FUNDRAISING INTERMEDIARIES INHIBIT QUALITY‐DRIVEN CHARITABLE DONATIONS

Charitable donations are frequently raised by an intermediary, which accepts donations and subsequently sends the proceeds to the chairty—for example, a workplace campaign for United Way, a 5‐km walk for Susan G. Komen, or buying cookies from a local troop for the Girl Scouts. These fundraisers can greatly increase donations received by a given charity, but how do they affect what types of charities we support? This article shows intermediary fundraisers can make donors insensitive to differences in charity quality: Unattractive charities can receive the same financial support as an attractive charity. In a series of across‐subject experiments, when donations are framed as going directly to the charity, unattractive charities receive fewer and smaller contributions relative to attractive charities; however, when donations for the same charities are collected by (meaningless) intermediary fundraising campaigns, donations become indistinguishable across charities. The fundraising campaign does not affect donor recall of charity identity or evaluation of charity quality; it simply precludes donors from using these data in the donation decision. Follow‐up experiments suggest the results are driven by information overload. (JEL A13, C91, C93, D61, D64, H41)     

EDUCATION'S GAMBLING PROBLEM: EARMARKED LOTTERY REVENUES AND CHARITABLE DONATIONS TO EDUCATION

I examine the impact that lotteries introduced to support education have on voluntary contributions to education. State lotteries, and the causes they are introduced to support, are highly publicized. This provides the opportunity to assess whether donors are crowded‐out by government spending of which they are almost certainly aware. Using donor‐level survey data and nonprofits' tax returns, I find that donations to education‐related organizations fall with the introduction of a lottery. This result is driven by donors' response to the new (highly publicized) government revenue source (rather than a decrease in nonprofit fundraising efforts). (JEL D64, H3, H75)     

AN EXPERIMENTAL STUDY OF ALTERNATIVE CAMPAIGN FINANCE SYSTEMS: TRANSPARENCY,DONATIONS, AND POLICY CHOICES

We experimentally study the transparency effect of alternative campaign finance systems on donations, election outcomes, policy choices, and welfare. Three alternatives are considered: one where donors' preferences and donations are unobserved by the candidate and public; one where they are observed by the candidate but not the public; and one where they are observed by all. We label them full anonymity (FA), partial anonymity (PA), and no anonymity (NA), respectively. We find that in NA and PA candidates consistently respond to donations by choosing policies favoring the donors. FA, in contrast, is the most successful in limiting the influence of donations on policy choices. Donors benefit greatly from the possibility of donations whereas social welfare may be harmed in some treatments. To our knowledge, this article is the first to investigate the effect of different campaign finance systems distinguished by their transparency level. (JEL D72)     

SELECTIVE RECOGNITION: HOW TO RECOGNIZE DONORS TO INCREASE CHARITABLE GIVING

Recognizing donors by revealing their identities is important for increasing charitable giving. Using a framed field experiment, we show that all forms of recognition that we examine increase donations relative to the baseline treatment, and recognizing only the highest or only the lowest donors has the strongest and significant effect. We argue that selective recognition creates tournament‐like incentives. Recognizing the highest donors activates the desire to seek a “positive prize” of prestige, while recognizing the lowest donors activates the desire to avoid a “negative prize” of shame. We discuss how selective recognition can be used by charities to increase donations. (JEL C93, D64)     

SUBSIDIZING ALTRUISM IN LIVING ORGAN DONATION

The current supply of deceased donor organs is insufficient to meet the growing demand for transplantable organs. Consequently, candidates for kidney transplantation are encouraged to find a living donor. In 2008, the Department of Health and Human Services began to reimburse donors' travel‐related expenses via the National Living Donor Assistance Center (NLDAC). Using variation in transplant centers' applications for donor assistance, we use a difference‐in‐difference model to estimate the relationship between the NLDAC and living donor kidney transplants. We find that among participating transplant centers, the program increased the number of living donor kidney transplants by approximately 14%. (JEL I12, I18, D64)     

