The Substitution Effect of Matches

Abstract

My research will try to determine if there is a substitution effect among charities specifically, when a charity introduces a match to bring in more money does the match actually bring in more money from donors who would not have made a donation to charity or does it shift money that would have been donated to a different charity that would have been funded to itself. The purpose of a matching scheme is to bring in new dollars that would not have been donated to the charity. However, if the substitution effect occurs and is statistically significant then the efficiency of matching schemes would be questioned because rather than bring in new money from donors by shifting the amount of money that would have been donated, the overall amount of donations in the charity ecosystem remains unchanged.