Cookies, Cocktails, and Charitable Giving

Doing good does not necessarily come cheap.

May 5, 2014

To fund their missions, charities host bake sales and banquets, send friendly faces door to door, embark on mobile campaigns, and mail impassioned letters (complete with free address labels) to potential donors. But no matter the method, every effort results in that all-important request: Won’t you please donate?

New research by Kelly Goldsmith, an assistant professor of marketing at the Kellogg School of Management, along with her colleagues Jennifer Savary and Ravi Dhar, both at Yale University, suggests that by tweaking how the request is framed, charities can increase their donation rate substantially.

“A lot of the time when we make purchasing decisions, we’re not considering what else we could do with the money,” says Goldsmith. Reminding people of alternative ways to spend the cash—particularly attractive ways—tends to reign in spending. For example, when deciding between a $1000 television set or a $700 set, considering how many DVDs $300 will buy can prompt us to go with the cheaper television.

But under the right circumstances, these researchers find, the same strategy can also be used to make people more generous with their finances. Remind people of a fun, indulgent alternative to donating to charity, and you will increase their likelihood of donating. “In the domain of charitable giving,” explains Goldsmith, “you see a lot of ads on TV that say, ‘for the price of coffee you can save a child’s life etcetera, etcetera…' They’re saying that because a cup of coffee sounds cheap. Therefore, it sounds like they’re not asking you for much. What’s interesting is: well, is that cup of coffee a luxurious indulgence? Or is that cup of coffee something practical that we think we need? What we find in our studies is that makes a big difference. If you see coffee as a luxurious indulgence, you’ll be more likely to donate.”

Read the complete piece HERE