Research Summary
Research Summary
Unintended Consequences of Fundraising Tactics
Description
Charity fundraisers use a variety of methods to increase donations, with three of the most common being matching funds, seed money, and thank you gifts. Field experiments have shown that matching funds (Eckel and Grossman, 2008) and seed money (List and Lucking-Reiley, 2002) do, in fact, increase donations during the time of the fund drive. Our laboratory studies, however, show that certain levels of these familiar “sweeteners” may have the unintended consequences of reducing giving in the future. In our seed money study, we find that those who donate at the end of a successful capital campaign donate less money in the future – 25 percent less than those who donate at the beginning or middle of the campaign, holding initial donation constant. We speculate that perhaps the “warm glow” of altruism (Andreoni 1989, 1990) can at times make us feel as though we have actually done more than we have, decreasing our motivation to give more, since we may feel we have given enough. This hypothesis could help explain our additional finding that high levels of matching funds can decrease future donations – those whose initial contributions were matched at 300 percent subsequently gave 18 percent less than those whose contributions were matched at 100 percent. We found that thank you gifts such as music CDs given away by public radio stations to encourage participation in their fund drives can backfire as well. When donors received a small thank you gift in exchange for their contribution, they gave 20 percent less when solicited again. We propose that the psychological mechanism underlying this behavior may be that structuring the donation event as a trade turns it into an economic rather than a social transaction in the mind of the donor, and this may decrease one’s intrinsic motivation to donate. Many studies have shown that extrinsic motivation can undermine intrinsic motivation and impair performance (see Deci, Koestner and Ryan, 1999, for a review), and, in agreement with Gneezy and Rustichini (2000) we suggest this effect extends to charitable giving. We are currently investigating our hypotheses regarding the mechanisms behind the major drops in charitable giving that can result from seed money, matching funds, and thank you gift strategies.