Motivating Charitable Giving in India

December 11, 2012

HelpAge India, a nonprofit that supports India's 90 million senior citizens, gave K. Sudhir, the James L. Frank '32 Professor of Private Enterprise and Management and professor of marketing, two weeks to figure out how to increase donations through its direct mail advertising. In that short time, Sudhir designed an experiment to learn how alternative messages in the direct mail campaign can improve fundraising. The winning treatment increased the organization's revenues more than three-and-a-half times relative to the mailing that HelpAge India had planned to send prior to Sudhir's involvement in the campaign.

Sudhir discussed how he applied psychology and economic research to this real world problem as the first lecturer in this year's Program on Nonprofit Organizations (PONPO) seminar series, which invites practitioners and researchers to discuss their ongoing work. PONPO is a collaboration between the Program on Social Enterprise at Yale SOM and the MacMillan Center for International and Area Studies at Yale.

"A lot of psychology work is done in the lab, and it works fairly well, but practitioners always ask, 'Does this work in the field?' This was a nice opportunity to test this," said Sudhir, who directs the China India Insights Program at the Center for Customer Insights.

Sudhir explained that there is a lot of research that measures how advertising spending affects response rates, but very little that measures how advertising content affects response rates. Working with Subroto Roy of the University of New Haven and Mathew Cherian of HelpAge India, Sudhir designed a field experiment to test whether sympathy biases and other effects identified in lab settings as motivating giving would translate into practice by introducing them into advertising messages.

The researchers varied persuasive advertising messages across HelpAge India's direct mail pieces that were sent to more than 180,000 high net worth individuals in India. They measured how many people gave and how much they gave.

The advertising that induced the most sympathy and donations told the story of one person rather than a group of people (identifiable victim effect); featured a person who was a member of the same group that was receiving the advertising (in-group vs. out-group effect); featured a person who had fallen into a bad situation instead of someone in a chronically bad situation (reference dependent sympathy); and framed the donation as costing a specific amount per month instead of a specific amount per day, which reduced the pain of giving (Prospect theory).

"One of the best things about my work on this project is that the impact was immediate and quantifiable in dollar terms," said Sudhir.

See HelpAge India's advertising on their website.

K. Sudhir is the James L. Frank '32 Professor of Private Enterprise and Management, and Professor of Marketing & Director of the China India Insights Program. His research focuses on gaining market insights by analyzing consumer and firm actions through econometric modeling. As director of the China India Insights Program, he also specializes in research on consumers in emerging markets.