthens social networks and connections. As discussed earlier, connections
promote charitable giving, and thus I posit:
H4: The more frequently an individual participates in organized group
activities, the higher the amount of charitable contribution.
Studies also show that individual charitable decisions and the amount of
contribution are highly influenced by the level of trust embedded in society and in
the charitable organization itself. “Charitable organizations can increase the public’s
trust by signaling their trustworthiness,” however, “charitable organizations have
only very limited control over the public’s trust because it is also rooted in a general
social trust in institutions and fellow citizens” (Bekkers, 2003:596). Bekkers found
that general social trust increased the amount people gave to charitable causes.
Therefore, I hypothesize:
H5: The higher the level of social trust, the higher the amount of charitable
contribution.
29
In addition to social capital, volunteering for formal organizations, the
psychological inclination to donate, human and financial capital, religiosity and other
demographics are also important determinants of individual charitable giving.

Volunteering:
Studies have shown that volunteering behavior is a reliable predictor of
charitable giving. Independent Sector’s series of studies on giving and volunteering
in the United States showed a clear trend that volunteers gave more than non-
volunteers (1999). In the six national surveys on giving and volunteering,
contributing households with a volunteer gave more than twice the percentage of
household income than the households that contributed but did not volunteer. This
relationship held even in periods of uncertain economic condition as in 1991 and
1993. The finding was consistent with the results of other empirical studies.
Schervish (1997) examined whether the number of hours and the number of different
organizations people volunteered in had any impact on their charitable giving. He
found that the number of hours volunteered significantly increases the amount of
giving. Brooks (2005) also found that volunteering for various types of
organizations increases people’s charitable giving. Volunteer work may promote
charitable giving in the following two ways. First, volunteers tend to have pro-social
personalities (i.e. empathy, caring, etc.) that make them more likely to make
monetary contributions to public goods. Second, volunteering increases the
awareness of public needs, helps people establish networks and relationships with
30
charitable organizations, strengthens beliefs in the organizations’ missions and
enhances their understanding of the significance of the charitable work. Pro-social
characteristics and increased exposure and interaction with charitable organizations
will foster charitable giving. Therefore, I posit:
H6: People who volunteer more will donate more.

Human and Financial Capital:
Individuals’ human and financial capital reflect their capacity to give.
Human capital, measured as educational attainment, is expected to positively affect
charitable giving. Education moves people upwards in a social hierarchy, expands a
person’s information sources, fosters civic awareness and empathy to those who
need help, and makes people more willing to undertake actions for the public good
(Brown and Ferris, 2007). Previous studies consistently have found that even after
controlling for income, education still has a positive impact on giving (Reece and
Zieschang, 1985; Bradley et. al, 1999; Andreoni, et. al, 2001; Brown and Ferris,
2007). Therefore, I posit:
H7: The higher the respondent’s education level, the higher the amount of
charitable giving.
Annual household income determines the discretionary financial resources
available for charitable donations after necessary expenditures. Of course there is
considerable diversity in one family’s necessity versus another family’s luxury,
which means that the amount of discretionary resources is also subjective (Schervish,
31
1997). Nevertheless, I assume generally that families with higher annual incomes
would find it easier to spend money for charitable purposes compared to those with
less income. Therefore, I posit:
H8: The higher the annual household income, the more amount of charitable
donation.
The impact of homeownership on the amount of charitable giving is twofold:
one is that homeownership represents a stable and healthy financial status, and thus
homeowners are financially better positioned to donate than those who do not own a
house. The other is that compared to renters, homeowners tend to care more about
the community they live in and are involved more in community network activities
because their property values are directly affected by the living environment of the
neighborhood and their costs of moving to another community are higher than those
of renters. A national survey conducted by the Independent Sector in 2001 found
that homeowners in the West gave 174 percent more than non-homeowners within
the region (Independent Sector, 2004). Therefore, I hypothesize that homeowners are
more willing to contribute when it comes to issues of the community’s well-being.
Thus, I posit:
H9: People who live in owner-occupied houses give more than those who
rent a house.

32
Psychological Inclination
An individual’s decision to donate is often affected by his or her
psychological inclination. Studies show that an agreeable, extraverted, emotionally
stable person is more likely to give (Bekkers, 2004). In this study, I use the
individual’s self-rated happiness as an indicator of psychological inclination to
donate. Compared to those who are unhappy about their lives, those who are
generally happy are more emotionally capable to help others. In addition, happy
people normally have an optimistic personality, which resonates with other
characteristics that foster charitable giving behavior. Therefore, I posit:
H10: People who are happy give more to charity.

Religiosity:
Religiosity has proved to be a significant contributor to charitable giving in
American society (Hodgkinson and Weitzman, 1996; Schervish, 1997). Religion
provides a cognitive framework that fosters caring and benevolent behavior. The
impact of religiosity on religious donations is explicit. The question is whether
religiosity increases secular giving. In general, studies show that people with
religious beliefs tend to be generous and care for disadvantaged groups (Brown and
Ferris, 2007). Therefore, I hypothesize:
H11: People with religious beliefs contribute more to both secular and
religious causes.

33
Demographics:
Demographics are often introduced as control variables in studies of
charitable behavior. Age, gender, race/ethnicity, citizenship, marital status, number
of children and the length of residence in the community (Schervish, 1997; Brown
and Ferris, 2007) affect the decision to make a donation and the amount donated.
The impact of age on charitable giving behavior can be described as a
combination of capacity and interest. When people are young, they face a long
future of financial demands, such as marriage, housing, their children’s education,
their retirement plan and so on. Therefore, younger people tend to feel less
financially secure in donating. In contrast, older people, especially those who have
retired, may be less financially stressed and thus more able to make charitable
donations. Older people also have more experiences and exposure to philanthropic
work, and thus would be more likely to involve themselves in or contribute to
charity. In the literature, some scholars describe the relationship between age and
charitable giving as an inverted U-shape, which means donations increase in the
early part of the life cycle and then decline (Brown and Ferris, 2007). However,
there is no evidence to support the argument that donations do decline as people
grow older. In fact, many large donations come as bequests or after donors have
retired. Therefore, I hypothesize a linear relationship between age and donations:
H12: As people get older, they donate more.
The empirical evidence on gender differences in charitable behavior is mixed.
Some studies in experimental economics found no significant gender difference in
34
benevolent behavior (Bolton and Katok, 1995), while other empirical studies using
survey data found that women are more likely to donate than men (Andreoni, et al.
2003). In general, the body of research in this area indicates significant gender
differences in attitudes and beliefs about caring and empathy (Hoffman, 1977;
Andreoni and Vesterlund, 2001). Women appear to be more charitable than their
male counterparts. In this study, I posit:
H13: Women contribute more than men.
Studies on race/ethnicity differences in charitable giving consistently have
shown that being white is positively associated with the likelihood to donate or to
donate higher amounts compared to other minority groups. The 1998 Giving and
Volunteering Survey conducted by the Independent Sector revealed that African
Americans and Hispanics have lower rates of household giving and gave less
amounts compared to whites. Brown and Ferris (2007) also found that compared to
whites, Hispanics donate significantly less to religious purposes, and both African
Americans and Hispanics donate less to secular purposes. Thus, I posit:
H14: Whites contribute more than other minority groups.
Citizenship enhances the sense of belonging and connectedness in a country
and therefore will increase the likelihood and amount of charitable giving. Literature
on immigrant charitable giving shows that recent immigrants—those who migrated
in the past 10 years to the United States—have a significantly lower likelihood of
giving compared to those who have been in the United States for more than 30 years
35
and who most likely already have gained citizenship (Osili and Du, 2005). Thus, I
posit:
H15: Citizens contribute more than non-citizens.
The charitable giving literature shows that married persons are more likely to
give and to give more than single persons (Mesch, 2006). Compared to singles,
married couples have more social networks and care more about charitable causes.
Therefore, I posit:
H16: Married persons contribute more to charity than singles.
The impact of the number of children on charitable giving is mixed. On one
hand, the number of children in the family indicates more financial burdens or
constraints and thus results in less charitable giving. On the other hand, having more
children indicates more social networks and group involvement (i.e. PTA), and thus
more opportunities and need to contribute to or support groups or activities. I
believe that families with more children definitely would have more expenditures
and therefore fewer financial resources to contribute. Even though families with
children may contribute more often, the total amount of donations could remain low.
Therefore, in this study, I posit:
H17: Those who have more children in the family will contribute less.
The length of residence in a community reflects the social connections and
sense of belonging in the community. As previously discussed, social connections
and sense of belonging foster charitable giving. Therefore, I posit:
H18: Those who have lived longer in the community will contribute more.
In summary, the model to explain the relationship between volunteering,
social capital and secular giving is presented in Figure 2.1:
Figure 2.1: Model of the Determinants of Charitable Giving

Demographics:
• Age (+)
• Female (+)
• Citizenship (+)
• Married (+)
• Children (-)
• Residence (+)
Volunteering
• Times Volunteered (+)
Social Capital:
• Social Trust (+)
• Bridging Social Network (+)
• Civic Engagement (+)
• Informal Social Network (+)
• Organized Group Activism(+)
Human and Financial Capital:
• Education (+)
• Income (+)
• Homeownership (+)
Religiosity
• Importance of Religion (+)
Psychological Inclination
• Happiness (+)
Charitable Giving
Religious
Secular

36
37

2.3 Data and Methodology

To test these hypotheses, I use data derived from the 2000 Social Capital
Community Benchmark Survey (SCCB) (see Chapter 1 for a detailed description of
the survey and dataset).
5
This study uses SCCB data collected from the national
sample, which includes 3,003 respondents. After missing values are excluded, 1,946
respondents are included in the analysis.

Dependent Variables:
The dependent variables are religious giving and secular giving, respectively.
Respondents were asked the total dollar amount the household contributed to church
or religious causes and non-religious causes, respectively, in the past 12 months. The
charitable giving data originally were coded categorically. In the analysis, the
amount of charitable giving is estimated based on the category’s midpoint. On
average, the respondents gave $1,141 to religious causes and $566 to secular causes
in 1999.

Independent Variables:
The details of the social capital and volunteering activity measurements are
provided in Appendix A. A social trust index is calculated based on answers to six
questions: whether the respondents thought most people could be trusted, and how
much they trust neighbors, co-workers, fellow congregants, store employees where

5
Additional details on the survey are available at www.cfsv.org/communitysurvey.

38
they shop and local police. The index ranges from –2.5 to 1.00 in the sample (see
Table 2.1). Bridging social networks are measured as a count of the different kinds
of personal friends the respondent has from the 11 types provided. On average, the
respondents have six different kinds of personal friends. Informal social networks
are calculated based on the number of times the respondent played cards with others,
visited relatives, invited friends home, socialized with co-workers outside of work
and spent time with friends in public places in the past 12 months. The index is the
mean of the standardized responses to the five questions. The index ranges from –
0.9 to 2.2. Civic engagement is the count of the different types of formal groups in
which the respondent is involved. On average, the respondents were involved in
three different kinds of formal groups. Organized group activism is measured based
upon the number of times the respondent attended community events, club meetings
and public meetings. It is the mean of the standardized scores of the three questions
and ranges from –0.5 to 5.7.
Volunteering activity, denoted times volunteered, is measured as how
frequently people volunteered. On average, the respondents volunteered six times in
the past 12 months.
Educational attainment, denoted education, is measured in three levels: high
school and less education, some college, and 4-year college and above. The
educational attainment is evenly distributed among the samples (37% with high
school and less education, 31% with some college, and 31% with 4-year college and
above degrees). In the analysis, the high school and less education category is used
39
as the baseline of comparison, and two dummy variables on education—some
college and 4-year college and above—are included in the model. To make the
measurement of education level more meaningful, the study only focuses on
respondents 25 years old and older (i.e. similar to the measurement of education
level in the U.S. Census). Annual household income in 1999, denoted income, is
also measured in three levels: $30,000 and below, $30,000 to $75,000, and $75,000
and above. About 32% of the respondents are low income, 46% middle income and
21% high income. The low-income category is used as the baseline of comparison,
and two dummy variables—middle income ($30,000 to $75,000) and high income
($75,000 and above)—are created and included in the analysis. In the survey, the
respondents were asked whether they own or rent their house and 72% of them
owned their house.
The variable “happiness” is the respondent’s answer to the question: “All
things considered, would you say you are very happy, happy, not very happy, or not
happy at all?” “Not happy at all” is coded as zero, and “very happy” is coded as three.
It is considered an ordinal-scale variable in the analysis. Most respondents (55%) are
happy about their lives, one-third of the respondents are very happy, and only a few
are not happy at all.
Religiosity is measured as whether the respondents agree with the statement
that religion is important in their lives. About 83% of respondents either strongly
agree or agree with the statement.
40
More than half of the respondents are female (60%), married (54%) and
citizens (72%). On average, the respondents included in the analysis are 48 years old,
range from 25 to 92 years old, and have one child 17 years old or younger in the
household. The length of residence, denoted residence, is a variable with five
categories—less than one year, between one to five years, six to 10 years, 11 to 20
years, and more than 20 years. Most of the respondents have lived in the community
for either more than 20 years (36%) or between one to five years (24%).
Table 2.1: Descriptive Statistics of the Variables in the Analysis

Variable(s) Mean (st.d.) or Frequency
(N=1946)
Max. Min.
Dependent Variables:
Religious Giving 1141 (1853) 0 7500
Secular Giving 566 (1312) 0 7500
Independent Variables:
Social Capital:
Social Trust 0 (0.7) -2.5 1.0
Bridging Network 6.1 (2.7) 0 11
Informal Network -0.1 (0.65) -0.9 2.2
Civic Engagement 3.2 (2.8) 0 18
Activism 0 (0.7) -0.5 5.7
Volunteering:
Time Volunteered 6 (2.5) 1 9
Human and Financial Capital:
Some College 31% -- --
College 31% -- --
Middle Income 46% -- --
High Income 21% -- --
Homeownership 72% -- --
Psychological Inclination:
Not Happy at All 1% -- --
Not Very Happy 5% -- --
Happy 55% -- --
Very Happy 38% -- --
41
Table 2.1: Descriptive Statistics of the Variables in the Analysis: Continued

Variable(s) Mean (st.d.) or Frequency
(N=1946)
Max. Min.
Religiosity:
Strongly Disagree 8% -- --
Somewhat Disagree 8% -- --
Neutral 1% -- --
Somewhat Agree 20% -- --
Strongly Agree 63% -- --
Demographics:
Age 47.5 (15.3) 25 92
Female 60% -- --
Citizenship 94% -- --
Married 57% -- --
Kids 0.9 (1.3) 0 13
Asian 1.5% -- --
Black 16% -- --
Hispanic 14% -- --
Other 3% -- --
Residence: <1year 6% -- --
1-5 years 24% -- --
6-10 years 16% -- --
11-20 years 18% -- --
>20 years 36% -- --

Data Analysis:
To test the impact of these independent variables on the amount of charitable
giving, I use the Tobit regression method. Because the dollars donated are left-
censored at zero, which means the amount of donation is never negative, ordinary
least squares (OLS) regression, which assumes a symmetrical distribution of the
dependent variable, will have a biased estimation of the impact. The Tobit
regression method is more appropriate for handling a censored dependent variable
(Tobin, 1958). The analysis is conducted using SAS 9.0 software. To ensure that the
results of the analysis are generalizable to the overall U.S. population, the Tobit
42
regressions are weighted by a weight variable, which is generated according to the
samples’ age, gender, education and race/ethnicity.

