Do Subsidies Increase Charitable Giving in the Long Run? Matching Donations in a Field Experiment
28 Pages Posted: 6 Feb 2007
Date Written: December 2006
Subsidizing charitable giving, for example, for victims of natural disasters, is very popular, not only with governments but also with private organizations. Many companies, for example, match their employees' charitable contributions, hoping that this will foster the willingness to contribute. However, systematic analyses of the effect of such a matching mechanism are still lacking. This paper tests the effect of matching charitable giving in a randomized field experiment in the short and the long run. The donations of a randomly selected group were matched by contributions from an anonymous donor. The results support the hypothesis that a matching mechanism increases contributions to a public good. However, in the periods after the experiment, when matching donations have been stopped, the contribution rate declines for the treatment group. The matching mechanism leads to a negative net effect on the participation rate. The field experiment therefore provides evidence suggesting that the willingness to contribute may be undermined by a matching mechanism in the long run.
Keywords: public goods, field experiment, matching mechanism, charitable giving
JEL Classification: C93, D64, H00
Suggested Citation: Suggested Citation