Do Not Give, and Ye Shall Receive

January 29, 2013

The arrival of spring has us cleaning out closets and deciding what we should keep, and what we can toss: The DVDs, clothes, and books from our loved ones. The equal (or likely larger) mound of knickknacks from charities, in thanks for a contribution, in subtle request for the next. But do these thank-you gifts—a coffee mug, a tote bag—really convince you to donate?  Will you give more next time to express your gratitude?  New research from the Yale Center for Customer Insights suggests just the opposite.  To catch a friendly donor, forget the swag.

According to a study by Yale professor George E. Newman and graduate student Y. Jeremy Shen published in the Journal of Economic Psychology, small thank-you gifts actually decrease charitable donations.  In a simple experiment, Newman and Shen asked study participants how much money they would donate to a charity.  Half of the participants were offered a small gift (a tote bag) in exchange for donating, while the other half were simply asked for a donation, with nothing offered in return. Among participants who chose to donate, those who knew they would receive a gift donated on average $12.56 less than those who were not promised a gift.    

To catch a friendly donor, forget the swag

The "crowding out" effect may explain such a counterintuitive result, according to the researchers. When you give money to a charity, you are acting on altruistic and intrinsically motivated impulses.  However, an offer of something in return can undermine, or “crowd out,” this altruism, shifting your mindset to understand the act as a conventional monetary exchange.  Newman and Shen tested this hypothesis with another simple experiment in which participants were assigned to one of three different donation scenarios: no gift, a gift said to be for personal benefit (e.g. a tote bag for shopping convenience), and a gift designed to benefit others (e.g. a tote bag for bringing canned goods to a donation drive).  They found that those receiving a tote bag for others' potential benefit donated significantly more than those receiving a personal tote bag.  In other words, by reframing the purpose of the gift, subjects were still able to act on their altruism and avoid the “crowding out” effect.

People receiving a gift actually donated $12 less

This research holds interesting implications for charities trying to hook that potential donor: Producing and shipping gifts sucks up scarce resources from nonprofits. Newman and Shen’s study suggests that nonprofits might not only save money, but also possibly pull in more, by foregoing these costs.  Instead, the authors point out, charities could offer exclusive events to their donors, a strategy that has been demonstrated to have a positive effect on contributions.  Or charities could reserve gifts to thank long-time, committed donors, who might see the gifts in a different light.

Regardless, in some cases it appears the old proverb had it wrong: do not give, and ye shall receive.