2.4 Model Estimation and Results

Table 2.2 presents the results of the Tobit regression on religious giving and
secular giving. The results indicate that social capital, volunteering, human and
financial capital, psychological inclination, religiosity and demographics all play
important roles in determining charitable giving.
Social capital has a positive impact on both religious and secular giving.
However, it affects the two types of charitable giving in different ways. As expected,
social trust, bridging social networks and civic engagement (or formal group
involvement) increase the amount of charitable giving to both religious and secular
causes (p<.10). This suggests that associational membership and diversity of social
networks increase individuals’ personal and organizational connections and thus
increase their chances of being asked to donate. Social trust facilitates the
charitable-giving decision. In addition to the three social capital measures,
organizational activism also positively affects the amount of secular giving
(p<.0001). This is not surprising as attending community events, club meetings and
public meetings raise awareness of secular issues and therefore increase the
propensity to give. Secular involvement does not necessarily promote religious
giving.
43
The results also support the hypothesis that volunteering positively affects
both religious and secular giving. People who volunteer more often in a year give
more to charity. This finding is consistent with the literature (Hodgkinson and
Weitzman, 1996; Schervish, 1997).
Table 2.2: Tobit Regression on Religious and Secular Giving
Variable(s) Parameter Estimates
Religious Giving
Parameter
Estimates
Secular Giving
Social Capital:
Social Trust 204.85** 102.71*
Bridging Network 35.45* 33.47**
Civic Engagement 111.28**** 112.24****
Informal Network -40.30 -4.29
Activism -74.47 183.03***
Volunteering:
Time Volunteered 19.90**** 7.01***
Human and Financial Capital:
Some College 433.08*** 160.73*
College 667.99**** 466.13****
Middle Income 342.25*** 304.43***
High Income 1209.46**** 1049.76****
Homeownership 272.83** 150.17
Psychological Inclination:
Happiness 186.02** 46.91
Religiosity:
Importance of Religion 858.88**** -17.57
Demographics:
Age 7.40* 9.76***
Female -359.18*** -126.76*
Citizenship -225.57 -119.40
Married 304.80*** 103.03
Kids 94.95** -31.69
Asian 264.90 -446.20*
Black 253.39 -204.99*
Hispanic -347.14* -427.66***
Other 88.99 -239.20
Residence 94.55** -56.82*
Log Likelihood -12706.75 -11683.45
*p<0.10, **p<0.05, ***p<0.01, ****p<0.0001
44
Similar to social capital, human and financial capital also significantly
determine the amount of religious and secular giving. Education and income both
increase charitable giving. Homeownership has a mixed impact on religious and
secular giving. Homeowners contribute significantly more to religious causes
compared to renters. However, homeowners are not significantly different from
renters in secular giving, controlling for other factors. This could be because
homeowners are more likely to be involved with community religious organizations
and therefore have more opportunities to give to religious purposes.
The results of the analysis show that psychological inclination—the feeling
of happiness—affects religious giving but not the secular giving. This is an
interesting finding. On one hand, it indicates that religion often provides individuals
with inner peace and joy, and this psychological effect fosters personal attachment to
religious organizations and increases the amount of religious giving. On the other
hand, individuals may not necessarily link personal happiness with certain secular
causes and therefore may not contribute more to secular causes compared to those
who are less fortunate and happy. It is also possible that religious giving gives
people a sense of happiness, which makes the relationship between charitable giving
and happiness reciprocal. Because the data I use for this research are cross-sectional,
it is methodologically challenging to test the impact of happiness on religious giving,
controlling for this reciprocity.
Not surprisingly, those who think religion is important in their lives donate
more to religious causes. In addition, I find that religiosity does not have a
45
significant impact on secular giving. This finding is interesting because it contrasts
with the notion that religiosity also affects secular giving and that those who are
religious give more to both religious and secular causes. My findings show that the
impact of religion on secular giving is inconsistent. Those who think religion is not
important to their lives are just as likely to donate to secular causes as those who
think religion is important. Therefore, the finding raises reasonable doubt regarding
the importance and influence of religiosity on secular giving.
In terms of demographics, age, gender, being Hispanic and the years lived in
the community significantly affect religious and secular giving. Women contribute
significantly less to religious and secular causes than men; older people contribute
more than younger people; Hispanics contribute less than whites. Those who live in
a community longer tend to donate more to religious causes and less to secular
purposes. This could be caused by the strong ties of long-term residents to
community religious organizations and the crowd-out effect of charitable giving.
Individuals have limited charitable resources they can distribute among religious and
secular causes. On one hand, those who have lived in a community for more than 10
years tend to develop connections to local religious organizations. These
connections will encourage charitable giving to religious causes. On the other hand,
those residents’ commitment to secular causes may not be as strong as to religious
causes. Therefore, after controlling for social capital, volunteering, human and
financial capital, and other factors in the model, the amount of secular giving is
actually less compared to those who have been in the community for a short period.
46
In addition, the connections among religion, family and community are also reflected
in the impact of marital status and children on religious giving. Married persons and
those who have more children contribute more to religious causes, but they are not
significantly different in secular giving from non-married persons, which include
single, divorced and widowed persons, and those who have no children. In terms of
racial/ethnic differences in charitable giving, Asians and blacks contribute less to
secular causes than whites but are not significantly different from whites in religious
giving.

2.5 Conclusion
In an era of growing competition for charitable dollars, understanding
individual giving behavior is critical to capacity building and the survival of
charitable organizations, especially small organizations. By connecting religious and
secular giving to an individual’s social trust, social networks, volunteering behavior,
human and financial capital, psychological inclination, religiosity and demographics,
this study draws a new diagram of the personal and social forces that affect
charitable giving.
Overall, the findings support the main hypothesis that social capital fosters
charitable giving. Individuals who trust others or authorities more give more to
religious and secular causes. Individuals with a greater diversity of social networks
tend to give more. Individuals involved in more formal groups also donate more.
These results underscore the importance of individual trust, connections to other
47
individuals and connections to organizations in determining charitable behavior.
Interestingly, the results indicate that various kinds of social networks have different
influences on religious giving and secular giving. Active participation in civic
affairs contributes only to secular giving but not to religious giving.
Another interesting and important finding is that happiness, religiosity,
marital status and children in a family matter for religious giving but not for secular
giving. The number of years people live in a community increases religious giving
but decreases secular giving. The considerable differences of these forces in shaping
the generosity toward religious and secular causes suggest that future surveys and
empirical studies of charitable giving should analyze the two types of giving
behavior separately when possible. It also suggests that faith-based nonprofit
organizations and secular nonprofit organizations need different fundraising
strategies and should target different types of potential donors.
In addition, as expected, people who volunteer more also donate more;
people with higher education levels and income give more; and older people donate
more to both religious and secular causes. These results suggest that to attract or
increase the amount of donations, charitable organizations—both religious and
secular nonprofit organizations—can try to provide voluntary opportunities and thus
build their volunteers’ sense of connection to the organization. Through bonding and
bridging networks with volunteers, gaining their trust and enhancing their
appreciation of the organizations’ mission, charitable organizations may attract more
monetary contributions from these volunteers.
48
Finally, charitable giving is a pro-social action that cannot be solely
explained by rational choice theory. Giving is a rational choice not based on an
individual’s cost-benefit calculation. Rather, it is a rational choice because an
individual’s network, trust, psychological inclination, human and financial resources,
and demographics jointly determine the outcome.
49

CHAPTER 3: COMMUNITY FOUNDATION AND
SOCIAL CAPITAL

The United States has a long tradition of community philanthropy—the act of
giving back to one’s community by volunteering time and talent or by donating
money or goods. The importance of this philanthropic tradition has increased as
many local governments face increased demands for their limited resources, and
changes in local governance have encouraged an increased reliance on the private
sector to help solve the complex problems faced by communities. Community
leaders have thus begun to turn to local philanthropic organizations to provide
institutional support for identifying and coordinating effective solutions to
community needs (Garonzik, 1999). One such community philanthropic
organization is the community foundation.
Community foundations, grant-making public charities, are well positioned
for a community leadership role as they serve a defined geographic area and must
demonstrate broad public support from diverse funding sources to maintain their
public charity status.
6
They are one of the fastest growing forms of organized
philanthropy in the last decade. According to Foundation Center statistics, the
number of community foundations in the United States has more than doubled from
328 in 1990 to about 700 in 2003; their assets have grown from $4.6 to $16.9 billion;

6
These nonprofit organizations are tax-exempt under 501(c)(3) of the Internal Revenue Code.

and their grants have increased from $0.3 to $1.3 billion
7
(see Figure 3.1).
Internationally, the growth of community foundations has been similarly robust.
Worldwide, the number of community foundations has increased from fewer than
440 in 1990 to 1,064 in 2003 (Sacks, 2004).
Figure 3.1: Growth of Community Foundations in the US: 1990-2003
Number of Foundations, 1990-2003
0
100
200
300
400
500
600
700
800
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
No. of Foundations

Amount of Assets and Giving, 1990-2003
0
2
4
6
8
10
12
14
16
18
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
Amount (in billions
Amount of Assets Amount of Giving

Source: The Foundation Center, 2005. From the Foundation Center’s Statistical Information Service,
Table “Change in Community Foundation Giving and Assets, 1981 to 2003.

7
The Foundation Center, 2005. The amounts are in constant 1981 dollars based on the annual
average Consumer Price Index, all urban consumers, as reported by the U.S. Department of Labor,
Bureau of Labor Statistics, as of February 2005.

50
51

This tremendous growth of community foundations nationally and
internationally has provided new opportunities for community-based social change.
Sustaining that promise, however, has proved challenging for many community
foundations. Community foundations rely on charitable donations to achieve their
mission, and they face considerable competition for those resources. Consequently,
attracting charitable donations has been the primary focus for many community
foundations (e.g., see Graddy and Morgan, 2006). Much of these donations come
from the communities within which the foundations focus their activities (Hero,
1999). This suggests that specific community characteristics may be critical for the
growth and development of community foundations. The nature of the connection
between community characteristics and community philanthropy is not well
understood. To what extent does the demographic composition of the community
matter? To what extent will the social trust and civic engagement of the residents
affect the gifts received by community foundations? Recent developments in social
capital research shed some light on this relationship.
Studies on social capital began to flourish after Robert Putman sounded the
alarm of declining social capital in the United State in his “Bowling Alone” article
(1995). Putnam argued that communities with high levels of social capital were
more prosperous and successful in implementing governmental reforms (Putnam, et
al., 1993). Empirical studies in the past decade have demonstrated that social capital
contributes to a wide range of positive social, economic and political outcomes, such
52
as economic development and poverty alleviation (Fukuyama, 1995; Woolcock,
1998; Narayan, 1999; Skidmore, 2001), improved school performance (Helliwell and
Putnam, 1999), decreased crime (Galea, et. al, 2002), and better health (Kawachi, et.
al, 1999a). In addition, scholars recently have linked social capital to the field of
nonprofit studies. Brooks (2005) argued that social capital could make people
generous. Brown and Ferris (2007) found that social capital affects both giving and
volunteering. Saxton and Benson (2004) found that political engagement and
“bridging” social ties but not the level of interpersonal trust have significant impacts
on the growth of the nonprofit sector.
In this paper, I extend the literature by examining the relationship between
social capital and the development of community foundations. More specifically, I
consider whether community foundations receive more gifts if they are located in
communities with higher levels of social capital, i.e., where residents have higher
levels of social trust, higher degrees of community involvement and more social
activities.
The paper is organized in four parts. First, I briefly review the concept of
social capital and then develop a model of its connection to community foundation
development. In the next section, I introduce the research design, the data sources
for the study and how the variables are measured. I then estimate a model and
explore the impact of five dimensions of social capital on the amount of charitable
gifts community foundations receive in 132 counties nationwide. Finally, I discuss
53
the implications of this study for the literature on social capital, civic participation
and community foundation development.
3.1 Model Development

