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Crowdfunding for Social Good

Devin D. Thorpe

Devin Thorpe

Williams College Professor’s Research Shows Thank You-Gifts Undercut Charitable Giving

Press Release – WILLIAMSTOWN, Mass., July 5, 2017 — Research recently published by Williams College assistant professor of economics Matthew Chao in the Proceedings of the National Academy of Sciences (PNAS) shows that offering thank-you gifts during fundraising campaigns may actually reduce the number of contributions made.

Chao partnered with a public radio station to test the effectiveness of thank-you gift offers during the station’s monthly membership renewal campaign. The campaign mailed 3,641 previous donors a solicitation letter once they were approaching the one-year anniversary of their last donation. All recipients received a standard solicitation letter and remit form, and some recipients were randomly selected to also receive a large, colored insert advertising an opt-in thank-you gift in exchange for a donation of at least $180. In some cases, the station offered a tumbler as the gift. In other cases, the station offered to donate meals to the local food bank as the gift.

His research found that those who were randomly chosen to receive the gift offer were less likely to contribute than those who received no such offer. This occurred for both types of gift offers. Common theories in economics and psychology suggest that this may occur because the gift makes the donation feel less selfless, leading to decreased motivation to donate. However, this explanation does not hold for the food bank gift that the station offered, since donating meals to the needy would not reduce the perceived selflessness of the donation.

Instead, Chao’s research points to attention-based models of choice to explain the results. “The eye-catching, colored insert draws attention toward the gift and away from all of the intrinsic reasons one might have for supporting the station,” Chao says. “When individuals open the envelope, they face a split-second decision on whether to donate or to instead throw the mailer out. At this critical point, they may be thinking about whether the tumbler or the meals gift is worth $180 instead of how much they enjoy the station’s original programming.” Since both gifts had market values in the range of $15 and were clearly not worth $180, this change in attention and mindset may explain why both gift offers led to fewer donations.

While these results caution nonprofits to be more wary of these types of fundraising strategies, Chao warns that the results do not suggest that these techniques should never be used. Gift offers that are more appealing to donors could still increase donations. Gifts may also be more effective when targeting those who have never donated before, instead of recent donors as was the case in this study.

Finally, the study emphasizes that an attention-based mechanism is not the only way in which these types of results may come about. Other explanations may fit results found in other contexts. The study simply demonstrates that in this particular context, an attention-based mechanism is the most likely explanation for the observed results.

Chao earned his bachelor’s degree from Dartmouth College and his Ph.D. in economics from the California Institute of Technology. His research is in behavioral economics, judgment and decision-making, and empirical microeconomics. He has been at Williams since 2015.


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