30 May 2013Working Paper Summaries

Non-Standard Matches and Charitable Giving

by Michael Sanders, Sarah Smith and Michael I. Norton

In this article, Michael Sanders, Sarah Smith, and Michael I. Norton review evidence suggesting that matching schemes—an increasingly common strategy used by nonprofits and firms to increase giving in which organizations match employee donations to charity—may not always prove effective. The authors offer several novel matching schemes designed to improve the effectiveness of matching, some focused on individual donors in isolation and some focused on donors embedded in organizations. The authors' hope is to spur further research assessing the efficacy of these schemes, reducing the tendency for matching schemes to crowd out donations and making them more likely to increase charitable behavior. Key concepts include:

A standard match operates in a simple way: For every $1 a person donates from their net consumption (i.e., for each $1 sacrificed from their ability to buy other things), their chosen cause receives more. The form that standard matches take, however, can vary.
Matches may not be an optimally cost-effective way to increase giving. Charities benefit from the value of the match payments, but the match payments do not have a large positive effect on individuals' donations.
There are novel alternatives to the standard match, such as non-linear matching, social (and team) matching schemes, and lottery matching. For each new type of non-standard match, the authors use existing theory and data to offer support for its potential effectiveness.

Author Abstract

Many organizations, including corporations and governments, wish to encourage charitable giving, and offer incentives for their employees, customers, and citizens to do so. The most common of these incentives is a match rate, where the organization agrees to pay, for example, $1 for every $1 donated. However, these incentives may not be efficient. In this short article we suggest alternative ways of matching that existing theory and data suggest might be more effective at encouraging donations. These include non-linear matching, social (and team) matching, and lottery matching-each of which novel schemes could be tested empirically against a standard match incentive.