Thank-You Gifts Reduce Charitable Donations

Charities and nonprofits may want to reconsider the tote bags, coffee mugs, and other small thank-you gifts they offer in return for donations, according to a Yale School of Management study.

"Organizations believe that offering thank-you gifts increases charitable donations, but they actually reduce donation amounts," says George Newman, assistant professor of organizational behavior at the Yale School of Management.

Newman and Jeremy Shen, who earned his PhD in psychology from Yale in 2011, studied the effectiveness of offering thank-you gifts in exchange for donations. In a series of experiments across different charities and types of gifts, they found that offering a gift reduced donation amounts regardless of whether the donations were hypothetical or real, the gift was desirable or undesirable, the charity was familiar or unfamiliar, or the gift was more or less valuable.

The authors attribute the decrease in donations to the crowding out effect. Offering a gift to he or she has made a donation may create ambiguity about, or "crowd out," the person's motivations for giving. For example, the donor may feel that they he or she is donating in order to receive the gift instead of to support the charity. "The presence of an external motivation like a gift may undermine people's altruistic motivations to donate," says Newman.

Charities can ward off the crowding-out effect by presenting the gift as having an altruistic motivation. Newman and Shen found that offering a tote bag bearing the charity's logo while displaying a note suggesting that using it will raise awareness for the organization increased donations; however, the donations were no larger than those received from people who were offered no gift at all.

"We're not suggesting that thank-you gifts are universally bad, but our study suggests that charities may not always benefit from thank-you gifts in the most common way that they employ them," says Newman.

The paper, "The counterintuitive effects of thank-you gifts on charitable giving," is published in the October 2012 issue of the Journal of Economic Psychology.