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Subsidizing charitable contributions: a natural field experiment comparing matching and rebate subsidies

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Abstract

We report the results of a field experiment conducted in conjunction with a mailed fundraising campaign of a nonprofit organization. The experiment is designed to compare the response of donors to subsidies in the form of matching amounts or rebated amounts. Matching subsidies are used by many corporations as an employee benefit; the US federal tax system encourages giving using a rebate subsidy by making donations tax deductible. The design includes a control group and two levels of subsidy of each type. Our main result is that matching subsidies result in larger total donations to charities than rebate subsidies, a result that is qualitatively similar to the lab findings. The estimated price elasticities for the matching subsidy are very similar to (and insignificantly different from) the lab experiments, while rebate subsidies lead to lower contributions in the field than in the lab. Since rebates in the field involve substantial lags and additional complications as compared with the “instant rebates” of the lab, this latter difference is not unexpected. The matching results are an important step in validating lab estimates of responsiveness to subsidies of charitable giving.

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Authors and Affiliations

  1. School of Economic, Political and Policy Sciences, University of Texas at Dallas, GR31, Richardson, TX, 75080, USA

    Catherine C. Eckel

  2. Department of Economics, St. Cloud State University, St. Cloud, MN, 56301, USA

    Philip J. Grossman

Authors
  1. Catherine C. Eckel
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  2. Philip J. Grossman
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Correspondence to Philip J. Grossman.

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Eckel, C.C., Grossman, P.J. Subsidizing charitable contributions: a natural field experiment comparing matching and rebate subsidies. Exper Econ 11, 234–252 (2008). https://doi.org/10.1007/s10683-008-9198-0

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  • DOI: https://doi.org/10.1007/s10683-008-9198-0

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