Do Subsidies Increase Charitable Giving in the Long Run? Matching Donations in a Field Experiment

Subsidizing charitable giving—for example, for victims of natural disasters—is very popular, not only with governments but also with private organizations. Many companies match their employees' charitable contributions, hoping that this will foster the willingness to contribute. However, systematic analyses of the effect of such a matching mechanism are still lacking.This article tests the effect of matching charitable giving in a randomized field experiment in the short and the long run. The donations of a randomly selected group were matched by contributions from an anonymous donor. The results support the hypothesis that a matching mechanism increases contributions to a public good. However, in the periods after the experiment, when matching donations have been stopped, the contribution rate declines for the treatment group. The matching mechanism leads to a negative net effect on the participation rate. The field experiment therefore provides evidence suggesting that the willingness to contribute may be undermined by a matching mechanism in the long run. (JEL: C93, D64, H00) (c) 2007 by the European Economic Association.