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The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign

Author

Listed:
  • John A. List

    (Department of Economics, University of Central Florida)

  • David Lucking-Reiley

    (Department of Economics, Vanderbilt University)

Abstract

We test two recent theories on the subject of charitable fundraising in capital campaigns. Andreoni (1998) predicts that publicly announced seed contributions can increase the total amount of charitable giving in a capital campaign. Bagnoli and Lipman (1989) predict that another technique for increasing contributions is a promise to refund donors' money in case the campaign threshold is not reached. Using a field experiment in a capital campaign for the Center for Environmental Policy Analysis at the University of Central Florida, we present evidence on both of these predictions. Data from direct mail solicitations sent to 3000 Central Floridian residents confirm the basic comparative-static predictions of both theories: total contributions increase with the amount of seed money, and with the use of a refund policy. A change in seed money from 10% to 67% of the campaign goal resulted in nearly a sixfold increase in contributions, while imposing a refund increased contributions by a more modest 20%. Seed money has a statistically significant effect on both the proportion of people choosing to donate and on the average gift size of those who donate, while refunds have a statistically significant effect only on the average gift size. These results have clear implications for practitioners in the design of fundraising campaigns.

Suggested Citation

  • John A. List & David Lucking-Reiley, 2000. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Vanderbilt University Department of Economics Working Papers 0008, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:0008
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    References listed on IDEAS

    as
    1. David Lucking-Reiley & John A. List, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, vol. 90(4), pages 961-972, September.
    2. Rachel Croson & Melanie Marks, 2000. "Step Returns in Threshold Public Goods: A Meta- and Experimental Analysis," Experimental Economics, Springer;Economic Science Association, vol. 2(3), pages 239-259, March.
    3. Mark Bagnoli & Barton L. Lipman, 1989. "Provision of Public Goods: Fully Implementing the Core through Private Contributions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(4), pages 583-601.
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    7. John A. List, 2001. "Do Explicit Warnings Eliminate the Hypothetical Bias in Elicitation Procedures? Evidence from Field Auctions for Sportscards," American Economic Review, American Economic Association, vol. 91(5), pages 1498-1507, December.
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    14. repec:feb:framed:0043 is not listed on IDEAS
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    More about this item

    Keywords

    Charitable giving; field experiments; threshold public goods;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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