How do monetary incentives influence giving? An empirical investigation of matching subsidies on kiva

Zhiyuan Gao (), Zhiling Guo () and Qian Tang ()
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Zhiyuan Gao: Singapore Management University
Zhiling Guo: Singapore Management University
Qian Tang: Singapore Management University

Information Systems and e-Business Management, 2022, vol. 20, issue 2, No 3, 303-324

Abstract: Abstract Matching subsidies, through which third-party institutions provide a dollar-for-dollar match of private contributions made through selected campaigns, have served as effective tools to boost fundraising. We utilize a quasi-experiment on a prosocial crowdfunding platform to examine the effectiveness of matching subsidies in shaping funding outcomes and lender behaviors. Although matching subsidies offer matched loans competitive advantages over unmatched loans, we find that total private contributions made to both matched and unmatched loans increase compared to their prematching counterparts, suggesting a positive spillover effect on unmatched loans. However, matching subsidies lead to decreased private contributions made on the platform after a matching event, revealing an intertemporal displacement effect on existing loans. Furthermore, we find that matching subsidies effectively encourage previously inactive lenders to contribute to matched loans, leading to a motivational crowding-out effect on active lenders’ contributions to unmatched loans. These findings shed new light on the overall effectiveness of matching subsidies provided through online crowdfunding platforms.

Keywords: Monetary incentives; Crowdfunding; Prosocial lending; Matching subsidies; Generalized difference-in-difference (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10257-021-00515-6

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