Donors

Giving, charity and philanthropy in some form have existed as the sturdy pillars of advanced societies since the emergence of the earliest civilizations. The vast majority of Americans make charitable contributions. In 2010 90 percent of US households donated on average $1,573 to nonprofit organizations (Marx, 2010). Why do so many people choose to give their hard-earned income away? What motivates them to behave in this altruistic, or seemingly altruistic manner? The objective of this paper is to present a short summary of what researchers and economists have learned about the motivations for individual charitable giving. This is a question of substantial importance, as individual contributions account for more than 80 percent of total dollars given (Edles, 1993). If we do not understand why people give, then how can we encourage them to become donors or to increase their existing contributions, how can we predict how changes in the economic environment and the influence of social media will impact giving in the future?
One way to approach this aspect of charitable giving is to look at it just like the purchase of any other commodity. That is, we expect contributions to depend on how much we earn and how costly it is to give (Goeree, 2002). Determining how individuals respond to these factors is crucial for predicting not only how total donations respond to changes in tax policy and how fundraisers can take advantage of these changes, but also for determining how the government best can design subsidies such as the tax deductibility of donations to nonprofits and lastly how marketers and fundraisers can better leverage new and social media in reaching donors.
While the similarity with ordinary commodities was clear when I examined responses to changes in income and prices, it is less so when I wanted to determine what motivates individuals to make such a purchase or contribution. What is it that individuals get in return from these transactions? What tradeoffs

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