Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment

TLDR

The study uses a natural field experiment to deepen understanding of the economics of charitable giving. The experiment mailed solicitations to more than 50,000 former donors of a nonprofit, offering a matching grant to test its effect on giving. The match offer raised both revenue per solicitation and response rate, but higher match ratios ($3:$1 and $2:$1) did not yield further gains, suggesting diminishing returns and opening avenues for future research. JEL classification: D64, L31.

Abstract

We conducted a natural field experiment to further our understanding of the economics of charity. Using direct mail solicitations to over 50,000 prior donors of a nonprofit organization, we tested the effectiveness of a matching grant on charitable giving. We find that the match offer increases both the revenue per solicitation and the response rate. Larger match ratios (i.e., $3:$1 and $2:$1) relative to a smaller match ratio ($1:$1) had no additional impact, however. The results provide avenues for future empirical and theoretical work on charitable giving, cost-benefit analysis, and the private provision of public goods. (JEL D64, L31)