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How Can Bill and Melinda Gates Increase Other People’s Donations to Fund Public Goods? - Working Paper 292

  • Dean Karlan and John A. List

We develop a simple theory which formally describes how charities can resolve the information asymmetry problems faced by small donors by working with large donors to generate quality signals. To test the model, we conducted two large-scale natural field experiments. In the first experiment, a charity focusing on poverty reduction solicited donations from prior donors and either announced a matching grant from the Bill and Melinda Gates Foundation, or made no mention of a match. In the second field experiment, the same charity sent direct mail solicitations to individuals who had not previously donated to the charity, and tested whether naming the Bill and Melinda Gates Foundation as the matching donor was more effective than not identifying the name of the matching donor. The first experiment demonstrates that the matching grant condition generates more and larger donations relative to no match. The second experiment shows that providing a credible quality signal by identifying the matching donor generates even more and larger donations than not naming the matching donor. Importantly, the treatment effects persist long after the matching period, and the quality signal is quite heterogeneous—the Gates’ effect is much larger for prospective donors who had a record of giving to “poverty-oriented” charities. These two pieces of evidence support our model of quality signals as a key mechanism through which matching gifts inspire donors to give.

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File URL: http://www.cgdev.org/files/1426125_file_Karlan_List_donations_FINAL.pdf
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Paper provided by Center for Global Development in its series Working Papers with number 292.

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Length: 14 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:cgd:wpaper:292
Contact details of provider: Web page: http://www.cgdev.org

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  1. David Reiley & John List, 2008. "Field experiments," Artefactual Field Experiments 00091, The Field Experiments Website.
  2. John A. List, 2011. "The Market for Charitable Giving," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 157-80, Spring.
  3. Stephan Meier, 2006. "Do subsidies increase charitable giving in the long run?: matching donations in a field experiment," Working Papers 06-18, Federal Reserve Bank of Boston.
  4. Dean Karlan & Margaret A. McConnell, 2012. "Hey Look at Me: The Effect of Giving Circles on Giving," Working Papers 1006, Economic Growth Center, Yale University.
  5. Karlan, Dean & List, John A. & Shafir, Eldar, 2011. "Small matches and charitable giving: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5), pages 344-350.
  6. Karlan, Dean & McConnell, Margaret A., 2012. "Hey Look at Me: The Effect of Giving Circles on Giving," Working Papers 96, Yale University, Department of Economics.
  7. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
  8. Andreas Lange & Craig Landry & John List & Michael Price & Nicholas Rupp, 2010. "Is a donor in hand better than two in the bush? Evidence from a natural field experiment," Artefactual Field Experiments 00077, The Field Experiments Website.
  9. Craig E. Landry & Andreas Lange & John A. List & Michael K. Price & Nicholas G. Rupp, 2006. "Toward an Understanding of the Economics of Charity: Evidence from a Field Experiment," The Quarterly Journal of Economics, MIT Press, vol. 121(2), pages 747-782, May.
  10. Stefano DellaVigna & John A. List & Ulrike Malmendier, 2009. "Testing for Altruism and Social Pressure in Charitable Giving," NBER Working Papers 15629, National Bureau of Economic Research, Inc.
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