Transaction Costs, the Opportunity Cost of Time and Inertia in Charitable Giving

Transaction costs, the opportunity cost of time and procrastination in charitable giving

a r t i c l e i n f o We conduct a laboratory experiment to study whether giving people more time to donate to charity reduces donations. People may intend to donate, but because of the transaction costs of doing so, postpone making the payment until they are less busy, and having postponed making the donation once, keep postponing. We conjecture that transaction costs will have a greater effec...

Charitable Giving

In 2005 charitable giving in the United States totaled over $260 billon, or around 1.9% of personal income, making it a significant fraction of the economy. Individual giving accounted for 77% of this total, while foundations accounted for 12%, bequests for 7%, and corporations for 5% (Giving USA, 2006). Almost 70% of US households report giving to charity. While the US typically has one of the...

Charitable Giving

Are overhead costs a good guide for charitable giving?

Overhead cost ratios are easy to compare across charities relative to other metrics. Many third-party rating agencies rely on overhead cost ratios when evaluating charities, at least in part. Many donors report relying heavily on overhead cost metrics when choosing among charities. Donors exhibit strong distaste for charities that report high overhead costs, even when there is no relationship w...

Identity in Charitable Giving

How does priming identity affect charitable giving? We show that individuals are more likely to donate when a facet of their identity associated with a norm of generosity is primed in an appeal. In large charitable giving field experiments run by the American Red Cross, appeals that prime an individual’s identity as a previous donor to the charity or as a member of a local community generate mo...