Currently, I am organizing a speaker series to raise money for Peter Singer’s charity The Life You Can Save. To make an experiment out of it, I structured the event as a blind auction. People donate to the charity and email me the receipt. On the day of the event, I release invitations to the top-thousand most generous donors.
So far, I’m really pleased with the response! I feel like this approach is inducing people to donate, which is exciting. On the other hand, it has led me to ask myself (1) to what extent do unique fundraisers induce more aggregate donating, as opposed to simply shifting funds from alternative charities; and (2) to the extent the donations I’m receiving receipts for are simply people shifting a donation they would have already made to another charity, is there a way to approximate which charities are being negatively affected? These seem like important questions for assessing the effectiveness of fundraising.
I’m sure I’m not the first person to ask these questions. I found a few relevant studies, including:
- This randomized controlled trial done by Facebook that found that Save the Children ads increased Save the Children donations, but reduced donations to other charities.
- This study that found zip codes near tornado events donated just as much to charity as other zip codes, suggesting minimal crowdout.
- Several experimental lab studies that seem to suggest crowdout (here and here).
I take from this that crowdout is a very real concern. But from my quick reading, I had trouble deriving good rules-of-thumb for quantifying crowd-out. So I thought I’d ask here for anyone had any suggestions.
Thank you!
My guess is that there will be a chance of crowd-out and for givers who are at their hard limits on their charitable giving the crowd-out will be 100%. I would not expect a very good rule of thumb to exist.
That said, there may be things you can do to minimize it (just off the top of my head):
A very good question, and a nice and thoughtful answer.
I think this has been an ongoing debate on donation matching and giving multipliers
I'd just add that this is one of the reasons why neglectedness is my favorite (and neglected) ITN metric - it's hard to crowd-out resources for neglected causes.