The Unintended Side Effects of Regulating Charities: Donors Penalise Administrative Burden Almost as Much as Overheads

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Title: The Unintended Side Effects of Regulating Charities: Donors Penalise Administrative Burden Almost as Much as Overheads
Authors: Samahita, MargaretLades, Leonhard K.
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Date: Feb-2021
Online since: 2021-02-17T09:42:37Z
Abstract: Recent experimental evidence suggests that donors are averse to giving to charities with high overhead ratios. This paper asks whether donors are also averse to giving to charities spending a high share of the donations on unavoidable administrative expenses. The results of an experiment with a nationally representative sample (n = 1, 032) suggest that donors dislike paying for administrative burden almost as much as for overhead. While donors care primarily about how much of their donations are used for program-related services, donors seem to have a weak preference for charities to spend their donations on administrative burden rather than on overheads. Government subsidies that help alleviate charities’ administrative burden can reduce donors’ aversion to give to charities with high administrative expenses. Overall, we show that regulations that aim to increase transparency and accountability in the charity sector can have the unintended side effect of reducing charitable giving.
Funding Details: Irish Research Council
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 63
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2021/06
Keywords: Charitable givingAdministrative burdenOverhead aversionInformationDictator gameOnline experiment
JEL Codes: C99; D64; L31
Language: en
Status of Item: Not peer reviewed
This item is made available under a Creative Commons License:
Appears in Collections:Geary Institute Research Collection
Architecture, Planning and Environmental Policy Research Collection
Economics Working Papers & Policy Papers

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