Prior work shows that capital market participants including investors, analysts, and managers are all impacted by the prevailing level of investor sentiment. We extend this line of work by investigating whether the effects of sentiment spill over into the nonprofit sector by affecting donors’ spending to support moral causes. While donors are driven by ethical, altruistic, and other utility-maximizing motives, it is unclear whether behavioral biases stemming from sentiment would influence donors’ decisions to give. We shed light on this issue (...) using a large industry-diverse panel of over 115 thousand organization-years from 2008 to 2016. Results indicate that nonprofit organizations receive less in stock-based donations and more in cash-based donations during periods of high investor sentiment. Our inquiry separately considers cash and stock-based donations because we expect, and find, that market-related sentiment impacts these types of contributions differently. Moreover, we find that these effects are stronger for organizations with large donors, who are more closely tied to the capital markets, and therefore more susceptible to investor sentiment, as well as charitable organizations, consistent with “tug-at-the-heartstrings” type appeals inducing more emotional donation response. Taken together, the results suggest that market-wide investor sentiment impacts nonprofit organizations and the effects vary in the cross-section. (shrink)

The “gift exchange theory” articulated by Marcel Mauss, along with his core concept of a threefold obligation, is the dominant theoretical framework used to explain the majority of gift issues in marketing. This perspective assumes that some interest always lies behind gifts, such that a gift always implies a counterpart of receiving something in return. Despite the relevance of this approach in understanding the day-to-day consumer behavior, this paper presents empirical cases where the consumer is also able to give freely, (...) that is to say without implying a counterpart or even expecting it. To explain those empirical cases, we mobilize a key teaching of the Catholic Church: the “gratuitous gift” and then introduce the concept of the “need to give.” We show that gratuitousness is a relevant concept to understand most of gifts made by consumers, and we develop the normative aspect of gratuitous gift for ethical marketers. We also show that Catholic Social Teaching offers an appropriate anthropology to understand consumer behaviors motivated by this need for gratuitousness. To conclude, we propose further avenues of research. (shrink)