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How Can Bill and Melinda Gates Increase Other People's Donations to Fund Public Goods?

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  • Karlan, Dean S.
  • List, John

Abstract

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.

Suggested Citation

  • Karlan, Dean S. & List, John, 2012. "How Can Bill and Melinda Gates Increase Other People's Donations to Fund Public Goods?," CEPR Discussion Papers 8922, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8922
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Named matching donor are best to elicit more donations
      by Economic Logician in Economic Logic on 2012-04-24 19:14:00

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    Cited by:

    1. Bastian Hartmann & Martin Werding, 2012. "Donating Time or Money: Are they Substitutes or Complements?," CESifo Working Paper Series 3835, CESifo.
    2. Lenka Fiala & Charles N. Noussair, 2017. "Charitable Giving, Emotions, And The Default Effect," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1792-1812, October.
    3. Johanna Catherine Maclean & John Buckell, 2021. "Information and sin goods: Experimental evidence on cigarettes," Health Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 289-310, February.
    4. Steffen Huck & Imran Rasul & Andrew Shephard, 2015. "Comparing Charitable Fundraising Schemes: Evidence from a Natural Field Experiment and a Structural Model," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 326-369, May.
    5. Horn, Samantha & Karlan, Dean S., 2018. "Intuitive Donating: Testing One-Line Solicitations for $1 Donations in a Large Online Experiment," CEPR Discussion Papers 12714, C.E.P.R. Discussion Papers.
    6. Sadoff, Sally & Samek, Anya, 2019. "The effect of recipient contribution requirements on support for social programs," Journal of Public Economics, Elsevier, vol. 169(C), pages 1-16.
    7. Jack, B. Kelsey & Recalde, María P., 2015. "Leadership and the voluntary provision of public goods: Field evidence from Bolivia," Journal of Public Economics, Elsevier, vol. 122(C), pages 80-93.
    8. Ebeling, Felix & Feldhaus, Christoph & Fendrich, Johannes, 2017. "A field experiment on the impact of a prior donor’s social status on subsequent charitable giving," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 124-133.
    9. Indranil Goswami & Indranil Goswami, 2020. "No Substitute for the Real Thing: The Importance of In-Context Field Experiments in Fundraising," Marketing Science, INFORMS, vol. 39(6), pages 1052-1070, November.
    10. Cagala, Tobias & Glogowsky, Ulrich & Grimm, Veronika & Rincke, Johannes & Tuset-Cueva, Amanda, 2019. "Rent extraction and prosocial behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 709-723.
    11. Johanna Catherine Maclean & John Buckell & Joachim Marti, 2019. "Information Source and Cigarettes: Experimental Evidence on the Messenger Effect," NBER Working Papers 25632, National Bureau of Economic Research, Inc.
    12. Indranil Goswami & Oleg Urminsky, 2018. "No Substitute for the Real Thing: The Importance of In-Context Field Experiments In Fundraising," Natural Field Experiments 00660, The Field Experiments Website.

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    More about this item

    Keywords

    asymmetric information; charitable fundraising; matching grant; public goods;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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