DP15221 How Can Bill and Melinda Gates Increase Other People's Donations to Fund Public Goods?

Author(s): Dean S. Karlan, John List
Publication Date: August 2020
Keyword(s): asymmetric information, Charitable fundraising, Matching grant, Public Goods
JEL(s): D12, D71, D82, H41, O12
Programme Areas: Public Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15221

We conducted a fundraising experiment with an international development nonprofit organization in which a matching grant offered by the Bill and Melinda Gates Foundation raised more funds than one from an anonymous donor. The effect is strongest for solicitees who previously gave to other BMGF-supported, poverty charities. With supporting evidence from two other fundraising experiments as well as a survey experiment, we argue this is consistent with a quality signal mechanism. Alternative mechanisms are discussed, and not ruled out. The results help inform theories about charitable giving decision-making, and provide guidance to organizations and large donors on how to overcome information asymmetries hindering fundraising.