Microgiving with Digital Platforms
Microgiving, a new form of digital fundraising, operates by soliciting minuscule, recurring donations from large numbers of potential donors. We evaluate a charity subscription program operated by Alibaba, China’s largest retail platform, which allows sellers to pledge a tiny portion of a product’s revenue (2 cents per order) to charity, with donations made automatically as transactions occur. We present three sets of descriptive findings. First, sellers tend to pick their best-selling products for charity subscription, and many did so right before sales promotion of the associated products. This suggests revenue-maximizing motives. Second, charity subscriptions are almost never canceled, despite limited evidence that they increase revenues; interview evidence suggests that sellers’ decision to keep donating is sustained by joys of giving that worth the tiny monetary sacrifices; we also observe sellers to purchase more charity-linked products themselves after they become charity subscribers. This suggests warm-glow utilities. Third, between 2018 and 2020, the program attracted more than 2 million Alibaba sellers and generated 1.2 billion yuan of charitable funds, representing one of China’s largest online fundraisers and accounts for 12% of the country’s overall online charitable sector. We conclude that digital platforms can create an incentive-compatible environment to scale up microgiving.
We thank Dan Bernhardt, Karen Brandon, Shengmao Cao, Jacob LaRiviere, Benjamin Marx, and Jingyuan Wang for helpful comments. We thank data scientists Peng Li and Xiangfang Hu for data support, Fei Xu and Cheng Zhang (Ali Research) and Jing Zang and Yawei Xu (Alibaba Foundation) for research support. This paper sources data from fully de-identified sales records, all analysis codes are executed by Alibaba’s data scientists through encrypted access to aggregated data files stored on a secured workstation maintained by Alibaba, and the reporting of all findings is compliant with customer privacy protection requirements. Rongyu Cui, Haoran Ni, and Xiyuan Liu provided excellent research assistance. All errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.