Charitable Giving When Donors are Constrained to Give a Minimum Amount

Abstract

In some instances charities insist on donors giving more than some fixed, minimum amount. In many other instances charities frame appeals for funds in a way that suggests there is a minimum desirable donation. So, what are the effects on charitable giving if a minimum donation is required? We first provide a simple theoretical model that shows the effects are ambiguous. Some people are predicted to give more to the charity, some less and the overall effect could go either way. We then report the results of two lab experiments. In both experiments we find that giving is significantly lower when a minimum donation is required. Our two experiments consider very different settings. The first experiment involves individual decision making with large opportunity costs of giving. The second involves group involvement with direct incentives to give. That we observe lower giving in both settings suggests that imposing a minimum donation may not be an effective way to increase giving. We also explore the dynamic nature of giving under such restrictive conditions.

Keywords: Charity, warm glow, minimum donation, experiment

JEL Classification: C72, H41