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It is common for charitable organizations to allow donors to place material restrictions on their gifts. Nonprofit firms and fundraisers generally believe that allowing gift restrictions will increase donation revenue. Restricted gifts are costly to the nonprofit firms because of increased management expenses and an inability to reallocate gifts to higher valued uses. We report the results of an experiment which tests the influence of charitable gift restrictions on donor behaviour. We find that allowing restricted gifts significantly increases the amount given in a laboratory setting. However, we find no evidence that grant restrictions increase the probability of giving.
Helms et al. (Fri,) studied this question.
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