We test two recent theories on the subject of charitable fundraising
in capital campaigns. Andreoni (1998) predicts that publicly announced
seed contributions can increase the total amount of charitable
giving in a capital campaign. Bagnoli and Lipman (1989) predict
that another technique for increasing contributions is a promise
to refund donors' money in case the campaign threshold is not
reached. Using a field experiment in a capital campaign for the
Center for Environmental Policy Analysis at the University of
Central Florida, we present evidence on both of these predictions.
Data from direct mail solicitations sent to 3000 Central Floridian
residents confirm the basic comparative-static predictions of
both theories: total contributions increase with the amount of
seed money, and with the use of a refund policy. A change in seed
money from 10% to 67% of the campaign goal resulted in nearly
a sixfold increase in contributions, while imposing a refund
increased contributions by a more modest 20%. Seed money has a
statistically significant effect on both the proportion of people
choosing to donate and on the average gift size of those who donate,
while refunds have a statistically significant effect only on
the average gift size. These results have clear implications for
practitioners in the design of fundraising campaigns.
First version: March 2000
Last revised: March 2001
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