Insuring your donation : an experiment

An increasing fraction of donations is channeled through donation intermediaries. These entities serve multiple purposes, one of which seems to be providing donors with greater certainty: that the donation reaches its intended goal, and that the donor may be sure to get a tax benefit. We interpret this function as insurance and test the option to insure donations in the lab. Our participants indeed have a positive willingness to pay for insurance against either risk. Yet the insurance option is only critical for their willingness to donate to a charity if the uncertainty affects the proper use of their donation.