New research from economists at the universities of Kent and Gothenburg has shown that those charities and other fundraisers who publicise donations above a certain level risk seeing a fall in future donations.
Conducted by Dr Edward Cartwright of Kent’s School of Economics and Gothenburg’s Dr Amrish Patel, the research revealed that reporting donations using categories – for example more than £1,000 or more than £10,000 – can increase total donations. However, it also found that setting a high cut-off point at which donations are publicised can actually lead to a reduction in giving.
Dr Cartwright and Dr Patel used a ‘signalling model’ of giving to establish their findings. This model suggests that people donate in order to signal something positive about themselves, such as generosity or wealth. By reporting donations using categories, fundraisers can effectively extract a ‘fee’ from the donor for publicising the ‘signal’.
However, Dr Cartwright and Dr Patel found that finding the optimal ‘fee’ level is a difficult balancing act between encouraging some to give without alienating others.
Dr Cartwright said: ‘We found that great care is needed by fundraisers in deciding the cut off point for publicising donations. If the fee is set too high, for example, it can alienate even the most willing of donors.
‘These findings were a surprise as intuition would suggest that it’s best to set a relatively high threshold above which donations were publicised because this would encourage the most generous of donors to give more.
‘It turned out, however, that a low threshold can work a lot better as it motivates the less generous to donate without alienating the more generous. Given the counter-intuitive nature of our findings, it’s not clear whether fundraisers are using categories as well as they might be.’
‘How category reporting can improve fundraising’ (Edward Cartwright, Amrish Patel) is published in the latest issue of the Journal of Economic Behaviour and Organization. The paper can be viewed at: https://www.sciencedirect.com/science/article/pii/S0167268113000048