Social Capital
Social capital, like many other popular concepts, has a wide range of
definitions. The most influential definitions come from Bourdieu and Wacquant,
Coleman, Fukuyama and Putnam. Bourdieu and Wacquant (1992) differentiated
social capital from economic and cultural capital, while arguing that acknowledging
the different forms of capital is necessary to explain societal structures. They
defined social capital as “the sum of the resources, actual or virtual, that accrue to an
individual or a group by virtue of possessing a durable network of more or less
institutionalized relationships of mutual acquaintance and recognition” (1992: 119).
Similarly, Coleman (1988, 1990), emphasizing the network characteristics of social
capital, defined social capital as the aspects of social structure that facilitate the
actions of individuals within that structure. Although he did discuss various forms of
social capital—such as obligations, expectations, social relations and norms—
Coleman used the strength of the relations between parents and children and the
family’s integration into a community as measures of social capital when he
examined social capital’s role in aiding the formation of human capital. He found
that both social capital in and outside of the family reduced the probability of
dropping out of high school (Coleman, 1988).
54
In contrast to this network view of social capital, Fukuyama (1995, 1999)
focused on the social norm and trust aspects of social capital. He differentiated his
definition of social capital from Coleman’s and emphasized that social capital is a
“set of informal values or norms shared among members of a group that permits
them to cooperate with one another” (1999: 16). Fukuyama suggested that social
capital, especially trust, plays a crucial role in fostering economic prosperity. He
argued that the existence of networks in a society—such as kinship groups and tribes,
which are forms of social capital—could be obstacles to development and concluded
that many countries, such as those in Latin America, failed to achieve fast economic
growth because of low trust or a small radius of trust. Therefore, to achieve
successful economic development, it is important to build social capital on a society-
wide basis through strengthening political institutions and the rule of law (Fukuyama,
2002).
Putnam’s definition represents a synthesis of the network and trust views of
social capital. He defined social capital as “features of social organization such as
networks, norms, and social trust that facilitate coordination and cooperation for
mutual benefit” (1995: 67). Among the three building blocks of social capital,
networks are the base upon which the other two build. For Putnam, civic
communities can be viewed as horizontal networks where participation, trust and
solidarity take place. Also, good government and economic progress are enhanced
by collaboration and norms of reciprocity, which are based on trust (Putnam et. al,
1993).
55
In the past several years, numerous studies have documented the positive
impact of social capital on a plethora of social, economic and political phenomena in
communities. Putnam, et al. (1993), Boix and Posner (1998), and Knack (2002)
demonstrated that civic engagement in political and community affairs would
enhance citizens’ willingness to cooperate for mutual benefit, to monitor government
activities and to keep governments accountable. Woolcock (1998), Narayan (1999),
and Knack and Keefer (1997) found that social capital could bring more economic
opportunities and thus alleviate poverty and promote economic development.
Kawachi and his coauthors (1998, 1999a, 2000) found that social cohesion, social
ties and social trust are positively associated with self-rated health status and
negatively associated with mortality and crime rates in a community. Helliwell and
Putnam (1999) found that a community’s level of social capital is positively
associated with school performance. Overall, social capital has been viewed as a
resource for community development and a solution to the collective action problem.
Recently, scholars have tied social capital to the field of nonprofit studies.
After controlling for demographic factors, Brooks (2005) found that group
involvement, social trust and political engagement each had positive impacts on
people’s secular and religious giving. Brown and Ferris (2007) found that an
individual’s associational network and trust in others and in the community were
important determinants of giving and volunteering. Saxton and Benson (2004) found
that political engagement and “bridging” social ties but not the level of interpersonal
trust significantly increase the number of nonprofit organizations in a community.
56
Backman and Smith (2000) argued that the characteristics of social networks—the
day-to-day patterns of interaction connecting individual actors with one another—
were crucial to the development of community capacity.
Building on this literature, I hypothesize that social capital will make a
positive contribution to the development of community foundations. The community
foundation is a unique form of public charity. Its focus is geographically bound, thus
it serves a defined community. The foundation receives charitable gifts, which it
then uses to support nonprofits that meet community needs and reflect donors’
wishes. Given this unique bond between a community foundation and the area it
serves, I expect the level of social capital in a community to affect directly the
amount of gifts received by community foundations. I adopt Putnam’s view of
social capital and explore the impact of both social trust and social networks on the
development of community foundations. I expect higher levels of social capital to
allow community foundations to bridge across social networks and gain access to
funding streams inside the community. Social capital also allows community
foundations to build on the social trust in the region to develop donor trust. Thus, in
a region with high social capital—where residents participate in local voluntary
organizations and community activities, and trust others in their community— I
expect those residents to be more likely to donate to local charities to collectively
address community-based problems. In contrast, in a region with low social
capital—where residents do not trust others and do not participate in community-
based social activities—I expect that residents will be less likely to donate to local
57
charities. In this sense, the social capital of a community is a major resource for the
development of community foundations. Therefore, I posit:
H1: Community foundations serving communities with high levels of
social capital are expected to receive more gifts per capita.
The impact of social capital on community foundation development must be
placed in a broader model of the determinants of such development. To develop this
model, I draw from the organization theory and charitable giving literatures to posit
that the amount of gifts received by community foundations is associated with how
long community foundations have been present in the community, the number of
community foundations in the region, the local competition for donors, and the
socioeconomic and demographic characteristics of the community that are known to
affect philanthropic giving.

Charitable Organizations in the Community
Communities vary in the development of their charitable institutions. Some
have a long tradition of community philanthropy with strong community recognition
and identification, while others may have only recently seen the development of
these institutions. Moreover, community foundations are only one form of charitable
institutions. Communities may have other charities that attract local donors. The
presence of multiple charities operating within a community could affect the gifts
received by community foundations. I consider here the impact of the history and
58
extent of community foundation presence in the region and the presence of local
competitors on giving to community foundations.
Organizational ecology views organizational development in terms of a life
cycle (Hannan and Freeman, 1989). Thus, age is a key factor in explaining the
survival and development of organizations. A young organization usually lacks
social networks and institutional contacts, and thus has limited ability to secure
resources and build capacity (Baum and Oliver, 1991). In addition, the
organizational legitimacy literature argues that organizational age is positively
related to an organization’s legitimacy and reputation (Deephouse and Carter, 2005).
The legitimacy of individual organizations and industries could attract financial
resources for organizational development (Lounsbury and Glynn, 2001). I
synthesize these two theories and apply them to the development of community
foundations. If community foundations, a form of community philanthropy, have
existed in a region for a long time, the legitimacy and reputation of this type of
public charity would be well developed. Residents will be more likely to trust
community foundations as a community builder and to use them as their charitable
vehicle. Even young community foundations in the region will benefit from the
presence of other community foundations in the area. Therefore, I posit:
H2: The longer community foundations have existed in a community,
the greater the expected gifts per capita to community foundations in the
region.
59
However, the development of community foundations is constrained by
competition for charitable contributions from local philanthropic organizations. A
typical competitor of community foundations is the United Way. Ragey and her co-
authors (2005) found that the United Way often directly competes with community
foundations for major donors and community leadership. Therefore, I expect:
H3: The more contributions other local charitable organizations
receive, the less the expected gifts per capita to community foundations in the
region.
Finally, communities with multiple community foundations have more
exposure to these institutions and, as I argued above, may be more likely to support
all such organizations. However, community foundations may compete with each
other for the same donors (Ferris and Graddy, 2007), in which case the total gifts
might not increase. On balance, I expect regions served by multiple community
foundations to receive more gifts per capita, but the effect is likely to be small.
Therefore, I posit:
H4: The more community foundations that serve a region, the greater
the expected gifts per capita to all community foundations in the region.

Community Socioeconomic and Demographic Characteristics
Community foundations are created as a response to unmet community needs.
Thus, the characteristics of the community shape the nature and focus of the
philanthropic organizations in the region. More fundamentally for the purposes of
60
this study, the characteristics of community residents affect their propensity to give
to locally focused organizations. These characteristics reflect the connection the
individual feels to the community and his/her propensity to support the public good.
A review of the charitable giving literature identified nine socioeconomic variables
that are expected to predict this connection to and support of one’s community.
Education: The empirical giving literature has demonstrated that educational
level is positively associated with the amount of charitable contributions (e.g., Reece
and Zieschang, 1985; Brooks, 2005). This relationship likely reflects both the ability
and the inclination to give. Individuals with high levels of education often work in
jobs requiring high levels of knowledge and skills, which consequently have higher
salaries. Education also moves people upwards in social hierarchies and makes them
more willing to undertake actions for the public good (Brown and Ferris, 2007),
which is usually expected from persons with privileged social status. Therefore, I
expect:
H5: Communities with more educated residents are expected to have
higher per capita gifts to community foundations.
Ethnic Homogeneity: Knack and Keefer (1997) found that in ethnically
diverse localities, networks are poorly developed, and civic participation is low. In
addition, laboratory experiments and survey research have confirmed that trust and
perceived trustworthiness tend to be high when individuals are socially similar, while
both trust and trustworthiness decline when experimental partners are of different
races (Glaeser et. al, 2002). Therefore, in an ethnically diverse community, the level
61
of social cohesion is expected to be low. Residents are less likely to share a sense of
a community. Therefore, I posit that:
H6: Ethnically homogeneous communities are expected to have
higher per capita gifts to community foundations.
Homeownership: The expected impacts of homeownership on community
foundation development derive from community ties. Compared to renters, I expect
homeowners to be more committed to their community and to care more about
community problems. Their status as homeowners suggests a greater stake in the
community. Rossi and Weber (1996) found that homeowners were more likely to
take part in and provide leadership for local community organizations. Therefore, I
expect that:
H7: Communities with higher percentages of its residents living in
owner-occupied units are expected to have higher per capita gifts to
community foundations.
Population: Community size, measured as the total number of people in the
community, affects social cohesion, interpersonal interaction and the sense of
community. In a small community, the chance of residents sharing social networks,
being familiar to each other, working collectively to solve issues in the community
and thus developing a shared sense of community are higher than in large
communities. As the sense of community, caring and community involvement are
important factors for people deciding to give to community foundations (Magat,
1989), I posit that:
62
H8: Smaller communities are expected to have higher per capita gifts
to community foundations.
Population Density: In the nonprofit literature, it is often posited that the
urban and rural status of a region significantly affects the growth of nonprofit
organizations (Grønbjerg and Paarlberg, 2001; Saxton and Benson, 2005). However,
the nature and direction of the effect is unresolved. Lincoln (1977) argued that high
levels of urbanization would negatively affect community integration and thus
decrease support for nonprofits. Saxton and Benson (2005), in contrast, argued that
“urban environments should find it easier to develop a concentrated nonprofit
community,” and therefore population density should positively affect the growth of
the nonprofit sector. These arguments can be extended to the development of
community foundations. Because community foundations rely heavily on community
integration and on residents’ sense of community, I adopt Lincoln’s argument and
posit that in densely populated or urban areas, the fundraising efforts for community
foundations will be difficult compared to sparsely populated or rural areas. Thus,
H9: Regions with higher population densities are expected to have
lower per capita gifts to community foundations.
Elderly Population: Grønbjerg and Paarlberg (2001) found that the proportion
of older residents in a community serves to increase the supply of human and
financial resources that can be mobilized by nonprofit organizations. This finding
also applies to the growth of community foundations because estate donations from
63
retirees are important sources of funding for community foundations (Leonard, 1989;
Council on Foundations, 1999). Therefore,
H10: Communities with higher percentages of elderly populations are
expected to have higher per capita gifts to community foundations.
Poverty: A large proportion of the community’s population living in poverty
indicates lack of wealth and increased demand for services, i.e., greater needs and
less capacity to meet those needs. Grønbjerg and Paarlberg (2001) found that the
percentage of children living in poverty in a community is negatively associated with
the density of nonprofit organizations in the region. Cobin (1999) also found that the
percentage of people in a metropolitan area living at or below poverty-level income
is negatively associated with the growth of nonprofit social service organizations. I
posit less support for community foundations as well.
H11: Communities with higher percentages of their residents living in
poverty are expected to have lower per capita gifts to community foundations.
Religion: American society long has been recognized for the breadth and
depth of its religious tradition. About 40 percent of American people report
attending religious services weekly (Swanbrow, 2003). Religious belief is identified
as a major contributor to individual charitable behavior and to the strength of the
nonprofit sector (Independent Sector, 2004; Brooks, 2005). In addition, people who
donate to religious organizations are also more likely to donate for secular purposes
(Independent Sector, 1999) as “faith gives meaning to community service and good
will, forging a spiritual connection between individual impulses and great public
64
issues. That is, religion helps people to internalize an orientation to the public
good.”
8
As the community foundation is an institution that serves the public good, its
development should benefit from its residents’ religious beliefs. Therefore,
H12: Communities with higher percentages of their population
expressing religious beliefs are expected to have higher per capita gifts to
community foundation.
Single-Person Households: In general, charitable contributions of single-
person households are expected to be lower than that of family households. This
could be attributed to the income effect and the network effect. Compared to dual-
salary family households, single-person households have fewer financial resources
on average and thus have less capacity for charitable giving. In addition, scholars at
the Australian Institute of Family Studies (AIFS) argue that a stable family life is a
key underpinning of civic engagement (Winter, 2000a; Stone, 2001). In contrast,
single-person households are less likely to participate in community activities.
Therefore, I posit:
H13: Communities with higher percentages of single households are
expected to have lower per capita gifts to community foundations.
In summary, I expect gifts to community foundations to be determined by the
level of social capital, a broad range of socioeconomic and demographic

8
From Saguaro Seminar on Civic Engagement in America, “Better together: Religion and Social
Capital”, John F. Kennedy School of Government, Harvard University; accessed in August 2005.
http://www.bettertogether.org/pdfs/Religion.pdf#search='religion%20and%20social%20capital'

characteristics of the community being served, and by the experience in the
community with these institutions. The model is summarized in Figure 3.2.
Figure 3.2: Model of the Determinants of Community Foundation Development

65

Community Socioeconomic and
Demographic Characteristics:
• Education (+)
• Ethnic Homogeneity (+)
• Homeownership (+)
• Population (-)
• Density (-)
• Elderly (+)
• Poverty (-)
• Religiosity (+)
Charitable Organizations
• Years in Community (+)
• Number of Community
Foundations (+)
• Competition (-)
Social Capital:
• Social Trust (+)
• Bridging Social Networks (+)
• Informal Social Networks (+)
• Civic Engagement (+)
Community
Foundation Gifts
Received Per
Capita

3.2 Data and Research Design

To test the model developed in the previous section, data on social capital,
community foundations and their competitors, and community socioeconomic and
demographic characteristics are needed. Because most community foundations in the
66

United States define their service areas as a county, I use the county as the unit of
analysis for the community.
The social capital data comes from the 2000 Social Capital Community
Benchmark (SCCB) Survey. This survey was designed by the Saguaro Seminar
Project—led by Robert Putnam—of the John F. Kennedy School of Government at
Harvard University. It was the first effort in the United States to measure the various
aspects of social capital in a community. The survey was conducted both nationally
and in 41 local communities in the country. This study uses the social capital
measurement collected from the local sample of SCCB, which includes 26,230
respondents from 284 counties. After excluding observations with missing variables
and counties with less than five respondents, 132 counties are included in the
analysis. Figure 3.2 shows the geographic distribution of the counties in the
sample.
9

The information on community foundations—including the list of community
foundations used in the study, the geographic focus of the foundations, their total
gifts received, the year they were created and the number of community foundations
that serves a region— were collected from the Council on Foundations, the
Grantsmanship Center, Guidestar.org and each community foundation’s website. The
information on competing community philanthropic organizations is collected from
the National Center for Charitable Statistics.

