Substitutes or complements: a budget-based analysis of the relationship between donating and volunteering

Abstract

Are charitable gifts of money and time substitutes or complements? The answer to this question would benefit non-profit organizations and governments aiming to maximize charitable gifts, but previous research has not yet delivered a final conclusion. Therefore, I introduce an alternative approach to this question that focuses on variation in individuals’ budgets instead of previously used variation in the price of giving. For this purpose, I develop a theoretical model of charitable giving in which individuals are constrained by two budgets indicating their available money and time. My derivations show that the cross-budget effects can identify the relationship between donating and volunteering. Consequently, I empirically estimate the effect of time on donations using longitudinal survey data of Dutch individuals. My estimates (albeit insignificant) suggest that donating and volunteering are substitutes. This result would be in line with some previous experimental evidence, but additional applications are needed to strengthen this conclusion.