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Effects of the Price of Charitable Giving: Evidence from an Online Crowdfunding Platform

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  • Jonathan Meer

Abstract

A long literature has examined the effects of the price of giving - that is, the amount an in-dividual must give for one dollar to accrue to the charitable activity itself - on donative behavior. We use data from DonorsChoose.org, an online platform linking teachers with prospective donors, that are uniquely suited to addressing this question due to exogenous variation in overhead costs. An increased price of giving results in a lower likelihood of a project being funded. We also calculate the price elasticity of giving, finding estimates between -0.8 and -2; these are likely to be upper bounds on the tax price elasticity of charitable donations. Finally, we examine the effect of competition on giving and find that increased competition reduces the likelihood of a project being funded. These results provide insight into the workings of the market for charitable gifts.

Suggested Citation

  • Jonathan Meer, 2013. "Effects of the Price of Charitable Giving: Evidence from an Online Crowdfunding Platform," NBER Working Papers 19082, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19082
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Hornuf, Lars & Schwienbacher, Armin, 2015. "Funding Dynamics in Crowdinvesting," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112969, Verein für Socialpolitik / German Economic Association.
    2. Brown, Alexander L. & Meer, Jonathan & Williams, J. Forrest, 2017. "Social distance and quality ratings in charity choice," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 66(C), pages 9-15.
    3. Lars Hornuf & Armin Schwienbacher, 2015. "Funding Dynamics in Crowdinvesting," Research Papers in Economics 2015-09, University of Trier, Department of Economics.
    4. Adena, Maja & Huck, Steffen, 2016. "Online fundraising, self-deception, and the long-term impact of ask avoidance," Discussion Papers, Research Unit: Economics of Change SP II 2016-306, Social Science Research Center Berlin (WZB).
    5. Meer, Jonathan, 2017. "Does fundraising create new giving?," Journal of Public Economics, Elsevier, vol. 145(C), pages 82-93.
    6. Janice A. Hauge & Stanley Chimahusky, 2016. "Are Promises Meaningless In An Uncertain Crowdfunding Environment?," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1621-1630, July.
    7. Christine L. Exley, 2015. "Excusing Selfishness in Charitable Giving: The Role of Risk," Discussion Papers 15-013, Stanford Institute for Economic Policy Research.
    8. Adena, Maja & Huck, Steffen, 2016. "Online fundraising, self-image, and the long-term impact of ask avoidance," Annual Conference 2016 (Augsburg): Demographic Change 145535, Verein für Socialpolitik / German Economic Association.
    9. Bi, Sheng & Liu, Zhiying & Usman, Khalid, 2017. "The influence of online information on investing decisions of reward-based crowdfunding," Journal of Business Research, Elsevier, vol. 71(C), pages 10-18.
    10. Jonathan Meer, 2017. "Are overhead costs a good guide for charitable giving?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 329-329, January.
    11. Adena, Maja & Huck, Steffen, 2018. "Online fundraising, self-image, and the long-term impact of ask avoidance," Discussion Papers, Research Unit: Economics of Change SP II 2016-306r, Social Science Research Center Berlin (WZB).
    12. Marx, Benjamin M., 2015. "Has regulation of charitable foundations thrown the baby out with the bath water?," Journal of Public Economics, Elsevier, vol. 129(C), pages 63-76.
    13. Adena, Maja & Huck, Steffen, 2016. "Online fundraising, self-image, and the long-term impact of ask avoidance," Annual Conference 2016 (Augsburg): Demographic Change 145535, Verein für Socialpolitik / German Economic Association.
    14. Lars Hornuf & Matthias Neuenkirch, 2017. "Pricing shares in equity crowdfunding," Small Business Economics, Springer, vol. 48(4), pages 795-811, April.
    15. Wojciech Hardy, 2013. "How to perfectly discriminate in a crowd? A theoretical model of crowdfunding," Working Papers 2013-16, Faculty of Economic Sciences, University of Warsaw.
    16. Daniel Hungerman & Mark Ottoni-Wilhelm, 2016. "What is the Price Elasticity of Charitable Giving? Toward a Reconciliation of Disparate Estimates," Artefactual Field Experiments 00557, The Field Experiments Website.
    17. Christine L. Exley & Ragan Petrie, 2016. "The Impact of a Surprise Donation Ask," Harvard Business School Working Papers 16-101, Harvard Business School, revised Dec 2017.

    More about this item

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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