9
Additional information on the survey, including a list of communities surveyed, is available at
www.cfsv.org/communitysurvey.

67
Figure 3.3: Geographic Distribution of Counties Included in Analysis
Texas
Montana
Utah
California
Idaho
Nevada
Arizona
Oregon
Iowa
Colorado
Wyoming
Kansas
New Mexico
Illinois
Minnesota
Ohio
Nebraska
Missouri
Florida
Georgia
Washington
Oklahoma
South Dakota
North Dakota
Wisconsin
Maine
New York
Alabama
Arkansas
Virginia
Indiana
Michigan
Louisiana
Kentucky
Tennessee
Pennsylvania
North Carolina
Mississippi
South Carolina
West Virginia
Vermont
Maryland
New Jersey
New Hampshire
Massachusetts
Connecticut
Delaware

68
Community characteristics—including total population, population density,
percentage of homeownership, the level of education, the number of single-person
households, population in poverty, population over 65 years old and the
race/ethnicity distribution —were collected from the 2000 U.S. Census. The
percentage of the community’s population holding religious beliefs was estimated
based on the SCCB survey.
Dependent Variable: Community Foundation Gifts Received Per Capita

The geographic focus of a community foundation can be as small as a city or
as large as several states. For example, the Glendale Community Foundation serves
the city of Glendale in Los Angeles County, California. However, the Foundations
for the Carolinas, based in Charlotte, North Carolina, serves selected regions in both
North Carolina and South Carolina. However, in most cases, the service area is a
county.
To measure community foundation development in a county, I use
“community foundation gifts received per capita”—the total gifts received by all
community foundations that serve a county in 2000 divided by the county’s
population. If a community foundation serves more than one county, I divided its
total gifts received by the counties served, adjusted by county population, to
determine gifts received by each county. A total of 121 community foundations
serving 132 counties are included in the analysis.

69
Independent Variables
Social Capital. As developed earlier, social capital refers to the features of
social organization, such as networks, norms and social trust that facilitate
coordination and cooperation for mutual benefit (Putnam, 1995). It is normally
measured in terms of several core dimensions (Putnam, 2000; Grootaert & Bastelaer,
2001; Narayan and Cassidy, 2001; Adler and Kwon, 2002). In this study, I examine
the impacts of five dimensions of social capital—social trust, bridging social
networks, informal social networks, civic engagement and organized group
activism—on the charitable gifts received by community foundations. These
dimensions capture both the network and trust aspects of social capital. Appendix B
presents the definitions and measurements of these five dimensions of social capital.
Community-level social capital is defined as the average of these measures for the
sampled individual residents of the county. I assume that the social capital of those
sampled residents is representative of the whole county. For all five dimensions, I
expect a positive relationship between social capital and charitable gifts.
Community Foundation Presence. I measure the presence of community
foundations in a region, denoted Years in Community, as the number of years
community foundations have existed in the county. This is calculated as the
difference between the year 2000 and the year the community foundation first was
established in each county. I expect a positive impact on gifts received. The longer
community foundations have existed in the county, the more familiar the residents
are with these institutions and the more they are expected to support them. The

70
number of community foundations serving a region, denoted Number of Community
Foundations, is a count of the total number of community foundations that serve the
same county. Community competitors for philanthropic dollars, denoted
Competition, is measured as the per capita contributions, gifts and grants received by
federated giving programs in each county in 2000. These competitors include the
United Way and other community charitable programs as defined by the National
Taxonomy of Exempt Entities (NTEE).
Socioeconomic and Demographic Characteristics. Measurement of most of
the community socioeconomic and demographic characteristics is straightforward.
The education level of county residents, denoted Education, is measured as the
percentage of the population with a bachelor’s degree or higher among the
population 25 years old and older. The proportion of the elderly, denoted Elderly, is
measured as the percentage of the population over 65 years old. The extent of
homeownership, denoted Homeownership, is measured as the percentage of the
county’s population living in owner-occupied housing. Each of these variables is
expected to have a positive impact on charitable giving to community foundations.
Population is measured as the population in 2000 for each county.
Population density, denoted Density, is measured as the county’s population per
square mile in 2000. Poverty is the proportion of the county’s population with
incomes below the federal poverty level defined in 1999. Finally, Single-person
Households is the proportion of the county’s population living in single-person

households. Each of these variables is expected to have a negative impact on giving
to community foundations.
Measures of our remaining two community characteristics—ethnic
homogeneity and religion—require more explanation. First, to measure the ethnic
homogeneity of the community, denoted Ethnic Homogeneity, I construct a
Herfindahl-Hirschman Index (HHI) (see Graddy and Chen, 2006). The HHI is a
commonly accepted measure of firm concentration in an industry.
10
Here, I use it to
capture the ethnic composition of a county. Using five categories of ethnicity—
African American, Asian, Latino, White and Other—I calculate the share of each
category among residents of the county, square the numbers and then sum them
(HHI= ). Low values of the index indicate ethnically diverse communities,
while high values indicate more ethnically homogeneous communities. I expect a
positive relationship with giving to community foundations.
∑
=
5
1
2
i
i
s
Finally, I measure the extent of religiosity among the residents of a county,
denoted Religiosity, as the percentage of respondents in the SCCG survey who stated
that they held religious beliefs—either Protestant, Catholic, another type of Christian,
Jewish or some other religion. I expect a positive relationship with giving to
community foundations.
71

10
The HHI is calculated by squaring the market share of each firm in the industry and then summing
the resulting numbers. The index approaches zero as the number of firms in the industry increases and
each firm has an equal small share of the market. The index approaches 1 if one firm has 100%
market share.

72
To summarize, the empirical model to be estimated is presented below with
the expected direction of the effect noted in parentheses. Table 3.1 presents the
descriptive statistics associated with each variable.
Community Foundation Gifts Received Per Capita= f {Social Trust(+),
Bridging Social Networks(+), Informal Social Networks(+), Civic
Engagement(+), Organized Group Activism(+), Years in Community(+),
Number of Community Foundations(+), Competition(-), Education(+),
Ethnic Homogeneity(+), Homeownership(+), Population(-),Density(-),
Elderly(+), Poverty(-), Religiosity(+), and Single-Person Households(-)}

Table 3.1: Descriptive Statistics
Variables Mean MedianStd. Dev. Min Max
Dependent Variables (N=132)
Community Foundation Gifts
Received Per Capita (dollars) 25.12 16.40 24.92 0 136.02
Independent Variables
Social Capital
Social Trust 0.12 0.13 0.19 -0.47 0.68
Bridging Social Networks 6.20 6.26 0.72 2.74 8.25
Informal Social Networks 0.03 0.01 0.16 -0.27 0.61
Civic Engagement 3.02 3.00 0.57 1.27 4.88
Organized Group Activism 0.04 0.06 0.23 -0.54 1.18
Charitable Organizations
Years in Community 28.71 23.50 22.28 0 85
Number of Community
Foundations 1.54 1 1.00 0 6
Competition 73.15 12.28 159.24 0 1253.29
Demographic Characteristics
Education (%) 22.60 20.76 10.47 7.03 52.38
Ethnic Homogeneity 0.76 0.84 0.20 0.27 0.96
Homeownership (%) 74.51 76.14 8.82 36.79 89.13
Population 369,960 107,965 947,020 6,851 9,519,338
Density 728.20 214.15 1858.29 1.70 16634.40
Elderly (%) 12.16 12.19 2.63 6.92 19.71
Poverty (%) 10.03 9.33 4.24 2.92 22.83
Religiosity (%) 87.10 87.60 7.87 62.50 100
Single-Person Households (%) 9.57 9.37 2.09 5.33 16.96

73
Residents in the sample communities are on average involved in three formal
organizations and have six different kinds of personal friends. The average of the
social trust index in the communities is slightly higher than the national norm, and
the averages of the informal social networks and the organized group activism index
are close to national norms.
The percentage of the population in a community with bachelor’s degree and
higher varies from less than 7% to 52%. On average, about 23% of a community’s
population 25 years old and older has a bachelor’s degree and above (the national
average is 24%). The communities in the sample vary in their ethnic homogeneity—
the ethnic index ranges from 0.27 to 0.96, and the average ethnic homogeneity index
is 0.76 (the national ethnic homogeneity index is 0.51). The percentage of the
population living in owner-occupied housing ranges from 37% to 89% in the
selected communities, and the average is about 75% (the national average is 69%).
The population over 65 years old accounts for an average of 12% of community
residents, the same as the national average. The percent of the population living in
poverty is about 10% on average (the national average is 12%). The sample also
reflects a general characteristic of American society: a large proportion of the
population has religious beliefs. On average, the percentage of the population with
religious beliefs in the communities is about 90%. The results of the General Social
Surveys of America also show that about 90.6% of respondents have religious
preferences (Davis, et. al, 2005). The proportion of the population living in single-
person households averages 10%, which is the same as the national average.

74
The communities in our sample vary substantially in their familiarity with
community foundations. Some communities have just established community
foundations in the region, while others have had community foundations for more
than eight decades. The average is 29 years. An average of 1.5 community
foundations serve each county included in the sample. The per capita contributions
received by competitors average $73. Community foundations in the sample receive
an average of $25 per capita, but there is a considerable variation in the per capita
support to community foundation, which ranges from $0 to $136.

3.3 Analysis

The specification of the model is linear, and it was estimated using Ordinary
Least Squares. In Table 3.2, I present the results as three models to demonstrate the
added explanatory power of social capital on giving to community foundations
compared to that of community foundation presence/competition and of the
community’s socioeconomic and demographic characteristics. Model 1 reveals that
the community’s socioeconomic and demographic characteristics alone explain 19%
of the variation in per capita gifts to community foundations. Including the number
of years that community foundations have existed in the community, the number of
community foundations that serve the community and competition for funds (Model
2) adds 8% in explanatory power, and including social capital measures (Model 3)
adds an additional 3% in explanatory power. The full model, which includes all
three sets of influences, explains 30% of the variation in per capita gifts to

community foundations. I report the results as standardized coefficients because the
primary interest is in social capital for which the scale of measurement is not
meaningful.

Table 3.2: Standardized OLS Regression Coefficients for Per Capita Gifts
Received by Community Foundations
Independent Variables Model 1 Model 2 Model 3
Demographic Characteristics
Education -0.13 -0.17 -0.29
Elderly 0.10 0.14 0.08
Ethnic Homogeneity 0.08 0.15 0.02
Homeownership -0.42* -0.45* -0.47**
Population -0.06 -0.18 -0.18
Population Density 0.28* 0.26* 0.27**
Poverty -0.33** -0.28** -0.26*
Religiosity 0.02 0.02 0.02
Single-Person Households -0.06 -0.16 -0.13
Charitable Organizations
Years in Community 0.23* 0.23*
Number of Community Foundations 0.17 0.18
Competition 0.05 0.04
Social Capital
Social Trust 0.22*
Bridging Social Networks 0.01
Informal Social Networks 0.03
Civic Engagement 0.02
Organized Group Activism -0.01
R
2
19% 27% 30%
Change in R
2
-- 8% 3%
N=132
*p<.05,**p<.01, ***p<.001
75

76

The results are interesting. They reveal that all three sets of variables have
statistically significant impacts on gifts to community foundations, although the
relationships are not always as expected. Tests for multicollinearity reveal no
serious multicollinearity among the independent variables. I now discuss the results
for all three sets of variables in some detail.
Socioeconomic and Demographic Characteristics. Three of the nine
socioeconomic and demographic characteristics have statistically significant impacts
on the gifts received by community foundations in a county (p<0.05). Community
foundations located in low poverty areas tend to receive significantly higher amounts
of gifts per capita. This is as expected and is consistent with other literature, which
finds that poverty negatively affects the development of the nonprofit sector (Cobin,
1999; Grønbjerg and Paarlberg, 2001).
The effect of population density and homeownership, however, are not as
expected. Increasing population density significantly increases per capita gifts
received by community foundations. This finding supports Saxton and Benson’s
argument (2005) that urban environments more easily support the growth of the
nonprofit sector, in this case, community foundations. Higher homeownership in a
community is negatively associated with per capita gifts received by community
foundations. This could be due to the percentage of new homeowners or low-income
homeowners who have limited capacity to donate to community foundations. The
other socioeconomic and demographic variables are not significant determinants of
the charitable gifts received by community foundations.

77
Community Foundation Presence. As expected, the longer community
foundations have existed in communities, the higher amount of per capita gifts
received by community foundations in that region (p<0.05). The number of
community foundations serving a region and the competition from other federated
giving programs do not have significant impacts on the per capita gifts received by
community foundations. Together, the three variables explain about 8% of the
variance in per capita gifts. This is a relatively large effect and supports the
importance of familiarity with specific charitable institutions and presumably the
associated increased legitimacy. It is worth noting that the estimation of the model
does not have significant changes when the competition variable is excluded from
the model. This indicates that the model is robust and is not affected by the missing
variable of the competition variable.
Social Capital. Our primary interest in this work is with the role of social
capital on community foundation giving. Our results indicate that the level of social
capital in a region has a statistically significant impact on gifts received by the
community foundations serving that region. Social capital alone explains 3% of the
variance in per capita gifts to community foundations.
One dimension of social capital—social trust—is found to impact charitable
giving. As expected, community foundations serving communities with high levels
of social trust receive more gifts per capita. The charitable giving literature
recognizes and emphasizes the role of trust, more specifically of donors’ trust of
nonprofit organizations in affecting charitable decisions. The findings confirm the

78
importance of trust, although a different level of trust, in community foundation
development. When residents of a community generally feel they can trust others, it
will be easier for community foundations to build on the social trust in the region to
develop donor trust and therefore receive a higher amount of gifts. However, I find
that the social network aspects of social capital—bridging social networks, informal
social networks, civic engagement, and organized group activism—do not
significantly impact charitable giving to community foundations.
These findings indicate that the different dimensions of social capital—social
trust versus social networks—may not affect charitable giving in the same way.