CATEGORY REPORTING IN CHARITABLE GIVING: AN EXPERIMENTAL ANALYSIS

We examine the effect of category reporting on charitable giving, aiming to disentangle the publicity effect from the category effect. We compare subjects' donation decisions under three reporting plans: category reporting, where an honored category is prespecified and qualifying subjects were publicly acknowledged; category no reporting, where the same category was utilized but the qualifying donors were not publicly acknowledged; and no reporting, where neither category setting nor public reporting was utilized. We found that category reporting significantly increased average donations relative to no reporting, and that this superiority was due to the dual presence of the category setting and the public reporting. The category setting anchors donations toward the category threshold and increased the average donations when the threshold was modestly set. The public reporting, on the other hand, only worked at the highest category level. It further increased the donations by providing extra social‐image benefits. (JEL C90, C91, D64, H00)     

RISING TOP INCOMES AND INCREASED BORROWING IN THE REST OF THE DISTRIBUTION

One potential consequence of rising top‐income concentration is borrowing by less‐affluent households attempting to maintain relative living standards. This paper evaluates the “keeping up with the Joneses” phenomenon, examining the responsiveness of payment‐to‐income ratios for different debt types across the income distribution to changes in income among affluent households. The analysis provides evidence for the responsiveness of debt to rising top incomes. Middle‐ and upper‐middle‐income households take on more housing‐related debt and have higher payments in places with higher top‐income levels. Among lower‐income households non‐mortgage borrowing and debt payments decline, consistent with restrictions in the supply of credit. (JEL D63, D14)     

PRIZE‐BASED MECHANISMS FOR FUND‐RAISING: THEORY AND EXPERIMENTS

We study the optimal design of mechanisms for the private provision of public goods in a setting in which donors compete for a prize of commonly known value. We discuss equilibrium bidding in mechanisms that promote both conditional cooperation and competition (i.e., the lottery and the all‐pay auction with the lowest‐bid payment rule) and rank their fund‐raising performance vis‐à‐vis their standard (pay‐your‐own‐bid) counterparts. The theoretically optimal mechanism in this model is the lowest‐price all‐pay auction—an auction in which the highest bidder wins the prize and all bidders pay the lowest bid. The highest amount for the public good is generated in the unique, symmetric, mixed‐strategy equilibrium of this auction. In the laboratory, the theoretically optimal mechanism generates the highest level of donations with three bidders but not with two bidders. (JEL D44, D64)     

Crowding‐Out and Fundraising Efforts

The crowding‐out of private donations by government grants is an integral element in designing an efficient method of financing nonprofit activity. This article looks at elements of crowd‐out, both the direct impact on donors and the indirect impact caused by the response of nonprofits. We include both theoretical and empirical analyses of the reactions by donors and nonprofits to an increase in government funding based on data from the League of American Orchestras’ annual reports from 2004 to 2007. To combat indirect crowd‐out, renewed emphasis should be placed on grant design; for direct crowd‐out, theories of collective action are appropriate.     

Profiling Donors of Blood,Money, and Time

Understanding donor profiles is crucial for donor relationship management. Whereas previous research has focused on profiling blood, money, or time donor segments separately, we define seven donor profiles based on their former donation behavior for blood, money, and time donation and compare them to non‐donors. Relying on representative data from the German Socio Economic Panel, we use an extensive set of characteristics that include sociodemographic, psychographic, health‐related, and geographical measures and simultaneously investigate profiles of donors for single and multiple donation forms and non‐donors by means of a multinomial logistic model. Our results reveal valuable insights for donor acquisition and retention strategies of nonprofit organizations along the identified profiling characteristics of donor segments. By this, our findings help nonprofit organization managers to better target single and multiple donors across three donation forms.     

