The Internet has long been argued to have “flattened” the world. However, a variety of work has shown that frictions do remain, deriving from biases and preferences tied to individual-level differences, e.g., cultural, demographic, and geographic. Such biases, if present, are undesirable from the perspectives of the platform operator and society because they imply market inefficiencies. With this in mind, we investigate a novel source of in-group bias that has thus far received relatively little attention in the literature. Specifically, we examine the influence of bias associated with religious differences in the context of Kiva.org, a peer-to-peer platform for pro-social lending. We propose a measure of religion distance between any given pair of countries, which we then incorporate into a gravity model of trade to explain variation in country-to-country lending volumes. We leverage data from Kiva.org spanning the period between 2006 and 2017, and demonstrate the negative and significant effect of religion distance on lending activity, over and above other established factors. Further, we demonstrate that the effects of religion distance are moderated by the social environment characterizing both a lender country and borrower country at a given point in time. That is, we show that increases in the degree of religiously motivated social hostilities, as well as the greater government favoritism of religion, within a lender country amplify the baseline (negative) effects of religion distance on lending activity. At the same time, we demonstrate that diversity of religion within a lender country attenuates the effects of religion distance. Our findings speak to the important frictions associated with religious differences in individual philanthropy, and they point to the role of government policy around religious tolerance as a determinant of citizens’ philanthropic behavior.