Abstract
An influential result in the literature on charitable giving is that matching subsidies dominate rebate subsidies in raising funds. We investigate whether this result extends to “unit donation” schemes, a popular alternative form of soliciting donations. There, the donors’ choices are over the number of units of a charitable good to fund at a given unit price, rather than the amount of money to give. Comparing matches and rebates as well as simple discounts on the unit price, we find no evidence of dominance in our online experiment: the three subsidy types are equally effective overall. At a more disaggregated level, rebates lead to a higher likelihood of giving, while matching and discount subsidies lead to larger donations by donors. This suggests that charities using a unit donation scheme enjoy additional degrees of freedom in choosing a subsidy type. Rebates merit additional consideration if the primary goal is to attract donors.
Highlights
Subsidies are a common way of incentivizing charitable giving
Do the key findings about the effects of matches and rebates in money donations generalize to the alternative unit donation scheme? In this paper, we examine the effect of subsidies on unit donations by conducting an online field experiment
Our analysis suggests that those different results for the WS sample are mostly an artifact of the WS design, which we consider less externally valid: When confronted with all possible subsidies, subjects seem to make a single decision at the extensive margin of giving across all subsidy types with a similar rate and respond to the subsidy type mostly at the intensive margin
Summary
Subsidies are a common way of incentivizing charitable giving. They typically take the shape of rebates, in which a third party (e.g., the government) refunds a fraction r of the gift back to the donor; or the shape of matches, in which a third party (e.g., a generous donor) supplements each donation at a rate m, such that the charity receives a total of (1 + m) times the original donation. The literature has established these findings in a setting in which individuals are asked to decide how much money to give to a charity, arguably the most common scheme for soliciting donations We refer to this as a money donation scheme. Donors for ShareTheMeal do not choose an amount of money to give Instead, they are informed that feeding one child for a day costs $0.80 and are asked to indicate the number of feeding days (“meals”) that they would like to fund.. The fundraiser states an explicit price p and asks how many discrete units gi the potential donor would like to fund In this respect, the setting resembles early models of the private provision of public goods that are explicit about units and prices (e.g., Warr 1983). Under a unit donation scheme, the donor’s choice variable gi is denominated in terms of the quantity of the charitable good funded
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