Encouraging Giving: Subsidies in the Field

Abstract

We conduct a field experiment in conjunction with a direct mail fundraising campaign to test the effect of different forms of subsidies – rebates or matching subsidies – on charitable donations. Previous studies cannot distinguish whether donors are aware of the offer of a subsidy: here donors must check a box on the pledge form in order to receive the subsidy, thereby identifying donors who ignored or rejected the offer. This allows more accurate estimates price elasticities of giving, and more valid comparisons to lab-generated data. We find that donors accept matching more often than rebate offers (73% vs. 39%), and that “checkbook” giving (not adjusting for subsidies) is higher for those who accept a subsidy offer. Match and rebate subsidies have similar effects on checkbook giving; therefore a matching subsidy has a much larger impact on total donations than an equivalent rebate subsidy.

Keywords: Charitable giving, field experiment, subsidies

JEL Classification: D64, H2, C93