Facilitating or inhibiting charitable giving? Exploring the dual role of compulsory donations in China

Charitable giving is often seen as voluntary prosocial behavior. However, compulsory donations are not uncommon in countries such as China. This paper explores this understudied phenomenon by examining the impact of compulsory donations on voluntary and total charitable giving. Building upon the previous literature from multiple perspectives and using panel data from the China Labor-force Dynamics Survey, this study proposes an integrated framework to explain how compulsory donations affect voluntary and total giving and empirically tests the possible impact. Results from random-effects logistic regressions and tobit models demonstrate the dual role of compulsory donations in China. On the one hand, making compulsory donations crowds out voluntary charitable giving, while on the other hand, the practice increases total charitable giving because of its imperfect crowding-out effect on voluntary giving.