Charitable Giving and Intermediation

Charitable donations are often made through intermediaries who can fund themselves from these same donations. Donors who purchase charitable output through an intermediary incur a principal-agent problem with unobservable prices. We compare charitable giving in an experiment with and without intermediation. Overall, donors give less when an intermediary is introduced, a decision which can only be partly explained by donors’ beliefs about the price of charitable output. However, this overall result can be attributed to only 41 per-cent of all donors. 59 per-cent of all donors in fact give as much or more with than without intermediation. Responses to intermediation can be explained by characteristics of donors’ moral judgment.