ROUND GIVING: A FIELD EXPERIMENT ON SUGGESTED DONATION AMOUNTS IN PUBLIC‐TELEVISION FUNDRAISING

Direct‐mail fundraisers commonly provide a set of suggested donation amounts to potential donors, in addition to a write‐in option. Standard economic models of charitable fundraising do not predict an impact of suggested amounts on charitable giving. However, our field experiments on direct‐mail solicitations to over 10,000 members of a public television station tell a different story. We find that changing one of the suggested amounts in an ask string from $100 to $95 reduces the number of gifts greater than or equal to $90 by more than 30%. This contrasts with our finding that in three independent comparisons, increasing the entire vector of suggested amounts by 20%–40% reduces the probability of giving by approximately 15%, with little effect on the average size of the gift. Both manipulations lead to a larger proportion of write‐in donations, even as they reduce the number of total gifts. We propose a simple behavioral theory to explain the data: many donors prefer to give round numbers, and donors incur a cognitive cost when choosing to give a nonsuggested amount. (JEL C9, H4)     

Does Who Decides Really Matter? Causes and Consequences of Personal Financial Management in the Case of Larger and Structural Charitable Donations

We study causes and consequences of financial management in households in the specific case of charitable giving. We test hypotheses using couples in the Giving in the Netherlands Panel Study (n = 1,101). We find that more relationship specific investments lead to deciding on charitable giving as one economic actor. Furthermore, we find that the partner with the highest relative educational resources has most decision making power over charitable donations. Separately deciding couples are smallest charitable donors. Households in which the male partner decides are largest charitable donors when only larger and more structural donations are considered. This can be explained by their more conservative religious denomination.     

With the Best of Intentions

Abstract

Charities and humanitarian organisations in Singapore that were involved in post-Tsunami relief and reconstruction work are repeatedly queried by volunteers, donors, and journalists. The world has pledged and donated billions to Tsunami relief and reconstruction, and I have personally given money to Singapore charities. Why do I still read about needy people in temporary shelters? Where has the money gone? Another question reflects similar sentiments of puzzlement, even frustration: I am moved by the devastation and would like to help by volunteering my time and expertise. I have signed up to volunteer with several humanitarian organisations. I am highly qualified and could help people. Why am I still not sent overseas?

These are good questions that deserve solid answers. This article discusses the latest thinking in relief circles as to which volunteers are best sent overseas and how donations can most responsibly be used for effective and sustainable reconstruction. The authors draw on Singapore's experience with providing relief in the aftermath of the Tsunami along with Dr. Tay Keong Tan's observations of relief and rehabilitation efforts in the Tsunami-affected areas of Sri Lanka and Indonesia. The article finds that volunteering requires much more than just a giving heart. Also, donations may be used most effectively by thinking long-term rather than just short-term. Further, donations are best administered in a way coordinated with local relief plans and in consultation with local people. The article closes by considering lessons for volunteers, donors, and humanitarian relief agencies from the Tsunami's aftermath.     

KIDS OR CASH? EXPLORING CHARTER SCHOOL RESPONSES TO DECLINING GOVERNMENT REVENUES

While the literature is extensive on school districts' revenue sources, less research has been done on the impact of donations on school district funds. In this paper, we extend the theoretical literature on crowding out of private donations by government grants for one type of nonprofit firm, namely charter schools. The theoretical model leads us to focus on the key relationships among fundraising effort, enrollment (which is tied to federal and state funding) and donations. Using a dataset on Texas charter schools we adopt a two-stage approach to examine the empirical relationship between changes in nondonor revenues and the donations received by charter schools. Like the extensive empirical estimates of the effects of government grants on donations for other types of nonprofit firms, we find evidence of crowding-out with respect to our sample of charter schools. We also find a significant, positive effect of fundraising on donations with a $1 increase in fundraising associated to a $0.58 increase in donations, a pattern consistent with overinvestment in fundraising. Enrollments exhibit a robust inverse relationship to changes in nondonor revenues. (JEL H00, H32, H50)     

Exploring the Use of the Stages of Change Model to Increase Organ Donations Among African Americans

