Effects of the price of charitable giving: Evidence from an online crowdfunding platform

• Examines the effects of the price of giving on donative behavior.
• Finds that higher prices lead to less giving.
• Also finds that increased competition reduces giving to a charity.

A long literature has examined the effects of the price of giving – that is, the amount an individual must give for one dollar to accrue to the charitable activity itself – on donative behavior. We use data from DonorsChoose.org, an online platform linking teachers with prospective donors that are uniquely suited to addressing this question due to exogenous variation in overhead costs. An increased price of giving results in a lower likelihood of a project being funded. We also calculate the price elasticity of giving, finding estimates between −0.8 and −2. Finally, we examine the effect of competition on giving and find that increased competition reduces the likelihood of a project being funded. These results provide insight into the workings of the market for charitable gifts.