Funny Money: Philanthropic Giving and the Money Illusion

In: Nonprofit and voluntary sector quarterly: journal of the Association for Research on Nonprofit Organizations and Voluntary Action, Band 50, Heft 1, S. 77-92

Abstract

This study argues that the size of philanthropic gifts is affected by donors' perception of the value of their money. The essay examines aggregate giving to Bread for the World in former East Germany before and after two currency reforms and shows that decades of overvaluing the West German Deutschmark led East Germans to give less after the first currency reform while the second currency reform did not lead to such a drop off. The essay employs East German jokes to illustrate popular views of both East and West German currency that developed over time. It indicates that East Germans developed a perceived value of money separate from its real purchasing power, which affected their philanthropic donations. These findings are applicable to small and large philanthropic gifts, especially across currencies, as in international giving.