Technology can make it much more convenient for people to follow
through on pledges and donations, but what motivates donors to reach
for their wallets or credit cards in the first place? What’s in it for
your donors?
Rewards for donation may be tangible (discounts, gifts, access to special events, etc. - anything that can be assigned a monetary value) or intangible (the
good feeling that comes with doing good, for example, or fulfilling the
need to contribute to a cause that has personal meaning); and both
types of rewards may be public (visible, attributed to the donor, perhaps even publicized) or kept private; the donor may even choose to remain anonymous.
Tax breaks, pure altruism, personal commitment to a cause, and
“image motivation” are all significant contributors to charitable
giving, and the influence of each will depend on the individual donor.
It’s no surprise that people tend to be most generous when those
acts of generosity bring them either public approval or a tangible
reward — paying people to donate blood, for example, or giving
volunteers a percentage of the income from raffle tickets they sell.
But rewarding donors in the wrong way can actually discourage altruism,
according to a recent article in The Economist, Looking Good by Doing Good.
As much satisfaction as donors enjoy from a feeling of altruism,
they also find it rewarding to have their generosity seen and
acknowledged. Image building through charity is a powerful motivation
to give — witness the number of endowments to universities that carry
the name of the benefactor — and less than 1% of private gifts to
charity are anonymous.
The crucial thing about charity as a means of image building is,
of course, that it can work only if others know about it and think
positively of the charity in question.
It seems reasonable to expect that adding a tangible reward would be
a spur to greater giving, doesn’t it? On the contrary: a monetary
reward can actually undermine the “image motivation” if the reward is
publicized.
A recent study by Dan Ariely of Duke University, Anat Bracha
of Tel Aviv University, and Stephan Meier of Columbia University
confirmed that the addition of a monetary incentive had “much less of
an impact in public (where it muddles the image signal of an action)
than in private (where the image is not important).”
Public acknowledgment and tangible rewards, then, both have their
place in motivating generosity and charitable acts — but giving both
types of reward at the same time may backfire for non-profits.
The trio also raise the possibility that cleverly designed
rewards could actually draw out more generosity by exploiting image
motivation. Suppose, for example, that rewards were used to encourage
people to support a certain cause with a minimum donation. If that
cause then publicised those who were generous well beyond the minimum
required of them, it would show that they were not just ‘in it for the
money’.
It’s an interesting idea, given the out-of-pocket costs of
rewards-based fundraising and the continued pressure on charities to
cut their overhead expenses. How might “behavioral economics” shape
your non-profit’s relationship with donors and volunteers?
