New experimental evidence on charitable gift restrictions and donor behaviour

Abstract

Gift restrictions are a common tool used by donors to ensure charitable intent. Owing to increased monitoring costs and the loss of flexibility, gift restrictions are costly to the recipient nonprofit organizations. Using an economic experiment, we studied the impact of offering donors the option to restrict their charitable gift. Our primary finding demonstrates that allowing the option to restrict a charitable gift increases the average gift size, whether or not the donor chooses to exercise that option. This result implies that restricted gifts both are an important tool for increasing donations and may be less costly to the nonprofit organizations than originally believed. We further demonstrate that high levels of religious attendance are associated with an increased use of gift restrictions and an increased responsiveness to those restrictions.