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

Published online by Cambridge University Press:  14 March 2025

Catherine C. Eckel  and
Philip J. Grossman
Catherine C. Eckel*
Affiliation:
School of Economic, Political and Policy Sciences, University of Texas at Dallas, GR31, Richardson, TX 75080, USA
Philip J. Grossman*
Affiliation:
Department of Economics, St. Cloud State University, St. Cloud, MN 56301, USA
*
e-mail: eckelc@utdallas.edu
e-mail: pgrossman@stcloudstate.edu
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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.

Keywords

Field experimentRebate subsidyMatching subsidyCharitable giving

JEL classification

D64: Altruism • Philanthropy • Intergenerational Transfers H41: Public Goods L3: Nonprofit Organizations and Public Enterprise C93: Field Experiments

Information

Type
Research Article
Information
Experimental Economics , Volume 11 , Issue 3: Field experiments in economics with applications to the economics of charity , September 2008 , pp. 234 - 252
Copyright
Copyright © 2008 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (http://dx.doi.org/10.1007/s10683-008-9198-0) contains supplementary material, which is available to authorized users.

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