(Un)Informed charitable giving

• We examine a model of charitable giving with costly information.
• The average informed donation exceeds the uninformed donation.
• A direct grant discourages while a matching grant encourages informed giving.
• The larger the population, the lower the percentage of informed giving.

Evidence suggests little informed giving. To understand this behavior, we examine voluntary provision of a discrete public good with independent private values that can be ascertained at a cost. We find that an individual who considers a smaller contribution is less likely to learn her value, and thus the percentage of informed giving diminishes as the population grows. We also find that a direct grant to the charity exacerbates crowding-out by discouraging information acquisition whereas a matching grant increases donations by encouraging it. We further show that with costly information, a (first-order) stochastic increase in values can decrease donations; and that facilitating private acquisition of information can be a better fund-raising strategy than directly supplying it.