Do Not Give, and Ye Shall Receive

To catch a friendly donor, forget the swag.

January 29, 2013

Mailboxes are fuller at the holidays. Notes from family and loved ones, yes—that’s part of it. But also ask-letters from charities: those you contribute to, those that you once contributed to, those that you never have but maybe should contribute to.

These requests tend toward the bulky, stuffed with premature thank-you gifts like mugs or tote bags. But will knickknacks really convince people to donate? Will someone give more money this time, or for the first time, because they were offered a bauble? 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.    

People receiving a gift actually donated $12 less

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.

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.