Boosting effective giving with bundling and donor coordination

Abstract

There is increasing awareness that a large proportion of charitable donations are directed toward charities with relatively little impact. Although most donors prioritize effectiveness to some extent, they also prioritize other goals such as personal meaning, personal relationships, or group identity. This paper explores the hypothesis that many donors are cognitively and motivationally predisposed to allocate at least a portion of their donations to highly effective charities, even at some cost to themselves, when they are properly incentivized. The authors propose a novel strategy for increasing the effectiveness of charitable giving that leverages these motivations to donate. The strategy has three key components: bundling (combining a meaningful personal donation with a donation to a highly effective charity), bundling asymmetry (a higher matching rate on the effective charity donation relative to the personal donation), and donor coordination (the possibility of allocating matching funds to other donors rather than to a personal charity). The feasibility and efficacy of this new strategy was tested through a series of experiments. – AI-generated abstract.