The Effect of Status on Charitable Giving

Authors


  • Cagri S. Kumru, University of New South Wales (cs.kumru@unsw.edu.au). Lise Vesterlund, University of Pittsburgh, Department of Economics, 4916 WW Posvar Hall, Pittsburgh, PA 15260 (vester@pitt.edu).

  • We thank Jennifer Scanlon for providing practical fundraising insights and participants at seminars at Cornell, Harvard, NYU, OSU, SUNY Albany and Texas A&M for very helpful comments. We are grateful to the NSF for generous financial support.

Abstract

Fundraisers often start their campaigns by soliciting the wealthier, more recognized, and respected individuals in a community. We examine whether the success of this solicitation ordering in part can be attributed to the fact that it enables individuals to select organizations that have a high-status donor base. Assuming that individuals prefer to associate with individuals of higher social ranking we use a simple linear model to show that both aggregate donations and earnings are larger when high-status donors are solicited first. We investigate the predicted comparative statics using the experimental laboratory. Inducing a status differential we reverse the contribution ordering between participants of high and low status. Consistent with current fundraising practice, we find that low-status followers are likely to mimic donations by high-status leaders and this encourages high-status leaders to give. Donations are therefore larger when individuals of high status give before rather than after those of low status.

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