Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment
Last registered on July 26, 2016

Pre-Trial

Trial Information
General Information
Title
Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment
RCT ID
AEARCTR-0001135
Initial registration date
July 26, 2016
Last updated
July 26, 2016 2:33 PM EDT
Location(s)
Primary Investigator
Affiliation
Northwestern University
Other Primary Investigator(s)
PI Affiliation
Department of Economics, University of Chicago, Innovations for Poverty Action, and NBER
Additional Trial Information
Status
Completed
Start date
2005-08-01
End date
2006-08-01
Secondary IDs
Abstract
We conducted a natural field experiment to further our understanding of the economics of charity. Using direct mail solicitations to over 50,000 prior donors of a nonprofit organization, we tested the effectiveness of a matching grant on charitable giving. We find that the match offer increases both the revenue per solicitation and the response rate. Larger match ratios (i.e., $3:$1 and $2:$1) relative to a smaller match ratio ($1:$1) had no additional impact, however. The results provide avenues for future empirical and theoretical work on charitable giving, cost-benefit analysis, and the private provision of public goods.
External Link(s)
Registration Citation
Citation
Karlan, Dean and John A. List. 2016. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment." AEA RCT Registry. July 26. https://www.socialscienceregistry.org/trials/1135/history/9595
Experimental Details
Interventions
Intervention(s)
The study uses an organization’s donor list as the sample frame. Individuals are randomly assigned to treatment and control group. All individuals receive a four-page mailed letter identical in all respects except: (a) the treatment letters included an additional paragraph inserted at the top of the second page that announced that a “concerned fellow member” will match their donation, and (b) the reply card which contained the details of the match. For the control group, the reply card match language was replaced with a large logo of the organization.

The specifics of the match offer were then randomized orthogonally along three dimensions:
1. Price ratio of the match: 1:1, 2:1 or 3:1 (the 2:1 ratio means, for example, that for every dollar the individual donates, the matching donor contributes $2)
2. Maximum size of the matching gift across all donations: $25,000, $50,000, $100,000 or unstated.
3. Example donation amount suggested to the donor equal to: (i) the individual's highest previous contribution, (ii) 1.25 times the highest previous contribution, or (iii) 1.5 times the highest previous contribution.
Intervention Start Date
2005-08-01
Intervention End Date
2006-08-01
Primary Outcomes
Primary Outcomes (end points)
Probability of donating
Amount of donation
Primary Outcomes (explanation)
Outcomes measured directly from data.
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The charitable organization raising funds in this experiment was a political one. Because fundraising solicitations were sent to all 50 states, it is possible that utilitarian effects of contributing to a politically-motivated charity are different spatially due to the local political environments. To test for these effects, charitable giving data is merged with (i) demographic data, (ii) state returns from the 2004 presidential election and (iii) data on the frequency of the organization's activities within each state.
Experimental Design Details
The charitable organization raising funds in this experiment was a political one. Because fundraising solicitations were sent to all 50 states, it is possible that utilitarian effects of contributing to a politically-motivated charity are different spatially due to the local political environments. To test for these effects, charitable giving data is merged with (i) demographic data, (ii) state returns from the 2004 presidential election and (iii) data on the frequency of the organization's activities within each state.
Randomization Method
randomization done in office by a computer
Randomization Unit
Individuals
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
50,083 individuals
Sample size: planned number of observations
50,083 individuals
Sample size (or number of clusters) by treatment arms
Control group: 16,687
Treatment Total: 33,396

Treatment (1:1 matching grant): 11,133
Treatment (2:1 matching grant): 11,134
Treatment (3:1 matching grant): 11,129
Treatment (Maximum size matching gift $25,000): 8,350
Treatment (Maximum size matching gift $50,000): 8.345
Treatment (Maximum size matching gift $100,000): 8,350
Treatment (Maximum size matching gift unstated): 8,351
Treatment (Suggested amount equal to previous donation): 11,134
Treatment (Suggested amount 12.5 times previous donation): 11,133
Treatment (Suggested amount 1.5 times previous donation): 11,129
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
August 01, 2006, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
August 01, 2006, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
50,083 individuals
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
50,083 individuals
Final Sample Size (or Number of Clusters) by Treatment Arms
Control group: 16,687 Treatment Total: 33,396 Treatment (1:1 matching grant): 11,133 Treatment (2:1 matching grant): 11,134 Treatment (3:1 matching grant): 11,129 Treatment (Maximum size matching gift $25,000): 8,350 Treatment (Maximum size matching gift $50,000): 8.345 Treatment (Maximum size matching gift $100,000): 8,350 Treatment (Maximum size matching gift unstated): 8,351 Treatment (Suggested amount equal to previous donation): 11,134 Treatment (Suggested amount 12.5 times previous donation): 11,133 Treatment (Suggested amount 1.5 times previous donation): 11,129
Reports and Papers
Preliminary Reports
Relevant Papers
Abstract
HOW CAN BILL AND MELINDA GATES INCREASE OTHER PEOPLE’S DONATIONS TO FUND PUBLIC GOODS?

We develop a simple theory which formally describes how charities can resolve the information asymmetry problems faced by small donors by working with large donors to generate quality signals. To test the model, we conducted two large-scale natural field experiments. In the first experiment, a charity focusing on poverty reduction solicited donations from prior donors and either announced a matching grant from the Bill and Melinda Gates Foundation, or made no mention of a match. In the second field experiment, the same charity sent direct mail solicitations to individuals who had not previously donated to the charity, and tested whether naming the Bill and Melinda Gates Foundation as the matching donor was more effective than not identifying the name of the matching donor. The first experiment demonstrates that the matching grant condition generates more and larger donations relative to no match. The second experiment shows that providing a credible quality signal by identifying the matching donor generates even more and larger donations than not naming the matching donor. Importantly, the treatment effects persist long after the matching period, and the quality signal is quite heterogeneous—the Gates’ effect is much larger for prospective donors who
had a record of giving to “poverty-oriented” charities. These two pieces of evidence support our model of quality signals as a key mechanism through which matching gifts inspire donors to give.
Citation
Karlan, Dean and John A. List. "How Can Bill and Melinda Gates Increase Other People's Donations to Fund Public Goods?" Working Paper, Yale University, April 2012.
Abstract
DOES PRICE MATTER IN CHARITABLE GIVING? EVIDENCE FROM A LARGE-SCALE NATURAL FIELD EXPERIMENT

We conducted a natural field experiment to further our understanding of the economics of charity. Using direct mail solicitations to over 50,000 prior donors of a nonprofit organization, we tested the effectiveness of a matching grant on charitable giving. We find that the match offer increases both the revenue per solicitation and the response rate. Larger match ratios (i.e., $3:$1 and $2:$1) relative to a smaller match ratio ($1:$1) had no additional impact, however. The results provide avenues for future empirical and theoretical work on charitable giving, cost-benefit analysis, and the private provision of public goods.
Citation
Karlan, Dean and John List. 2007. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment." The American Economic Review 97(5): 1774-93.