3.4 Conclusion and Implications

The rapid growth of community foundations in the past decade has attracted
substantial interest in community-based institutional philanthropy. Some studies
explored the role of community foundations in addressing community needs
(Carman, 2001, Garonzik, 1999). However, there are few who have studied the
factors that affect the development of community foundations. In this study, I
explore how community context and its social capital affect the gifts received by
community foundations. This is the first empirical study to link social capital and
community foundation development.
Based on the social capital, charitable giving and organizational theory
literatures, I develop a conceptual model of charitable giving to community
foundations that predicts that the strength of social capital in the communities they

79
serve has a positive impact on charitable giving, while controlling for the socio-
demographic context, the longevity of the presence of community foundations in
those communities and competition for charitable funds in the area.
I find that the social trust dimension of social capital has a significant impact
on county-level community foundation gifts received per capita. When residents of a
community generally trust others, the charitable contributions to community
foundations will increase. The results extend the understanding of the relationship
between trust and community foundation growth. Studies on fundraising and
community foundation-donor relationships have emphasized the importance of
building donors’ trust in community foundations. This study shows that community-
level trust—a general interpersonal trust instead of a specific donor-to-organization
trust—is also critical to community foundation growth. In addition, I find, as did
Saxton and Benson, that the various dimensions of social capital “do not operate as a
monolithic whole” (Saxton and Benson, 2005) in promoting charitable giving.
I find that per capita gifts to community foundations increase when
community foundations have existed in the region for a longer time. This finding is
consistent with both life cycle and legitimacy forces in the development of
organizations. As they grow from infancy to maturity, community foundations will
extend their networks and contacts in the community, and will be increasingly
recognized as key players in addressing community needs. The close connections
and reputation will help raise charitable funds for the foundation. Moreover, the
presence of any community foundations in a region increases their legitimacy as a

80
vehicle for charitable giving for all community foundations. With regard to
community foundation competitors, I find that competition for charitable donations
does not necessarily reduce the contributions to community foundations. This
implies the possibility of a win-win situation in collaborative nonprofit fundraising.
Finally, this study supports the role of several demographic factors in
charitable giving. As expected, higher-poverty communities have limited charitable
capacity and thus give less to community foundations. In contrast, densely
populated communities contribute more to community foundations.
The results of the analysis have important implications for community
foundations as they seek to increase donor support. Trust is a key factor for
collective action and for engaging in philanthropy. Community foundations not only
need to build connections with donors, gain their trust and maintain that trust but also
need to act as a catalyst for network and trust building in the whole community. One
way to achieve the goal is to establish “donor circles” that facilitate interaction
among donors and broaden the circle to include a higher proportion of community
residents. The results also suggest that community foundations that align their
program focuses with community needs may be more attractive as giving vehicles
for community residents. By directing resources to address these needs, community
foundations can boost residents’ trust in institutional philanthropy.
Given the fact that social network measures—bridging social networks,
informal social networks, organized group interaction, and civic engagement—
included in this study were found to be unrelated to community foundation gifts

81
received, more research is needed to explore how and what type of community-level
social networks can help increase charitable funds to community foundations.
Because business, private foundations and even public agencies are potential donors
or supporters of community foundations, organizational social networks also may
increase the amount of contributions to community foundations. Therefore, a survey
can be conducted to collect information on community foundation organizational
networks for future research. In addition, data could be collected on the size of
businesses in the community as another measurement of community wealth outside
of the homeownership measurement used in the study.

82
CHAPTER 4: THE ROLE OF COMMUNITY
FOUNDATION IN BUILDING SOCIAL CAPITAL

In Chapter 3, the empirical tests show that social capital—especially social
trust in a community—helps generate financial resources for community foundations.
This is, however, only half of the story. Community foundations can then utilize the
financial capital to support social-capital generating activities and thus convert it
back into social capital (Feldstein and Sander, 2001).
Social capital as a community resource will decline if no institutions work on
community building, reach out to residents, involve them in community activities,
build connections among them, and foster a sense of trust and belonging.
The nonprofit literature has demonstrated that the nonprofit sector overall
plays a vital role in creating and sustaining social capital. Whiteley (1999), using
data from the World Value Survey, found that volunteering for nonprofit
organizations was a significant predictor of an individual’s level of “social trust.”
Isham and his coauthors (2006) found that involvement with a local nonprofit
organization affected one’s social connections and civic capacity in Vermont. In
Spain, Huntoon (2001) found that the government used nonprofit organizations to
build social capital among immigrants. Stolle writes that “following Tocquevillian
tradition, associations are seen as creators of social capital because of their
socialization effects on democratic and cooperative values and norms…It is claimed
that in areas with stronger, dense, horizontal, and more cross-cutting networks, there
is a spillover from membership in organizations to the cooperative values and norms

83
that citizens develop” (Stolle, 2003:20). In this chapter, I focus on a unique type of
nonprofit institution—the community foundation. A community foundation is one of
the community-based charitable institutions well poised to build social capital.
When he created the first community foundation in Cleveland, Ohio, in 1914,
Frederick Goff envisioned a new form of institutional philanthropy led by a board of
eminent local citizens authorized to receive contributions and endowments, to update
the purposes of the trust and to make grants from the income received to support
programs that serve the community (Nielsen, 1996). To ensure professional
management of the transferred funds, one or a group of leading local banks would be
in charge of the investments. To ensure the public trust of grant distribution, the
board members were “appointed by leading local figures such as a state or federal
judge, a university president, or a head of the local medical association” (Nielsen,
1996:182). In addition, an annual public report of grants and an annual audit were
other important parts of the plan
This form of institutional philanthropy has gained public trust and become a
popular charitable vehicle for many local residents. Over the past 80 years,
professionals in the field of community foundations, academics and the nonprofit
sector have been searching for the value of community foundations to communities
and to society at large. They find that “the essential role that community foundations
play is that of making a community more of a community: to strengthen its sense of
itself as a community, to help forge ties that bind, to assist in overcoming
divisiveness while releasing the powers of diversity and to reap the benefits of self-

84
reliance” (Ylvisakar, 1989:55). The idea of forging ties and strengthening the sense
of community reflect the core components of the “social capital” concept. Since
2000, many community foundations have expressed their key role in the community
as building social capital.
The questions are: What kinds of activities do community foundations
typically engage in to build social capital? Does the financial strength of community
foundations help them build social capital? In the following sections, I will address
these two questions by first using case illustrations to present community
foundations’ social capital-building activities and then use a quantitative method to
examine the impact of community foundations’ financial capacity in building social
capital. The cases are selected from community foundations in different regions of
the United States that have participated or supported the 2000 SCCB survey or the
follow up 2006 SCCB survey, or have specific social capital-related programs posted
on their Web sites or reported in other publications.

4.1 Community Foundations’ Action in Building Social Capital

Many community foundations in the United States have their unique social
capital-building programs and initiatives. Feldstein and Sander (2001) argued that
community foundations could help build social capital through educating/catalyzing
the community about the concept of social capital and through social capital-oriented
grant-making. In addition to these two aspects, I find that community foundations

85
also can build social capital by fostering civic engagement and through supporting
grassroots nonprofit organizations that serve the community.
(1) Educate the Community About the Social Capital Concept
Community foundations often convene individual residents, business sectors,
nonprofit organizations and public sectors to collectively address community issues.
They are the central players, or have the potential to be the central players, in
promoting the understanding and discussion of social capital because the networks
and connections they have in communities enable them to reach out to a broad
audience base. Many community foundations in the United States have launched
various programs to raise awareness of the social capital concept. In 1999, the
Winston-Salem Foundation in North Carolina launched the ECHO (Everyone Can
Help Out) fund program to increase the stock of social capital in the community. To
help community residents understand the concept of social capital, the foundation
developed vivid graphics and slides for the ECHO Fund program that explained
social capital in simple and warm language. The foundation used these materials in
33 ECHO community meetings in the first 11 months of the initiative (Feldstein and
Sander, 2001).
The 2000 Social Capital Community Benchmark (SCCB) Survey showed that
Forsyth County, the community focus of the Winston-Salem Foundation, had a high
level of mistrust among residents, especially among residents who come from
different social backgrounds. The county also had relatively low levels of
volunteering, an over-concentration of leadership among traditional leaders and

86

lacked public gathering spaces that encourage informal socializing among all
segments of the community. Based on this diagnosis, the Winston-Salem
Foundation conducted a series of ECHO Listening Sessions during the summer of
2003 to discuss how to build social capital in the county. Participants in the sessions
suggested that the community should make the decision-making process more
inclusive, help develop leadership throughout the entire community, provide
opportunities and training for volunteers, make community development and
economic development go hand in hand, and create more public gathering spaces,
especially spaces that encourage dialogue and interaction among diverse segments of
the community.
11
Subsequent to the meeting, in December 2003, the foundation
assembled the ECHO Council as a means of building social capital on a community-
wide basis. The ECHO Council was a diverse group of 43 leaders from various
segments of the community (e.g., neighborhood groups, businesses, nonprofits,
clergy and government). Using a process that included monthly meetings of
approximately two hours each, all-day retreats, committees and informal get-
togethers, the ECHO Council focused on four main goals for the first two years of its
existence. First, the council members become more knowledgeable about the
concept of social capital, the dynamics of social capital within Forsyth County,
underlying root issues and opportunities for building social capital. Second, in terms
of organizational development, the council needs to come together as a cohesive
problem-solving body with a shared purpose. Third, in terms of strategy

11
From The Winston-Salem Foundation Web site: http://www.wsfoundation.org/leadership-
initiatives/social-capital-and-echo/social-capital-benchmark-survey/

87

development, the Council will design mechanisms that directly address some of
Forsyth County’s deficits in social capital. Fourth, committees will be expanded to
include non-ECHO Council members so additional community residents can delve
into the issues that the ECHO Council has been seeking to understand and affect, and
to contribute to the development of effective strategies.
12

The Winston-Salem Foundation’s various efforts to educate the community
about the social capital concept and to build social capital in the community have
achieved some positive outcomes. The results of the 2006 SCCB Survey indicated
that Forsyth County residents are volunteering and participating in community-
building activities at a higher level than they were in 2000. The proportion of
Forsyth County respondents who volunteered at least once in the past year increased
from 53.4% in 2000 to 64.7% in 2006. There are also noteworthy increases in the
proportion of residents involved with parents’ associations (from 16.2% in 2000 to
27.8% in 2006) and youth-serving organizations (from 17.5% to 22.3%). In addition,
the 2006 survey shows that more residents and a more diverse group of residents are
now serving in leadership roles in the community. Moreover, there is increased
socializing across races within homes. Most importantly, Forsyth County is showing
signs of increased trust, especially among African Americans. The proportion of
African Americans indicating that “people can be trusted” increased from 22% to
30%. African Americans in Forsyth County also reported more trust of their

12
http://www.wsfoundation.org/leadership-initiatives/social-capital-and-echo/echo-council/

88

neighbors in 2006 than in 2000: “Trust them a lot” increased from 22% to 29%,
while “trust them not at all” decreased from 14% to 9.7%.
13

Overall, educating community members or leaders on social capital may
increase their appreciation of the importance of social trust, socializing, participation
and volunteering in the community. In addition, education may create ripple effects
among residents—the newly educated may educate others; education may change
the way individuals lead their lives; it may lead nonprofits, businesses, government
or other key institutions in the community to act more collaboratively, and it may
lead to the creation of new nonprofit organizations or groups. In this sense,
education regarding the social capital concept is the first step to achieving
community-based social change.
(2) Make Social Capital Oriented Grants
In addition to educating the community about the concept of social capital,
community foundations can build and improve social capital through social capital-
oriented grants either by weaving social capital-building into its regular grant-
making practice or by setting up a special social capital fund to support innovative
social capital-building practices. The New Hampshire Charitable Foundation
(NHCF) considers social capital a critical factor in the quality of life in its
community. The foundation and its seven regional offices
14
have made building
social capital one of their grant-making priorities. The foundation supports projects

13
The Winston-Salem Foundation. 2006. “2006 National Social Capital Community Benchmark
Survey—Forsyth County Results” http://www.wsfoundation.org/leadership-initiatives/social-capital-
and-echo/social-capital-benchmark-survey/2006-survey/
14
Lakes, Manchester, Monadnock, Nashua, North Country, Piscataqua and Upper Valley regions.

