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The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign

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  • John A. List

    ()
    (Department of Economics, University of Central Florida)

  • David Lucking-Reiley

    ()
    (Department of Economics, Vanderbilt University)

Abstract

We test two recent theories on the subject of charitable fundraising in capital campaigns. Andreoni (1998) predicts that publicly announced seed contributions can increase the total amount of charitable giving in a capital campaign. Bagnoli and Lipman (1989) predict that another technique for increasing contributions is a promise to refund donors' money in case the campaign threshold is not reached. Using a field experiment in a capital campaign for the Center for Environmental Policy Analysis at the University of Central Florida, we present evidence on both of these predictions. Data from direct mail solicitations sent to 3000 Central Floridian residents confirm the basic comparative-static predictions of both theories: total contributions increase with the amount of seed money, and with the use of a refund policy. A change in seed money from 10% to 67% of the campaign goal resulted in nearly a sixfold increase in contributions, while imposing a refund increased contributions by a more modest 20%. Seed money has a statistically significant effect on both the proportion of people choosing to donate and on the average gift size of those who donate, while refunds have a statistically significant effect only on the average gift size. These results have clear implications for practitioners in the design of fundraising campaigns.

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File URL: http://www.accessecon.com/pubs/VUECON/vu00-w08.pdf
File Function: First version, 2000
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0008.

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Date of creation: Apr 2000
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Handle: RePEc:van:wpaper:0008

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

Related research

Keywords: Charitable giving; field experiments; threshold public goods;

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  1. Bagnoli, Mark & Lipman, Barton L, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 56(4), pages 583-601, October.
  2. Marks, Melanie & Croson, Rachel, 1998. "Alternative rebate rules in the provision of a threshold public good: An experimental investigation," Journal of Public Economics, Elsevier, Elsevier, vol. 67(2), pages 195-220, February.
  3. Cadsby, Charles Bram & Maynes, Elizabeth, 1999. "Voluntary provision of threshold public goods with continuous contributions: experimental evidence," Journal of Public Economics, Elsevier, Elsevier, vol. 71(1), pages 53-73, January.
  4. David Lucking-Reiley & John A. List, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, American Economic Association, vol. 90(4), pages 961-972, September.
  5. John List, 2001. "Do explicit warnings eliminate the hypothetical bias in elicitation procedures? Evidence from field auctions for sportscards," Framed Field Experiments, The Field Experiments Website 00163, The Field Experiments Website.
  6. David Lucking-Reiley, 1999. "Using Field Experiments to Test Equivalence between Auction Formats: Magic on the Internet," American Economic Review, American Economic Association, American Economic Association, vol. 89(5), pages 1063-1080, December.
  7. John List & David Lucking-Reiley, 2000. "Demand reduction in a multi-unit auction: Evidence from a sportscard field experiment," Framed Field Experiments, The Field Experiments Website 00180, The Field Experiments Website.
  8. R. Isaac & David Schmidtz & James Walker, 1989. "The assurance problem in a laboratory market," Public Choice, Springer, Springer, vol. 62(3), pages 217-236, September.
  9. Bagnoli, Mark & McKee, Michael, 1991. "Voluntary Contribution Games: Efficient Private Provision of Public Goods," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 29(2), pages 351-66, April.
  10. Rachel Croson & Melanie Marks, 2000. "Step Returns in Threshold Public Goods: A Meta- and Experimental Analysis," Experimental Economics, Springer, Springer, vol. 2(3), pages 239-259, March.
  11. Rapoport, Amnon & Eshed-Levy, Dalit, 1989. "Provision of step-level public goods: Effects of greed and fear of being gypped," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 44(3), pages 325-344, December.
  12. Vesterlund, Lise, 2003. "The informational value of sequential fundraising," Journal of Public Economics, Elsevier, Elsevier, vol. 87(3-4), pages 627-657, March.
  13. repec:feb:framed:0052 is not listed on IDEAS
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