We examine the impact of social investing on charitable donations using a unique data set consisting of investment behaviors and donation transactions for more than 10,000 customers of an investment app platform. We find that investors switching to a recently introduced social fund reduced their donations, mainly in charities supporting causes similar to those of the social fund. However, 79% of the investors that switched to the social fund did not donate before switching, so the social fund attracted more people to fund social causes. Still, because of the substitution effect, we estimate social funds have a positive effect on society only if their annual contributions to social causes are greater than 3.2% of the balance invested. This paper was accepted by David Simchi-Levi, finance.
This study investigates the effect of investment priming on individuals’ donations to social causes. Using two field experiments, we examine donations to a plant-a-tree program of 1,480 investors who had invested in portfolios with large positive returns in the previous financial year. We compare the donations of investors who were reminded of their portfolio's returns (investment prime) before the donation request with those of investors who were not reminded of their portfolio's returns. We find that investment priming reduced the donations of non-prosocial investors who do not regularly donate to charities or invest in environmental funds. And among prosocial investors, we find that investment priming had no effect on donations. These findings extend previous research on money priming by suggesting that drawing investors’ attention to their investment gains may weaken their willingness to share their wealth and donate to social causes.
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