89

that bring together diverse groups, develop collaborations among different segments
of the community—i.e. nonprofit organizations, businesses and government—and
generate civic and community vitality. The foundation encourages grant applicants
to demonstrate how they plan to build community connections, especially among
diverse groups, and develop mutual trust and reciprocity in community
relationships.
15
It funds projects that include social capital as a means or as an end-
goal. The foundation also supports public agencies in filing statements that highlight
the potential impact of any new program on the communities’ stock of social capital.
New Hampshire is the first state in the nation to incorporate social capital testimony
in the federal Environmental Impact Statement Process and to pilot ways to include
social capital impact into the master planning of individual communities.
16

In addition to the New Hampshire Charitable Foundation, numerous
community foundations have set up similar grant-making priorities or specific funds
to increase the stock of social capital in their communities. For example, the
Community Foundation for the National Capital Region has a Common Ground
Fund and a Bridging Differences Initiative aimed at strengthening neighborhood
inter-group assets.
17
The Silicon Valley Community Foundation has Community

15
New Hampshire Charitable Foundation, “New Hampshire Charitable Foundation Grantmaking
Priorities.” Accessed in March, 2007.
http://www.nhcf.org/newsarticle.cfm?articleid=57191&ptsidebaroptid=0&returnto=page16898.cfm&r
eturntoname=Applying%20for%20a%20Grant&siteid=1690&pageid=16874&sidepageid=16898&ba
nner1img=banner%5F1%2EJPG&banner2img=banner%5F2%2EJPG&bannerbg=bannerbg%5Fcusto
m%2Egif
16
New Hampshire Charitable Foundation. 2006. “Social Capital: Better Together.”
17
The Community Foundation for the National Capital Region. 2006-2007 Guide for Grantseekers.
http://www.cfncr.org/page13847.cfm

90

Building grants that support efforts to build social capital.
18
Based on the results of
the 2000 SCCB Survey—which shows that Rochester-area local residents are more
trusting and tolerant, but that deep disparities in trust exist among people of different
backgrounds—the Rochester Area Community Foundation decided to offer
competitive grants to build bridges among people of different races/ethnicities,
incomes, ages, neighborhoods and religious backgrounds.
19
These social capital-
oriented grants may increase awareness of the stock of social capital in the
community and help build strong connections among residents. Through community
building programs, community foundations restore and enhance the social cohesion
within a region.
(3) Foster Civic Engagement
Civic engagement is an important aspect of social capital. Community
foundations can foster civic engagement through education and grant-making, and by
directly providing opportunities for community residents to engage in foundation
activities and community building.
The Kalamazoo Community Foundation launched its Better Together/
Kalamazoo Initiative in 2001 to help build social capital in the community. This
initiative emerged from a dialogue about civic engagement sparked by the
foundation’s analysis of social capital in the community based on the 2000 SCCB
survey. A key component of the initiative is “Engaging Citizens.” The foundation
believed that big results begin with small sparks. They supported the “Small Sparks”

18
Silicon Valley Community Foundation. http://siliconvalleycf.org/docs/commonApp.pdf
19
Rochester Area Community Foundation. http://www.racf.org/page12224.cfm

91

program, which recently gathered 42 energetic and creative “doers” and taught them
how to get people involved and build community in the greater Kalamazoo area.
20

The foundation also invested in programs that support community engagement
efforts and help youth develop leadership skills. The foundation established Good
Neighbor Grants, which were easy-to-access grants of up to $1,000 used to support
small grassroots resident groups and to empower neighbors to become actively
engaged in the health and well-being of the community. In 2005, 83 Good Neighbor
Grants totaling nearly $56,000 were awarded to local citizen groups. An evaluation
of the foundation’s work in social capital completed in 2005 showed that Better
Together/Kalamazoo increased residents’ capacities to create and/or participate in
activities that bring people together. At least 500 new volunteers were engaged in
the foundation’s Good Neighbor Grant projects.
21

In addition to educating local residents and providing grants to foster civic
engagement, community foundations also can facilitate greater civic engagement
through their expertise regarding the local community and its research capacity. In
2006, the Denver Foundation conducted research on how individuals of color
connect with nonprofit organizations, the barriers they encountered in their
involvement with nonprofits and what nonprofits could do to become more inclusive.
The research findings provide excellent tools for nonprofit organizations seeking to

20
Kalamazoo Community Foundation. December 2005. Better Together/Kalamazoo Newsletter.
21
Kalamazoo Community Foundation. 2005. Annual Report: We Are Better Together.
http://www.kalfound.org/resultpage.cfm?urlto=page20725%2Ecfm%3Ft%3D1&oldreturnto=page206
15.cfm&oldreturntoname=Community%20Impact%20System&criteria=better%20together&pagest=1
1&pageend=20&maxresults=13&cleancriteria=better%20together

92

increase civic engagement and also help people assess their involvement with
nonprofits.
22
In another recent example, 30 U.S. community foundations have been
selected by the Atlantic Philanthropies’ Community Experience Partnership
Initiative to receive grants totaling $750,000 ($25,000 for each community
foundation) to assess and better understand opportunities for older adults to become
engaged in community activities. Based on initial assessments, the Atlantic
Philanthropies will provide addition grants for the planning and implementation of
new programs that facilitate greater civic engagement among residents over 60 years
old.
23
These examples show that community foundations can not only directly
support local civic engagement activities but also provide information to guide civic
engagement activity and act as an intermediary in helping national initiatives to
increase civic engagement in communities.
(4) Support Grassroots Nonprofit Organizations that Serve the Community
Local grassroots nonprofit organizations often work closely with community
residents to promote social capital. In addition to providing financial support to
those nonprofit organizations, community foundations indirectly can provide training,
technical assistance and managerial support to these community-based groups to
enhance their abilities in building social capital. The Kalamazoo Community
Foundation has partnered with a local nonprofit training institute—The Northside
Ministerial Alliance (NMA) Training Institute—to help small faith- and community-

22
The Denver Foundation. 2007. Building the Pipeline Study on How Individuals of Color Connect
with Nonprofits. http://www.denverfoundation.org/page30150.cfm
23
Community Experience Partnership: Engaging Older Adults for Civic Good.
http://www.cprgroup.net/pdf/CmnityExpPartnershipRFP.pdf

93

based organizations strengthen their operations so they can reach more vulnerable
individuals and families, and achieve their service goals. In 2005, the Kalamazoo
Community Foundation provided $40,000 to support the training. As stated in its
mission statement, “Building Communities One Organization at a Time,” the NMA
Training Institute works intensively one-on-one with local grassroots organizations
to help them build their management skills, provide technical support and promote
“best practices” among these organizations. Most of these grassroots nonprofit
organizations in training have operating budgets below $100,000 and a staff of fewer
than five. This training and technical assistance are critical in boosting service
capacity.
24

The cases described in this chapter have shown that community foundations
can help build social capital in a variety of way. They can act as the convener and
encourage dialogue on the social capital concept, and facilitate interactions among
residents; they can initiate social capital-oriented funds; they can foster civic
engagement through funding civic engagement programs; they can support training
to enhance local grassroots nonprofit organizations’ management capacity; and they
can promote trust and collaboration across organizations and sectors. The next
question is what factors are likely to affect the outcome of community foundation
social capital-building activity. Is the financial strength of a community foundation a
constraint in generating or increasing social capital? To explore the answers to these
questions, I will use an empirical analysis to examine the impact of community

24
Kalamazoo Community Foundation. December 2005. Annual Report: We Are Better Together.
http://www.kalfound.org/resultpage.cfm?urlto=page20725%2Ecfm%3Ft%3D1&oldreturnto=page206

94
foundation assets on the stock of social capital in the communities serviced by the
community foundations.

Community Foundation Financial Capacity and Social Capital
The recent significant growth of community foundations in the United States
and worldwide have raised great interest among scholars in studying the potential
role that community foundations can play in serving communities in this growing
decentralized and collaborative governance era.
Carman (2001) and Lowe (2004) find that community foundations are a
growing source of community development. Carman argues a natural fit exists
between the purpose of community foundations and the philosophy of community
development. She suggests that local community development corporations (CDCs)
need to understand the various mechanisms that community foundations use to
support community development so they may better position themselves to take
advantage of the many resources that community foundations bring to their
communities. Using three case studies—the Cleveland Foundation, the Dade
Community Foundation and the Greater New Orleans Foundation—Lowe describes
the role of community foundations in facilitating the establishment of community
development collaboratives among public, private and nonprofit sectors to foster
support for local CDCs. These two studies indicate that community foundations’
substantial social networks could help them leverage resources and form partnerships
to collectively address many challenges facing community development.

95
In addition to the above two studies, Hamilton and his coauthors (2004)
suggest that community foundations are community change makers. They argue that
the community foundations’ unique access, agility, credibility and local knowledge
place foundations in a pivotal position at the center of community life. Community
foundations’ institutional and financial resources enable them to harness untapped
community resources and to braid pieces of a community into something greater than
the sum of the parts. The authors emphasize five main aspects of the change-making
roles that community foundations play to improve residents’ lives in poor
neighborhoods: contributing ideas and information, fostering strategic connections,
expanding resources devoted to change, leveraging systems change and promoting
performance. These five main aspects of the change-making role share similarities
to the community foundations’ social capital-building activities mentioned earlier in
the chapter.
Feldstein and Sander (2001) describe the relationship between community
foundations and their communities as interdependent. They argue that social capital
in a community can help community foundations with their fundraising, and in
return, community foundations would facilitate interactions among residents and
thus build social capital. This argument indicates that community foundations’
financial capacities and the stock of social capital in a community are mutually
causal.
The literature review shows there are various arguments about the
community foundation’s role in community building and the importance of the

96
community foundation’s financial strength in affecting its roles. All the studies
mentioned have used case studies or qualitative research methods. So far, no
empirical analysis has ever been conducted to show the systematic impact of
community foundations in a region due to the lack of community foundation data or
data on impact or outcome measurements.
In the following section, I will develop a theoretical model of the relationship
of community foundation gifts received and the stock of social capital in a region,
and apply the simultaneous equation method to test the relationship between the two
using data from the 2000 SCCB survey and self-collected community foundation
information. In this empirical test, I choose to focus on the social trust aspect of
social capital because the empirical test conducted in Chapter 3 shows that only
social trust significantly affects per capita charitable gifts to community foundations,
and none of the social network measurements matters. Therefore, focusing on social
trust would allow me to efficiently test whether community foundation gifts received
also help increase social trust among residents.

4.2 Research Design and Model Development

To empirically test the impact of community foundations’ financial capacity
on the level of community social trust, I must take into consideration the fact that
social trust also may help community foundation fundraising. If causality does
indeed run in both directions, then using the OLS method to estimate the coefficients
of a single equation model of community social trust, which treats community

foundation gifts received as a pure exogenous variable, will lead to biased and
inconsistent estimations of the coefficients
Simultaneous equation models are often developed to estimate two or more
variables that simultaneously determine each other. The simultaneous equation
method is an extension of the OLS method and corrects the reciprocal causation
issue. The following two equations show a generic two-equation model:
1 1 1 2 1 1
ε β γ + + = X Y Y (1)
2 2 2 1 2 2
ε β γ + + = X Y Y (2)
As seen from the equations, Y
1
and Y
2
simultaneously determine each other.
Variables that display such relationships are called endogenous variables. The OLS
method cannot be used to estimate the two models because the OLS assumption of
zero covariance between the error term and the independent variables is violated in
the above equations. Change in ε
1
will lead to change in Y
1
in equation (1), and these
changes will then lead to changes in Y
2
via Y
1
in equation (2). Therefore, Y
2
is
correlated to ε
1,
and the same logic applies to the relationship between Y
1
and ε
2
.
Consequently, the estimates of the coefficients with the OLS method are biased and
inconsistent (Keshk, 2003). One way to correct the correlation between independent
variables and the error term is to add instrumental variables—variables that are
highly correlated with the endogenous variables and uncorrelated with the error
terms—to the equations. In the following section, I will develop a simultaneous
equation model with community social trust and the adjusted per capita gifts
received by community foundations as the endogenous variables.
97

98

Community Foundations’ Impact on Social Trust:
Community Foundations’ Financial Capacity: The impact of a community
foundation in a region is constrained by its financial resources or capacity (Hamilton
et. al, 2004). Large community foundations, which have high per capita gifts
received or high assets, can mobilize residents to participate in the programs they
fund, and thus most effectively foster civic engagement and build trust in the
community. Compared to small community foundations, large community
foundations have more leverage in promoting social trust. Therefore:
H1: The higher the financial capacity of community foundations in a region,
the more likely they can affect the level of social trust.
Demographic Features of the Community.
In addition to the community foundations’ impact, the stock of social trust in
a locality is also affected by its demographic features. In the model, I propose four
major demographic factors as the determinants of social trust—homeownership,
education level of the residents, the percentage of elderly population and ethnic
homogeneity.
Homeownership: Studies have shown that homeownership in general
positively contributes to the stock of social capital (DiPasquale and Glaeser, 1999;
Glaeser et. al, 2002; Hubbard & Davis, 2002; Rohe & Basolo, 1997; Rossi & Weber,
1991). According to Glaeser and his coauthors (2002), mobility tends to loosen the
tie between the individual and community, and thus diminish social capital (Glaeser

99
et. al, 2002). Location-specific investments, such as homeownership, constrain
mobility and strengthen the ties between individuals and the community. Rohe and
Basolo (1997) find that homeowners are more likely to be involved in informal
interactions with neighbors. Neighborhoods that have higher levels of integration
provide more social support and mutual trust (Saegert & Winkel, 1998). In addition,
the percentage of the population that lives in owner-occupied housing roughly
reflects the overall income level of a community. A survey conducted by the Pew
Research Center for The People and The Press (1997) in Philadelphia shows that
people who live in “bad” neighborhoods with poverty, crime and low
homeownership rates are less trusting of other people. Stolle (2001) argues that
socioeconomic status is a large determinant of trust because the affluent—most
likely surrounded by less crime—have less about which to worry. Therefore:
H2: The higher the percentage of the population that lives in owner-occupied
units in a community, the higher the level of social trust in the community.
Education: In their study on the formation of social capital, Glaeser and his
co-authors (2001) remind the reader that education has been consistently identified
as the most robust correlate with social capital—in both social trust and social
networks. Research shows that better-educated people—such as lawyers, teachers
and other occupational groups—are more likely than less-educated people to
participate in political and other civic activities (Verba and Nye, 1972) and thus
develop social trust. In addition, the level of education also directly affects social
trust. Helliwell and Putnam (1999) find that an increase in average education

100
increases trust. Alesina and La Ferrara (2002) share a similar finding: Those who
have more than 16 years of education are more likely to trust other individuals and
institutions than those who have fewer than 12 years of education. The survey
conducted by the Pew Research Center (1997) confirms that education is one of the
most important background characteristics that affect the level of trust. The survey
shows that poorly educated young whites and blacks are extremely distrustful of
other people. Thus, the hypothesis is:
H3: The higher the community residents’ education level, the higher the level
of social trust.
Elderly: In addition to the level of education and homeownership, age is
another important factor that affects interpersonal trust and trust of organizations.
Alesina and La Ferrara (2002) find that trust in others increases with age, although at
a declining rate. The survey results of the Pew Research Center (1997) also show
that older, more educated and more affluent respondents are more trusting.
Therefore, I posit:
H4: The higher the percentage of the population older than 65 years of age in
the community, the higher the level of social trust.
Ethnic Diversity: Research has shown that in ethnically diverse localities,
networks are poor, and civic participation is low (Knack and Keefer, 1997). In
addition, laboratory experiments and survey research have confirmed that trust and
perceived trustworthiness tend to be high when individuals are socially similar, while
both trust and trustworthiness decline when experimental partners are of different

101
races (Glaeser et. al, 2000). Alesina and La Ferrara (2002) argue that people may
trust more individuals who are “similar” to them, i.e., family members or members
of the same social, racial or ethnic group. This implies that trust will be lower in
communities that are less racially homogenous. The results of their analysis support
their argument. They find that racial fragmentation in a community significantly
decreases the probability of residents trusting others. In other words, communities
characterized by ethnic/racial homogeneity tend to manifest greater amounts of
social trust. Therefore:
H4: The more ethnically homogeneous a community is, the higher the level
of social trust.
Among the four demographic variables, ethnic homogeneity is considered an
instrumental variable in estimating the stock of social trust because it has the highest
correlation with the endogenous variable—social trust (r=0.46, p<0.0001).

