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Gearing up for the ‘Giving Season’: Why do People Give?

Charitable giving is increasing in economic importance in the developed world. In the United States, more than $300 billion – over 2 percent of US GDP – is contributed to philanthropic organizations each year. As we gear up for the holiday season – most commonly referred to as the Giving Season by the nonprofit community, due to the significant uptick in donations between Thanksgiving and New Year’s Day – you might ask yourself, why and when do people give to charity? This question is interesting to social scientists, since giving and helping behaviors play a large part in the way societies function today. The question is also important to fundraising professionals, who seek to develop strategies that will bring in the most charitable dollars to their organizations.

It turns out the answer to the question ‘why do people give?’ is complex, but we have tools available to begin to answer it. Three years ago, with a grant from the John Templeton Foundation, myself, John List (University of Chicago), Jean Decety (University of Chicago) and Michael Price (Georgia State University) founded the Science of Philanthropy Initiative, which aims to use field experiments to learn about the underpinnings of generosity. In a recent review article (co-authored with Cynthia Jasper, University of Wisconsin-Madison), I discuss the importance of field experiments for increasing charitable giving in the developed world (Jasper and Samek, 2014). In what is called a ‘natural field experiment,’ we can randomly manipulate the type of information or solicitation received by each potential donor of an organization, and pinpoint the causal impact of each approach. As such, natural field experiments represent the ultimate opportunity for academic-practitioner partnerships – academics provide underlying theories and years of data from their laboratory experiments, while practitioners provide their own practical insights and have access to relatively large populations of potential donors.

altruismYour first guess – that people give out of pure altruism, to help an organization in need – is part of the answer. One way charitable organizations can encourage purely altruistic donors is by sending a signal to the donor of its high quality, for example through announcing a seed or challenge gift. Indeed, as we summarize in Jasper and Samek (2014), a number of researchers have found a positive impact of seed or challenge gifts on the likelihood of donations. Matching grants seem to also work well through signaling charity quality, though matches also reduce the ‘price’ of giving by making a donor’s dollar to work harder for the charity (see e.g. Karlan, List, and Shafir, 2011).

A second major motivator for giving is that it just feels good to give – economists call this ‘warm glow’. Warm glow is what I’d refer to as a ‘self-interested’ reason for giving – since the giver is the one who benefits. Another ‘self-interested’ reason for giving is the desire for recognition, and indeed, few gifts are made anonymously.

Third, we do not give in isolation. Humans are social creatures, greatly influenced by the world around them (see e.g. Shang and Cronson, 2009). In fact, as summarized in Jasper and Samek (2014), researchers have shown that providing potential donors with information about a previous donor’s gift substantially increases the likelihood of donating and moves the amount of the donation closer to the suggested amount. This motivator may explain why Giving Tuesday has been so successful in past years, since much of the fundraising conducted during this day is done through social media. In a recent paper, the authors proposed that incentivizing peer-to-peer fundraising benefits charities by increasing new donations. As Ragan, one of the authors, told me once, “two main reasons why people donate to charity are that they have been asked, and asked by someone they care about.”

This brings me to the last major motivator, the ‘power of the ask.’ We now know that ‘the ask’ is powerful for its ability to provide potential donors with information about the quality of the charity, social norms, or incentives (which are also a motivator). ‘The ask’ is also powerful in and of itself. In a recent paper, researchers pre-notify a randomly selected sub-set of donors that a solicitor will come to their door to fundraise on the following day. If the primary motivator for giving were pure altruism or ‘warm glow,’ we might expect more donors to be home and come to their door when they are pre-notified. Instead, the researchers found that fewer donors in the pre-notification condition answered the door! Such a result can be attributed to social pressure, that is, some donors give because they would get negative welfare from being asked and declining the request. It is these donors who ‘sort out’ and never open the door at all. This result is not only observed in this paper. In our own paper, Cynthia and I replicated the experiment in a different city with a different charity and find similar results.

In summary, we see that individuals are motivated to give for a variety of reasons. If you are interested in learning more, you can read our paper in its entirety here:

http://spihub.org/publications/wp_120

 



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