The Impact of Recession on Religious Organizations and Tithe Payers

Religious organizations survive by tithing its members. As church members slog through the most difficult economy in decades, religious institutions are among those organizations most hard hit by the downturn. In fact, an unusual number of religious schools have closed down through 2009. Not only do religious institutions finances vary perfectly with tithe payer income, whose income levels are down, but due to “boarder line” committed members forgoing tithing donations, the number of tithe payers is down.

Religious organizations are by no means immune to macroeconomic fluctuations, in fact, there is compelling evidence, as noted above, that a sour economy will decreases tithing donations. But do those continuing to pay tithing through a tough economy face greater income elasticity concerns? My opinion is “yes” there are added financial considerations both the tithe payer and the religious organization face during a recession.

How do some tithe payers and religious institution survive and even thrive through these difficult economic times while others tithe payers file bankruptcy and institutions dissolve is an interesting question. For more on this discussion, please see the link below entitled “problems with tithing.”



Kylie said...

Good take on the impact of the recession. This topic is something that is probably overlooked quite often, but has been affected greatly by the downturn in the economy.

steward said...

Legalism, which i believe tithing is a form of, would not be affected by a bad economy. Tithing is like a tax that provides you with very few options to NOT pay and come out unscathed.

- jared

Dr. Tufte said...

-2 on Daniel for multiple grammatical mistakes.

There actually is not too much research on tithing, and other forms of religious contributions, over the business cycle.

The sense - and I think it is correct - is that tithing is inelastic with respect to income for individuals, but appears to be elastic for the group as a whole. This makes the behavior of tithing similar to durable goods - subject to wide swings based on current conditions. It also makes it responsive to "policy" - in some sense, the sale of indulgences in the Middle Ages was a form of religious "cash for clunkers".