Social Trust and Community Foundation Gifts Received:
The empirical test in Chapter 3 shows that social trust significantly increases
the per capita community foundation gifts received. In addition, the number of years
community foundations have existed in the region also significantly increases the per
capita community foundation gifts received. Three demographic characteristics of
the community matter for the community foundation gifts received: population
density, percentage of the population living in owner-occupied housing and percent
of population in poverty. Therefore, these five variables are included in the equation

102
to explain community foundation gifts received. Population density is considered an
instrumental variable in this equation because it has the highest correlation with the
endogenous variable—adjusted per capita gifts received by community foundations
(r=0.27, p<0.001).
In summary, the simultaneous equation model of social trust and community
foundations’ financial capacity, measured as the adjusted per capita community
foundation gifts received, is as follows:
CF Gifts Received Per Capita= f (Social Trust, Years in Community,
Homeownership, Poverty, Density)
Social Trust= f (CF Gifts Received Per Capita, Homeownership,
Homogeneity, Elderly, Education,).

4.3 Data
To test the simultaneous equation model developed in the previous section, I
use similar a dataset I have applied in Chapter 3. Therefore, detailed data
descriptions are omitted here. The difference is that the model does not include
competition data (because the empirical test in Chapter 3 indicated that competition
did not have a significant impact on per capita gifts received by community
foundations). Therefore, a total of 187 counties are included in the analysis.
Table 4.1 shows the descriptive statistics of the samples. Residents in the
sample communities on average have a higher level of social trust of 0.12 compared
to the national norm of 0. The average amount of per capita gifts received by
community foundations in the sample is $23.83. Community foundations have
existed in the region for an average of 27 years.

103

Table 4.1: Descriptive Statistics
Variables Mean Median Std. Dev. Min Max
Dependent Variables (N=187)
Community Foundation Gifts
Received Per Capita (dollars) 23.83 12.26 26.86 0 215.40
Social Trust 0.12 0.13 0.20 -0.47 0.68
Independent Variables
Charitable Organizations
Years in Community 26.58 16.00 21.53 0 86
Demographic Characteristics
Education (%) 21.66 20.38 9.70 52.38 6.21
Elderly (%) 12.53 12.52 2.64 6.92 19.88
Homeownership (%) 74.61 75.52 7.96 90.78 36.79
Poverty (%) 10.68 10.00 7.96 90.78 36.79
Instrumental Variables:
Density 625.82 180.30 1636.87 1.60 16634.40
Ethnic Homogeneity 0.77 0.85 0.18 0.27 0.97

The percentage of the population in a community with a bachelor’s degree
and higher varies from less than 7% to 52%. On average, about 22% of the
population 25 years old and older have a bachelor’s degree or above in the
community, which is close to the national average. The percentage of the population
over 65 years old in the sample is about 12.5%, which is not significantly different
from the national average. The percentage of the population that lives in owner-
occupied housing ranges from 37% to 91% in the selected communities, and the
average is about 75%, which is significantly higher than the national average of 69%.
The percent of the population that lives in poverty is about 11% on average, and this
is close to the national average of 12%. The communities in the sample vary in their
ethnic homogeneity from 0.27 to 0.97, and the average ethnic homogeneity index is

104
0.77, which is significantly higher than the national ethnic homogeneity index of
0.51.

4.4 Analysis

The specification for this model is a simultaneous linear causal relationship,
and I estimated it using the Two-Stage Least Squares method. Table 4.2 presents the
results of the analysis. The per capita community foundation gifts received model
reveals that social trust, the number of years that the community foundation has
existed in the region, and the community’s socioeconomic and demographic
characteristics explain about 11% of the variances of the outcome. The social trust
model shows that per capita community foundation gifts received and the community
demographics explained about 30% of the variances of the outcome.
Community Foundation Gifts Received Model: The result is interesting. It
confirms that social trust is a marginally significant determinant of per capita
community foundation gifts received. The level of community social trust
significantly increases the per capita gifts to community foundations when other
factors in the model are controlled for (p<.10). In addition, the number of years that
community foundations have existed in the region also significantly increases the
amount of per capita community foundation gifts received by $0.18/year (p<0.10).
Among the demographic variables, population density has a strong significant
relationship with the outcome variable (p<0.001). A one-unit increase in population
density increases the per capita community foundation gifts received by $0.004. This

finding supports the hypothesis that community foundation fundraising efforts are
likely to be more fruitful in densely populated areas or urban settings than in other
areas.
Table 4.2: Two-Stage Least Squares Estimates for Social Trust and Per Capita
Gifts Received by Community Foundations.
*p<.10,**p<.05, ***p<.01, ****p<.001

Social Trust
Coefficients (s.e.)
CF Gifts Received
Coefficients (s.e.)
Endogenous Variables
Community Foundation Gifts
Received Per Capita -0.002(0.002)
Social Trust 54.89(31.20)*
Charitable Organizations
Years in Community 0.18(0.10)*
Demographic Characteristics
Education 0.011(0.002)****
Elderly 0.021(0.006)***
Ethnic Homogeneity 0.510(0.11)****
Homeownership 0.004(0.003) -0.35(0.41)
Population Density 0.004(0.002)***
Poverty -0.66(0.52)
R
2
30% 11%
N=187
Social Trust Model: My primary interest in this empirical analysis is to test
the role of community foundation financial capacity in building social capital,
mainly the level of social trust. The results, however, do not support my hypothesis
that community foundation financial capacity would increase the level of social trust
in a community. After considering the simultaneous impact of social trust on
community foundation gifts received and controlling for the demographic
characteristics that might affect the stock of social trust, per capita community
foundation gifts received does not have a significant impact on social trust (p=0.24).
105

106
The impacts of education, the elderly population and ethnic homogeneity on social
trust are as expected. A one-unit increase in the percentage of the population with a
bachelor’s degree and above significantly increases the level of social trust in a
community by 0.011 (p<0.001). In addition, a one-unit increase in ethnic
homogeneity increases the level of social trust by 0.51 (p<0.0001). The percentage of
the population over 65 years old in the community also significantly increases the
level of social trust (p<0.001).
The findings of the simultaneous equation model show that social trust does
help community foundations increase their level of funding. However, it lacks
evidence to support the hypothesis that community foundation financial strength also
matters for the level of social capital in a region. This could be partly due to the fact
that people’s trust or attitudes toward others or institutions may take a long time to
change. In some localities, social trust may be at a low starting point. Therefore,
even though community foundations in the region have strong capacities to improve
interpersonal or institutional trust, it takes years to see the impact. Using the
simultaneous equation method with a single year of data fails to catch the change in
the level of social trust because a baseline social trust does not exist as a comparison.
I hope that in the future, when longitudinal data is available, I can re-analyze
whether community foundation financial capacity helps increase the level of social
trust in a region.

107
4.5 Conclusion and Implications
Social capital is a community resource that requires the conscious effort of
organizations and community residents to constantly build and re-build. The
nonprofit sector overall plays a critical role in creating and sustaining social capital.
The community foundation is a unique type of philanthropic organization that is well
connected to local residents, businesses, government and grassroots organizations.
The deep connection to the community has allowed community foundations to act as
a central player in building social capital in a region.
Cases studies have shown that community foundations can help build
community social capital through educating the community regarding the social
capital concept. Community foundations thus can raise awareness of building social
capital through creating social capital-oriented grants or giving priority to social
capital friendly programs, supporting various forms of civic engagement and
enhancing the managerial capacity of local grassroots nonprofit organizations.
It is challenging, however, to empirically test the impact of community
foundations on social capital building. Feldstein and Sanders (2001) argued that
community foundations need to rely on social capital to raise funds; meanwhile,
community foundations could transfer financial resources they have to social capital
in the community. To test the argument of reciprocal causation between community
foundation development and the stock of social capital in a region, this chapter
applies a simultaneous equation model using 2000 SCCB survey data and self-
collected community foundation financial data. Because social capital is a

108
multifaceted concept—which includes social trust and social network aspects—and
each aspect may have different causal relationships with community foundation
development, I choose specifically to focus on the social trust aspect in this chapter.
The findings support the hypothesis that social trust does increase the level of
gifts received by community foundations. However, the results do not indicate that
community foundation financial strength significantly increases social trust in a
community. There are a few possible explanations for the lack of empirically
significant impacts of community foundation financial strength on social trust.
First, individual attitudes and trust towards others or institutions may take a
long time to change. Thus, some small changes in social trust hardly can be
measured or detected in the short term. In addition, it even could be hard to measure
the changes in community-level social trust, which is the aggregate of individual
social trust. Some localities may have low levels of social trust at a certain starting
point. Therefore, even though community foundations in the region have strong
capacities to improve interpersonal or institutional trust, it could take years to see the
impact. Using the simultaneous equation method with a single year of data fails to
catch the change in the level of social trust because of the lack of a baseline social
trust as a comparison.
Second, community foundation financial capacity perhaps truly is not related
to social trust building, which means that community foundations with low financial
capacity could be as successful as those with high financial capacity in improving
levels of social trust. It is the non-financial capacity—i.e. the community

109
foundation’s program focus, board composition and frequent interaction between
community foundations and other local grassroots nonprofit—that affect social trust
and social capital in general.
Although the results of the simultaneous equation model do not show a
statistically significant impact of community foundation financial capacity on the
level of community social trust, the empirical test is a significant first step in
examining community foundation impacts in a community that could be generalized
to the whole country. In the future, if multi-year longitudinal data on social capital
are available, I will re-examine the impact of community foundation financial
capacity on changes in community social trust. In addition, I would like to examine
whether the level of community social trust or social capital in general is higher in
communities where community foundations exist. Current social capital data are
only available for communities where community foundations exist, which limit the
possibility of testing the differences that community foundations make in a region.
Moreover, I will examine the impact of community foundations’ non-financial
capacity, mainly their program focus, on community social trust and social capital in
general.

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CHAPTER 5: CONCLUSION

Since welfare reform and the decentralization movement began in the late
1970s and early 1980s, local governments in the United States have faced increasing
demand for their limited resources. Consequently, local communities have begun to
look for alternative funding sources—mainly from individual donations and grants of
philanthropic organizations—to support programs that address urgent community
needs. This growing reliance on charitable giving and on foundation grants has
made fundraising a critical management function for many service-oriented nonprofit
organizations. Understanding individuals’ motivation to donate and the determinants
of individual charitable behavior are therefore important to the success of nonprofit
fundraising. Building upon the economic theory of individual charitable giving
behavior, the second chapter of the dissertation explains whether an individual’s
social trust, social networks and volunteering activities determine the propensity to
donate to religious and secular purposes.
In the past decade, the significant growth of community foundations in the
United States and worldwide has provided new opportunities for community-based
social change. To sustain that promise, however, requires community foundations to
stay financially sound by attracting endowments, unrestricted funds and various
donor-advised funds from residents in the region. What factors are likely to affect
the amount of charitable gifts to community foundations? The answer to this
question will provide insights to the strategy for community foundation development.
The close tie between a community and community foundations in a region indicates

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that demographic characteristics of the community, the perceived legitimacy of
community foundations in the region, the existence of other charitable organizations
in the community, and residents’ social trust and social networks are likely to affect
the level of funding to community foundations. This dissertation presents a
theoretical framework for the connection between community characteristics—
especially the stock of social capital in a community—and charitable gifts to
community foundations, and empirically tests the model.
The importance of social trust and social networks to individual charitable
behavior and to community foundation development has made social capital an
indispensable asset to a community. However, the stock of social capital in a
community will decline if residents and institutions do not work to build and increase
it. Studies have shown that the nonprofit sector plays a critical role in creating and
sustaining social capital (Stolle, 2003, Isham, et. al. 2006). Nonprofit organizations
provide opportunities for residents to engage in community activities and stay
connected, and thus foster a sense of trust among individual residents and
organizations in the region. The community foundation is one type of community-
based charitable organization that is well-poised to build a connected, cohesive and
trusting community. This dissertation uses both case illustrations and empirical
analyses to test the impact of community foundation financial strength on social
capital, mainly on the social trust aspect.
In summary, this dissertation applies various empirical methods to examine
the association between social capital and community philanthropy, both at the

individual and institutional level. There are three major research questions addressed
in this dissertation: Do social trust, social networks and volunteering encourage
individual charitable giving? Does a community’s stock of social capital matter for
community foundation development? And, does community foundation financial
strength promote the social capital of a community? Figure 5.1 shows the theoretical
framework of the dissertation.
Figure 5.1: Theoretical Framework of the Dissertation

112

Community Foundation
Presence & Competition
in the Region
Community
Demographics
Community
Social Capital
Community
Foundation’s
Financial Strength
Individual Social Capital
(Social Networks and
Social Trust)
Individual
Demographics,
Religiosity,
Psychological
Inclination
Personal
Donation
Volunteering
Individual Philanthropy
Institutional Philanthropy

To address the three main research questions of the dissertation, I use data
from the 2000 SCCB Survey, community demographic information from the 2000
U.S. Census and community foundation data collected from various sources. I apply

113
Tobit regression, OLS multiple regression and the simultaneous equation model,
respectively, to empirically test the hypotheses related to the three research
questions. The major findings of this research are summarized in the following
section.

5.1 Major Findings
First, social trust, bridging social networks, civic engagement and
volunteering increase individual charitable giving to religious and secular causes.
In Chapter 2, the empirical analysis shows that social capital—measured as
individuals’ social trust, bridging social networks, civic engagement, informal social
networks and organizational activism—affects religious and secular giving in
different ways. Social trust, bridging social networks and civic engagement increase
the amount of charitable giving to both religious and secular causes. In addition,
organizational activism—attending community events, club meetings and public
meetings—positively affects the amount of secular giving but not religious giving.
These findings support the hypothesis that associational membership and diversity of
social networks increase individuals’ personal and organizational connections, and
thus increase the chances of being asked to donate as well as the willingness to
donate. In addition, this research on individual charitable giving shows that the
amount of time people are engaged in volunteering positively affects the amount of
charitable giving. This finding is consistent with the charitable giving literature
(Schervish, 1997).

