New Evidence on Charitable Gift Restrictions

Gift restrictions are a common tool used by donors to ensure charitable intent. Due to increased monitoring costs and the loss of flexibility, gift restrictions are costly to the recipient nonprofit. Using an economic experiment, we study the impact of offering donors the option to restrict their charitable gift. Our primary finding demonstrates that allowing the option to restrict a charitable gift increases the average gift size, whether or not the donor chooses to exercise that option. This result implies that restricted gifts are both an important tool for increasing donations and may be less costly to the nonprofit than originally thought. We further demonstrate that high levels of religious attendance are associated with an increased use of gift restrictions and an increased responsiveness to those restrictions