Uncertainty over my future financial situation seems a good reason for me to postpone giving until later. Consider a simple two period model in which next period my income will be zero (with small probability), or $100,000. In a better world I could purchase insurance to fully insure against this risk, but such income insurance doesn’t exist. Now assume if I knew my income would be zero next period my optimal lifetime total charitable donation would be zero, but positive else-wise. It might be optimal for me to wait to observe my income next period before making any donations.
It would be nice if charities allowed refundable donations, where if you donated money that you end up regretting later for whatever reason, you could ask for your money back and they’d pay you using funds from other people’s donations. (I’m guessing that current laws do not allow this, and that changing the laws and/or charity policies would be a good way to increase total donations.)
I would guess that current laws do not allow this, and that changing the laws would not be a good way to increase total donations, because it would strike people as a bad signal and they wouldn’t want to do it. If you want more gifts next holiday season, should you offer your relatives the ability to give you refundable gifts?
In Austria, where for all practical matters and purposes charity donations are not tax-deductible, the animal welfare group Vier Pfoten is doing this. Doesn’t make it more attractive to me, though...
Uncertainty over my future financial situation seems a good reason for me to postpone giving until later. Consider a simple two period model in which next period my income will be zero (with small probability), or $100,000. In a better world I could purchase insurance to fully insure against this risk, but such income insurance doesn’t exist. Now assume if I knew my income would be zero next period my optimal lifetime total charitable donation would be zero, but positive else-wise. It might be optimal for me to wait to observe my income next period before making any donations.
It would be nice if charities allowed refundable donations, where if you donated money that you end up regretting later for whatever reason, you could ask for your money back and they’d pay you using funds from other people’s donations. (I’m guessing that current laws do not allow this, and that changing the laws and/or charity policies would be a good way to increase total donations.)
I would guess that current laws do not allow this, and that changing the laws would not be a good way to increase total donations, because it would strike people as a bad signal and they wouldn’t want to do it. If you want more gifts next holiday season, should you offer your relatives the ability to give you refundable gifts?
In Austria, where for all practical matters and purposes charity donations are not tax-deductible, the animal welfare group Vier Pfoten is doing this. Doesn’t make it more attractive to me, though...