114
In addition to social capital, the research confirms that individual human and
financial capital as expected also significantly determine the amount of religious and
secular giving. The findings are consistent with the economic explanation of
charitable behavior, i.e. education and income increase charitable giving.
Interestingly, the empirical analysis further shows that homeowners contribute
significantly more to religious causes than renters, but homeowners are not
significantly different in secular giving compared to renters. In addition, those who
have lived in a community for more than 10 years tend to give more to religious
organizations. Moreover, the study shows that psychological inclination—the feeling
of happiness—affects religious but not secular giving.
Second, social trust, the number of years community foundations have
existed in the region and community demographics affect the amount of gifts
received by community foundations.
The OLS regression analysis in Chapter 3 shows that the level of social trust
in a community positively affects the amount of charitable gifts donated to
community foundations. However, none of the community social network
measures—bridging social networks, informal social networks, civic engagement
and organization group activism—has a statistically significant impact on gifts
received by community foundations. In addition, the longer this specific form of
public charity— the community foundation—has existed in the region, the more
community residents give to community foundations. Moreover, community
foundations located in more populated areas receive more charitable gifts. In

115
contrast, the local poverty level and homeownership are found to have negative
impacts on per capita charitable gifts to community foundations.
Third, community foundations have great potential to increase social capital
in a region, yet the empirical test fails to show the statistically significant impact of
community foundation financial strength on the stock of social capital in a region.
In Chapter 4, cases studies of several community foundations in the United
States have shown that community foundations organize dialogues to educate
communities about the concept of social capital, make social capital-oriented grants,
foster civic engagement and support grassroots nonprofit organizations in building
their capacities. These activities have demonstrated positive impacts on social
capital building in communities. Based on the case studies and the theoretical
argument that community foundations contribute to social capital (Feldstein and
Sander, 2001), this dissertation develops an empirical test of the impact of
community foundation financial strength on the stock of social capital, especially
social trust, in a region. The results of the simultaneous equation model show that
social trust does help community foundations raise funds; however, the financial
strength of community foundations in a community does not have significant impacts
on social trust in return.

116
5.2 Theoretical and Practical Implications

The findings of this research have significant theoretical and practical
implications. Theoretically, the findings contribute to the literature on individual
charitable giving and community foundation fundraising as well as social capital.
First, the findings on the impact of social capital and volunteering on
individual religious and secular charitable giving fill the gaps in the economic and
psychological explanations of charitable behavior. The research shows that
individual propensity to donate is affected by social connections. After controlling
for human resources, financial resources and psychological inclinations, those who
are involved in more organizations, have more diverse personal networks and trust
others more still donate more to both religious and secular purposes. This indicates
that individual social resources are important determinants of charitable decisions,
and these social resources promote charity.
Second, the findings on the impact of social trust on community foundation
development extend the community foundation and social capital literature. The
research shows that social capital does not have a monolithic impact on community
foundation development. The finding confirms the importance of trust in community
foundation development. Social trust seems to be more important than social
networks in promoting gifts to community foundations. This study extends the
current research on the importance of individual donor trust in nonprofit
organizations and shows that broad community-based social trust also is important to
community foundation fundraising efforts.

117
Third, the finding of the non-significant impact of competition on community
foundation gifts received challenges the traditional competitive view of nonprofit
fundraising. It shows that one nonprofit organization’s success in fundraising in a
certain year does not necessarily reduce the amount of charitable giving to another
organization in the same period of time. Fundraising may not have to be a win-lose
game.
Fourth, prior studies on social capital have treated social capital either as an
individual or collective asset, and have examined its impact on various social,
economic and political outcomes. In this dissertation, I have treated social capital
both as an individual and community asset. I examine the impact of individual-level
social trust and social networks on individual charitable decisions, and the impact of
community-level social trust and social networks on community foundation
development. These findings will expand our understanding of social capital at both
the micro and macro levels.
The research findings also have significant implications for policies and
practices in nonprofit fundraising, building nonprofit and community relations, and
increasing social capital.
First, the considerable differences in the determinants of religious and secular
causes suggest that faith-based nonprofit organizations and secular nonprofit
organizations need different fundraising strategies and should aim for different types
of potential donors. In addition, the finding that volunteering behavior increases
charitable donations suggests that to attract and increase the amount of donations,

118
charitable organizations—both religious and secular nonprofit organizations—can
try providing voluntary opportunities and building a sense of connection to the
organization among volunteers. Through establishing bonding and bridging
networks with volunteers, gaining their trust and enhancing their appreciation of the
organization mission, charitable organizations may attract more monetary
contributions from these volunteers.
Second, because the research shows that gifts to other charities do not
necessarily reduce the contribution to community foundations, it implies the
possibility of collaborative fundraising among various charitable organizations. This
collaborative fundraising practice significantly would benefit small nonprofit
organizations that have limited capacity to do their own fundraising.

5.3 Limitations

As many other studies, this dissertation has several caveats.
The first limitation is that in studying the impact of community-level social
capital on community foundation development, the measurements of the stock of
social trust and social networks in the county are based on individual-level
aggregates. There are a few studies on how to measure social capital and whether
social capital is an individual- or society-level indicator (Brehmen and Rahn, 1997;
Lin, 1999; Kaldaru and Parts, 2005). So far, most of the community social capital
measures are based on individual-level aggregates, which is a major limitation in
social capital research. In addition, in some counties, there are fewer than five

119
samples selected. To increase the level of representativeness of the samples, I have
excluded counties with fewer than five samples from the analysis, which results in a
much smaller number of counties included in the analysis. In the future, I hope to
have more refined community-level social capital measurements, which hopefully
also would include measures of organizational social networks in the community,
and a larger sample size in each county. A larger sample size would make individual
social trust and social networks more closely representative of the population social
trust and social networks.
Second, the missing data on competition (for community foundation
fundraising) has further reduced the number of counties included in the study.
Although the model estimation with the competition variable is similar to the model
estimation without the competition variable—basically, the same determinants show
up as significant determinants of the per capita community foundation gifts
received—I would have more statistical power if there were not as many missing
values.
Third, the community foundation gifts received are measured for the single
year of 2000. It is likely that some community foundations may have received a
major donation in that year, which could affect the model estimation. However, if I
used the average gifts received in a few years, I would have picked up the impact of
other factors—such as the economic impact on community foundation gifts in a
certain year, say 2002, or the different population growths in a certain region—
which also likely could affect the community foundation gifts received in a period.

120
After weighing the tradeoffs, I chose to use the single year of community foundation
gifts received to match the social capital measurement in that year. Future studies
with community foundation and social capital data on a different year can be
conducted to verify the findings of this study.
Fourth, the empirical analysis in Chapter 4 does not indicate that community
foundation financial strength significantly increases social trust in a community.
One explanation for the result is that social capital, especially social trust, is a long-
term effect in which some small changes hardly can be measured or detected in the
short term. Therefore, we need multi-year longitudinal data rather than a single-year
data to test the impact of community foundation financial capacity on the level of
social capital. Another explanation is that a community foundation’s financial
capacity truly is not related to social capital building, which means that a community
foundation with low financial capacity may be as successful in building social capital
as a foundation with high financial capacity. It is the non-financial capacity—i.e. the
community foundation’s board composition, and the frequent interaction between
community foundations and other local grassroots nonprofit—that affect social
capital. Without multi-year longitudinal data on social trust, I cannot re-test the
relationship between community foundation financial capacity and the stock of
social capital. These limitations of the study can be overcome in the future when
data are available or when refined measurements of certain variables are available.

121
5.4 Future Research
The findings and the current limitations of the study lead to the following
research topics I am interested in studying in the near future. First, in terms of
individual charitable behavior research, I am interested in studying whether family
charitable giving history affects children’s charitable decisions when they grow up.
The sociological view of human behavior argues that individual values and behavior
are socially constructed. In this study, I have found that social networks, social trust
and volunteering experiences shape individual charitable giving. In the future, I
would like to use panel data to examine whether individuals raised in a family with
charitable-giving traditions would be more likely to give.
Second, in Chapter 3, I did not find social network factors to affect
community foundation development. However, fundraising experiences show that
social networks do matter. Therefore, in the next step, I will conduct some case
studies, and explore how and what types of social networks matter for community
foundation development. It is likely that organizational networks, not only
foundation-donor networks, help community foundations raise funds.
Third, I am interested in studying how participatory charitable giving fosters
trust, and therefore affects the amount of giving to community foundations and other
nonprofit organizations. I will study the donor circles affiliated with community
foundations. A donor circle is a group of people who pledge a certain amount of
contribution within a certain period and then collectively decide what programs or
organizations they support. This participatory charitable giving is similar to direct

122
democracy or citizen participation in the public arena. Participatory charitable
giving could avoid the sense of distrust in regards to how the donation will be
distributed and therefore increase people’s willingness to donate.
Finally, I would like to study collaborative fundraising efforts among local
charities. This study has found that the existence of other charitable organizations
may not necessarily reduce the amount of gifts to community foundations, which
suggests the possibility of win-win situations in nonprofit fundraising. The question
is then how nonprofit organizations—big or small—can collaborate efficiently in
their fundraising efforts.

123
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APPENDICES
Appendix A
The Definitions and Measurements of the Individual-Level Social Capital
Indices and Volunteering:

Variable Related Question(s) and Definition Measurement
Social Trust Q6 and 7a-f: general interpersonal
trust, trust neighbors, trust co-
workers, trust fellow congregants,
trust store employees where you shop,
trust local police
It is calculated as the mean of the
standardized responses to the 6
questions, at least 3 answers had
to be provided for a score to be
calculated.
Bridging
Social
Networks
Q55: How many different kinds of
personal friends the respondent has
from the 11 possible types: owns their
own business, manual worker, been
on welfare, a vacation home, very
religious, white, Latino, Asian, black,
gay/lesbian, community leader,
Count of how many different
kinds of personal friends the
respondent has.
Informal
Social
Networks
Q56c, 56d, 56f, 56h, 56i. How many
times in the past 12 months have you
played cards or games with others,
visited relatives or had them visit you,
has friends over to your home,
socialized with coworkers outside of
work, or hung out with friends in
public places?
Calculated as the mean of the
standardized responses to the 5
questions, based on national
survey norms. At least 2 of these
answers had to be provided for a
score to be calculated.
Civic
Engagement
Q33: Involve in any of the following
18 groups: any religious org., sports
club, youth organization, PTA,
veteran's group, neighborhood org.,
senior citizens' club, charity org.,
labor union, professional association,
fraternal org., civil rights org.,
political action groups, arts group,
hobby clubs, self-help program for
specific illnesses, group meet over
Internet, any other kinds of clubs
Count of how many different
groups the respondent involved
in.
Organized
Group
Activism
Q56a, 56e, and 56l, how many times
have you attended community events,
club meetings, public meetings that
discuss town or school affairs,
respectively in the past 12 months.
The index is calculated as the
mean of the standardized scores
of the 3 questions, based on
national norms.
Times
volunteered
Q58: How many times in the past 12
months have you volunteered?
The range is from 1 to 9.

134
Appendix B
The Definitions and Measurements of The Community Social Capital Indices

Variable Definition Measurement
Social Trust Respondent’s general interpersonal trust,
trust of neighbors, co-workers, fellow
congregants, store employees where you
shop, and local police
It is the average of
individuals’ social trust,
which is calculated as the
mean of the standardized
responses to the 6
questions. At least 3
answers had to be provided
for a score to be calculated.
Bridging Social
Networks
Bridging social networks are defined as
one’s diversity of friendships.
Respondents were asked whether they had
a personal friend who was a business
owner, on welfare, owned a vacation
home, gay, a manual worker, a community
leader, of a different faith, White, Black,
Hispanic, and Asian,
It is measured as the
average of the individuals’
diversity of friendship
indicator, which is
calculated as the count of
different kinds of personal
friends the respondents had
from the 11 possible types.
Informal Social
Networks
Respondents having friends visiting their
home, visiting with relatives, socializing
with co-workers outside of work, hanging
out with friends in public places, playing
cards and board games.
It is the mean of
individuals’ informal social
network score, calculated as
the mean of the
standardized responses to
the 5 questions, based on
national survey norms.
Civic
Engagement
Respondents involved in any of the
following 18 types of groups or
organizations: religious, youth,
neighborhood, fraternal, civil rights,
sports, the PTA, veterans, neighborhood,
senior citizens, charity, labor union,
professional association, political action,
arts and hobbies, self-help program for
specific illnesses, group meet over the
Internet, other kinds of clubs.
It is the mean of
individuals’ group
engagement, calculated as
the count of the number of
different groups in which
the respondent is involved
(ranging from 0 to 18).
Organized
Group
Activism
Respondents attending public meetings, or
club meetings, or local community events.
It is the mean of the
individuals’ group activism
score, which is calculated
as the average of the
standardized scores of the
three questions, based on
national norms.

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Asset Metadata

Creator Wang, Lili (author)

Core Title Social capital and community philanthropy: the impact of social trust and social networks on individual charitable behavior and community foundation development

School School of Policy, Planning, and Development

Degree Doctor of Philosophy

Degree Program Public Administration

Degree Conferral Date 2007-08

Publication Date 07/21/2007

Defense Date 04/30/2007

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag charitable giving,community foundation,OAI-PMH Harvest,philanthropy,social capital,social network,social trust,volunteerinng

Language English

Advisor Graddy, Elizabeth (committee chair), Hentschke, Guilbert C. (committee member), Sundeen, Richard A. (committee member)

Creator Email liliwang@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m637

Unique identifier UC1465658

Identifier etd-Wang-20070721 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-518501 (legacy record id),usctheses-m637 (legacy record id)

Legacy Identifier etd-Wang-20070721.pdf

Dmrecord 518501

Document Type Dissertation

Rights Wang, Lili

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Repository Name Libraries, University of Southern California

Repository Location Los Angeles, California

Repository Email cisadmin@lib.usc.edu