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Impure Prosocial Motivation in Charity Provision: Warm-Glow Charities and Implications for Public Funding

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  • Scharf, Kimberley

Abstract

We show that warm-glow motives in provision by competing suppliers can lead to inefficient charity selection. In these situations, discretionary donor choices can promote efficient charity selection even when provision outcomes are non-verifiable. Government funding arrangements, on the other hand, face verification constraints that make them less flexible relative to private donations. Switching from direct grants to government subsidies for private donations can thus produce a positive pro-competitive effect on charity selection, raising the value of charity provision per dollar of funding.

Suggested Citation

  • Scharf, Kimberley, 2013. "Impure Prosocial Motivation in Charity Provision: Warm-Glow Charities and Implications for Public Funding," CEPR Discussion Papers 9749, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9749
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    References listed on IDEAS

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    Cited by:

    1. Krasteva, Silvana & Yildirim, Huseyin, 2016. "Information, competition, and the quality of charities," Journal of Public Economics, Elsevier, vol. 144(C), pages 64-77.
    2. Gani Aldashev & Marco Marini & Thierry Verdier, 2017. "Samaritan Bundles: Inefficient Clustering in NGO Projects," Working Papers 6/17, Sapienza University of Rome, DISS.
    3. Krieg, Justin & Samek, Anya, 2017. "When charities compete: A laboratory experiment with simultaneous public goods," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 40-57.
    4. repec:eee:eecrev:v:96:y:2017:i:c:p:48-61 is not listed on IDEAS
    5. Scharf, Kimberley & Tukiainen, Janne, 2015. "Does Market Size Matter Also for Charities?," CAGE Online Working Paper Series 226, Competitive Advantage in the Global Economy (CAGE).
    6. Carlo Perroni & Ganna Pogrebna & Sarah Sandford & Kimberley Ann Scharf, 2014. "Are Donors Afraid of Charities' Core Costs? Scale Economies in Non-profit Provision and Charity Selection," CESifo Working Paper Series 5024, CESifo Group Munich.
    7. Joaquín Morales Belpair, 2016. "Decentralized aid and democracy," Investigación & Desarrollo 0116, Universidad Privada Boliviana, revised Jun 2016.
    8. Perroni, Carlo & Pogrebna, Ganna & Sandford, Sarah & Scharf, Kimberley, 2014. "Are Donors Afraid of Charities' Core Costs? Scale Economies in Non-profit Provision," CEPR Discussion Papers 10179, C.E.P.R. Discussion Papers.
    9. Heyes, Anthony & Martin, Steve, 2015. "NGO mission design," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 197-210.

    More about this item

    Keywords

    Competition in the Nonprofit Sector; Private Provision of Public Goods; Tax Incentives for Giving; Warm Glow;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H4 - Public Economics - - Publicly Provided Goods
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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