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Comparing charitable fundraising schemes: Evidence from a field experiment and a structural model

  • Huck, Steffen
  • Rasul, Imran
  • Shephard, Andrew

We present evidence from a natural field experiment designed to shed light on the efficacy of alternative fundraising schemes. In conjunction with the Bavarian State Opera House, we mailed 25,000 regular opera attendees a letter describing a charitable fundraising project organized by the opera house. Recipients were randomly assigned to six treatments designed to explore behavioral responses to fundraising schemes varying in two dimensions: (i) the presence of a lead donor; (ii) whether and how individual donations would be matched using the lead donation. We provide reduced form evidence from the field experiment on the causal impact of each fundraising scheme on the extensive and intensive margins of giving. We then develop and estimate a structural model of giving behavior that simultaneously estimates individual responses on both margins. We utilize the structural model to predict giving behavior in counterfactual fundraising schemes. The evidence suggests the optimal fundraising scheme is one in which the charitable organization merely announces the existence of a significant and anonymous lead donor, and does not use the lead donation to match donations in any way, be it through linear matching, non-linear matching, threshold matching, or some combination of the three. We conclude by discussing evidence from a follow-up field experiment designed to probe further the question why lead donors are effective.

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Economics of Change with number SP II 2012-303.

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Date of creation: 2012
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Handle: RePEc:zbw:wzbeoc:spii2012303
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  1. Daniel Rondeau & John List, 2008. "Matching and challenge gifts to charity: Evidence from laboratory and natural field experiments," Natural Field Experiments 00330, The Field Experiments Website.
  2. 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.
  3. Steven D. Levitt, 2006. "An Economist Sells Bagels: A Case Study in Profit Maximization," NBER Working Papers 12152, National Bureau of Economic Research, Inc.
  4. Karlan, Dean & List, John, 2006. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," Working Papers 13, Yale University, Department of Economics.
  5. Angrist, J.D., 1996. "Conditional Independance in Sample Selection Models," Working papers 96-27, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Briers, Barbara & Pandelaere, Mario & Warlop, Luk, 2007. "Adding exchange to charity: A reference price explanation," Journal of Economic Psychology, Elsevier, vol. 28(1), pages 15-30, January.
  7. Stefano DellaVigna & John A. List & Ulrike Malmendier, 2012. "Testing for Altruism and Social Pressure in Charitable Giving," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 1-56.
  8. Huck, Steffen & Rasul, Imran, 2011. "Matched fundraising: Evidence from a natural field experiment," Journal of Public Economics, Elsevier, vol. 95(5), pages 351-362.
  9. Gerald E. Auten & Holger Sieg & Charles T. Clotfelter, 2002. "Charitable Giving, Income, and Taxes: An Analysis of Panel Data," American Economic Review, American Economic Association, vol. 92(1), pages 371-382, March.
  10. repec:feb:natura:0053 is not listed on IDEAS
  11. Brigitte C. Madrian, 2012. "Matching Contributions and Savings Outcomes: A Behavioral Economics Perspective," NBER Working Papers 18220, National Bureau of Economic Research, Inc.
  12. Romano, Richard & Yildirim, Huseyin, 2001. "Why charities announce donations: a positive perspective," Journal of Public Economics, Elsevier, vol. 81(3), pages 423-447, September.
  13. Randolph, William C, 1995. "Dynamic Income, Progressive Taxes, and the Timing of Charitable Contributions," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 709-38, August.
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