1999 Private Charitable Generosity Index: Section One: Methodology for the Private Charitable Generosity Index

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Measures of Generosity: The Index Components

The Private Charitable Generosity Index is based on three measures: percentage of donors to tax filers, charitable donations as a percent of private income, and per capita volunteer hours. Each measures generosity in a different way. The index itself is a compilation of these three measures of generosity.

The components of the index are three among many possibilities. They were chosen for several reasons: first, there was readily available data; second, they each capture a different picture of how people donate time or money; and finally, they highlight differences in giving between different jurisdictions.

It is important to recognize that all of the data compiled for the Generosity Index refers to registered charities.2 That is, the compilation of information excludes non-profit organizations that are not registered charities,3 and informal activities. This is largely due to the absence of any reliable data source for information on either the non-profit sector or informal activities.

The first component of the index, the percentage of donors to tax filers, measures the number of individuals who donate to charity compared to the number of tax filers in each jurisdiction. This measure is an indication of the relative number of people who donate to charity in each jurisdiction. It conveys only the prevalence of charitable donors, not the amount each donates.

The second component, charitable donations as a percent of private income, measures the relative value of donations. Donations as a percent of private income is used rather than other types of measures (such as the average dollar value or median donation) in order to control for differences in income levels. Since it does control for income levels, this indicator provides a measure by which donations made by low-income families may be legitimately compared with donations made by high-income families. This type of measure, therefore, allows for the comparison of relatively wealthy jurisdictions with relatively poor ones.

Private income is an attempt to measure the purchasing power remaining in the hands of private citizens after government has taxed them. It is the net market value of goods and services attributable to labour and property supplied by a jurisdiction’s residents, minus the revenue of all levels of government in that jurisdiction.

Per capita volunteer hours, the third component, was calculated by dividing the total number of volunteer hours donated to registered charities in each jurisdiction by the number of people over 15 years of age. This is a conservative estimate of volunteering since it does not include informal volunteering, or volunteering for non-profit organizations.4 That is, it only includes formal volunteering donated to registered charities. Other types of volunteering are excluded partly due to data limitations. Volunteering for registered charities is the only consistently collected and readily available source of volunteering data in Canada.

US-Canada Generosity Index

Unfortunately, the US-Canada comparison excludes volunteer hours due to the lack of a reliable data source for US volunteering. There are, therefore, differences in the rankings among the Canadian provinces between the Canadian-only rankings, which include volunteer hours, and the US-Canada rankings, which exclude volunteer hours.

We hope that within the next few years a useable source of per capita volunteering will emerge in the United States. The Independent Sector, a leading US philanthropy and charity research organization, is currently developing a system to collect information on volunteering on a state-by-state basis.

The US-Canada Private Charitable Generosity Index thus consists of only two components: the ratio of donors to tax filers, and charitable donations as a percent of private income. Together, these component variables form a composite index that provides an alternative measure of private generosity in each jurisdiction. It also provides a simple and comprehensible method by which to compare people’s generosity across jurisdictions.

Generosity Index Calculation

To calculate the index, the components were rated on a 0-to-10 basis. Higher scores indicate greater generosity in the particular component measured. The formula used to derive the 0-to-10 ratings is

(V_i / V_max) multiplied by 10

where V_i is the jurisdiction’s actual value for that particular component, and V_max is the maximum value for all jurisdictions during the measurement period.

The Canada-only index is based on the actual values for the Canadian provinces from 1996. The Canada/US index considers both the Canadian provinces and the American states but does so only for 1996. For this reason, and because of the inclusion of an addition variable in the Canadian index, the two indices are not directly comparable. The Canada-only provincial rankings are different in the two indices. For readers interested mainly in the provinces, the Canada-only index is more accurate.

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Last Modified: Thursday, August 5, 1999.