Abstract

The success of organ transplants is affected by the degree of antigen match between donor and recipient. With organ transplants among African Americans, finding a good antigen match is difficult. While the consent rate for organ donations among Caucasians is 50%, this rate among African Americans is only 12%. The resulting ratio of donors to “recipients” is 1 to 9 in African Americans. The majority of organs received by African Americans come from Caucasian donors, thereby reducing the probability of an antigen match and increasing the probability of organ rejection. These circumstances could be improved if the organ donation rate eamong African Americans was increased. There is some empirical support for the theory that behavior change occurs through identifiable stages. This paper presents evidence for the construct validity of a stage of change measure suitable for use in designing and evaluating attempts to promote organ donations in the African American community. Use of this measure also permits clinicians to assess how receptive a client will be to organ donation promotional material. Use of this measure offers the possibility of refining approaches to organ donations among African Americans. Increases in the donor rate will result in a larger pool of antigen compatible organs in this subpopulation.     

Can social systems be autopoietic? Assessing Luhmann's social theory

The theory of autopoiesis, that is systems that are self‐producing or self‐constructing, was originally developed to explain the particular nature of living as opposed to non‐living entities. It was subsequently enlarged to encompass cognition and language leading to what is known as second‐order cybernetics. However, as with earlier biological theories, many authors have tried to extend the domain of the theory to encompass social systems, the most notable being Luhmann. The purpose of this article is to consider critically the extent to which the theory of autopoiesis, as originally defined, can be applied to social systems ‐ that is, whether social systems are autopoietic. And, if it cannot, whether some weaker version might be appropriate.     

THE HABIT OF GIVING

Many charitable organizations believe it is worthwhile to solicit very small donations, particularly from young people, because these gifts form a habit of giving which leads to larger donations in the future. Indeed, there is some evidence of a positive correlation between giving when young and giving when old. However, such a correlation, by itself, does not constitute evidence of habit formation. Using data on alumni contributions to a university, we assess whether the correlation is due to habit formation—true state dependence—or to unobservable factors such as affinity to the school. We further examine whether habits form by the mere act of giving or based on the amount given. We implement an instrumental variables approach using the fact that performance of the school's athletic teams and solicitation by one's former roommates generate shocks to giving while young that are plausibly uncorrelated with giving when older. There is strong evidence of habit formation on the extensive margin, but not in the amount given. This finding has important implications for fundraising strategies, charities' accounting practices, and tax policy. (JEL D64, D91, D12)     

Race/Ethnicity,Attitudes, and Living With Parents During Young Adulthood

Non‐White young adults are more likely to live with their parents throughout their 20s, more likely to return home after going away to college, and less likely to leave again after returning. Scholars have speculated that subcultural differences in attitudes toward marriage and family play a key role in generating racial/ethnic differences in rates of coresidence with parents among young adults. Data from the National Education Longitudinal Survey of 1988 (N = 11,228) were analyzed in order to test this hypothesis. Attitudes toward marriage and family were significantly associated with coresidence, especially among young men, but did not substantially account for racial/ethnic differences in living arrangements. Among young non‐White women and young Black men, higher rates of coresidence were related to differences from Whites in socioeconomic or marital status (and sometimes both) that were largely independent of differences in attitudes toward marriage and family.     

Can We Promote Child Well‐Being by Promoting Marriage?

This article uses data from the National Longitudinal Survey of Youth 1979 Cohort Mother‐Child files to explore the idea that child well‐being can be improved by encouraging and enhancing parental marriage. I consider how children’s living arrangements, the stability of parental marriages, and changes in living arrangements are related to children’s behavior and cognitive test scores. Although there is some evidence that children living with their married parents, even parents in unstable marriages, have better outcomes than children living in certain nonmarital arrangements, the findings vary across domains and specifications, and the effect sizes are generally small. Thus, any benefits of policies aimed improving child well‐being by encouraging and enhancing parental marriage are likely to be modest at best.