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Free keywords:
donation, charity, donation intermediary, insurance
JEL:
D03 - Behavioral Microeconomics: Underlying Principles
JEL:
D12 - Consumer Economics: Empirical Analysis
JEL:
D64 - Altruism; Philanthropy
JEL:
G22 - Insurance; Insurance Companies; Actuarial Studies
JEL:
H25 - Business Taxes and Subsidies
JEL:
H31 - Household
JEL:
K34 - Tax Law
JEL:
L31 - Nonprofit Institutions; NGOs; Social Entrepreneurship
Abstract:
An increasing fraction of donations is channeled through donation intermediaries. These enti-ties serve multiple purposes, one of which seems to be providing donors with greater certainty: that the donation reaches its intended goal, and that the donor may be sure to get a tax ben-efit. We interpret this function as insurance and test the option to insure donations in the lab. Our participants indeed have a positive willingness to pay for insurance against either risk. Yet the insurance option is only critical for their willingness to donate to a charity if the un-certainty affects the proper use of their donation.
