What do gifts buy? A model of philanthropy and tithing based on prestige and warm glow.

Charities publicize the donations they receive, generally according to dollar categories rather than the exact amount. Donors in turn tend to give the minimum amount necessary to get into a category. These facts suggest that donors have a taste for having their donations made public. This paper models the effects of such a taste for "prestige" on the behavior of donors and charities. I show how charities can increase donations by using categories. The paper also shows conditions under which tithing, or reporting donations as percentages of income, can maximize donations, and examines the effect of a taste for prestige on competition between charities.