Marketing May 5, 2014

Cookies, Cocktails, and Charitable Giving

Remind potential donors of the luxuries they could purchase instead—and watch donations rise.

Based on the research of

Jennifer Savary

Kelly Goldsmith

Ravi Dhar

Doing good does not necessarily come cheap. To fund their missions, charities host bake sales and banquets, send friendly faces door to door, embark on mobile campaigns, and mail impassioned letters (complete with free address labels) to potential donors. But no matter the method, every effort results in that all-important request: Won’t you please donate?

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New research by Kelly Goldsmith, an assistant professor of marketing at the Kellogg School of Management, along with her colleagues Jennifer Savary and Ravi Dhar, both at Yale University, suggests that by tweaking how the request is framed, charities can increase their donation rate substantially.

“A lot of the time when we make purchasing decisions, we’re not considering what else we could do with the money,” says Goldsmith. Reminding people of alternative ways to spend the cash—particularly attractive ways—tends to reign in spending. For example, when deciding between a $1000 television set or a $700 set, considering how many DVDs $300 will buy can prompt us to go with the cheaper television.

But under the right circumstances, these researchers find, the same strategy can also be used to make people more generous with their finances. Remind people of a fun, indulgent alternative to donating to charity, and you will increase their likelihood of donating.

“In the domain of charitable giving,” explains Goldsmith, “you see a lot of ads on TV that say, ‘for the price of coffee you can save a child’s life etcetera, etcetera…’ They’re saying that because a cup of coffee sounds cheap. Therefore, it sounds like they’re not asking you for much. What’s interesting is: well, is that cup of coffee a luxurious indulgence? Or is that cup of coffee something practical that we think we need? What we find in our studies is that makes a big difference. If you see coffee as a luxurious indulgence, you’ll be more likely to donate.”

For the Price of a Caramel Macchiato
In a series of studies, Goldsmith and her colleagues manipulated requests for money on behalf of charities such as the children’s welfare organization UNICEF. Participants were handed a $5 bill—their compensation for participating in the study—along with a $1 bill and an envelope with a set of instructions. Participants then had to choose whether to hand an emptyenvelope back to the experimenter (in which case they could pocket the extra dollar) or one with the dollar inside (in which case it would go to charity).

In one condition, they were reminded of an attractive, indulgent alternative to donating—that $1 is the cost of a fun iTunes download, for instance. In a second condition, they were given a more practical alternative—that $1 is the cost of an educational iTunes download. In study after study, the researchers found that when the product was indulgent—or even simply framed as indulgent—the donation rate jumped. (In every experiment, dollars targeted as donations actually did go to charity. “I get a lot of mail from UNICEF now,” Goldsmith jokes.)

The effect holds outside the lab as well. In another study, Goldsmith and her colleagues raised money for Doctors Without Borders by handing students a preprinted envelope as they passed through campus. “These were real undergrads using real money from their real pockets,” says Goldsmith. “We asked them to put whatever money they wanted in the envelope and return it to a collection box we had.” As before, potential donors were significantly likelier to donate when given a indulgent prompt—that $2 is about the cost of a cookie at a local bakery—than when they were given a practical one—that $2 is about the cost of a bar of soap.

“People give more money when they know their name and donation amount will be publically displayed,” says Goldsmith. 

So why would offering a pleasant, indulgent alternative spur giving? If anything, shouldn’t the more utilitarian alternative be more effective? The explanation relates to what psychologists call “social signaling”—the idea that we give to charity, in part, to signal to the outside world that we are the kindof person who gives to charity. “People give more money when they know their name and donation amount will be publically displayed,” says Goldsmith. “People are more likely to donate blood when their behavior can be observed by others.”

But just as we signal our decency to others, we also signal it to ourselves. This less-studied phenomenon, known as “self signaling,” was investigated in the current study. Even in private, when nobody can see what we are up to, we care about what our actions say about us. Crucially, we believe that choosing not to donate reflects more poorly on us when alternative ways of spending are presented as indulgent. But when they are presented as reasonable, even necessary, it becomes easier for us to refuse to donate.

Charitable Advice
Goldsmith hopes that her findings reach charities in need of funds. “They should use this!” she says. “The effects we have observed are quite large, which is exciting in any area of research, but perhaps especially for research on charitable giving. It’s neat to actually demonstrate, both in the field and in the lab, that we can dramatically increase the rate at which people were giving to charity with these simple interventions.”

And because we are so used to hearing comparisons like “For the price of a cup of coffee” from charities, swapping a coffee out for something a bit more luxurious should not arouse suspicion. This is key, says Goldsmith. If you try to guilt people into donating explicitly—by telling them that not donating would be selfish, for instance—“it backfires” and people are less likely to donate than if you had said nothing at all. “There’s a value to subtlety.”

Along these lines, charities should take care to choose the right alternative. A pair of pizza scissors (yes, this is a real product) might not be a great choice, no matter how indulgent it seems. “Picking the products is important,” says Goldsmith. “There’s an art to that. You want products that are not so weird that is going to feel manipulative. What we did was use really commonplace, everyday low-priced items, and we significantly increased donation rates in a really meaningful way.”

Goldsmith’s final word of advice for charities hoping to cash in? Be creative. Even placing a collection basket in an aisle or storefront where nearby products are indulgent could trigger generosity in potential donators. If you’re ever dressed up as Santa, ringing a bell for the Salvation Army, “try standing in front of a Prada,” says Goldsmith, “or even a candy store!”

Artwork by Yevgenia Nayberg

Featured Faculty

Kelly Goldsmith

Member of the Department of Marketing faculty until 2017

About the Writer

Jessica Love is the staff science writer and editor for Kellogg Insight.

About the Research

Savary, Jennifer, Kelly Goldsmith, and Ravi Dhar. Conditionally accepted. “Giving Against the Odds: When Tempting Alternatives Increase Willingness to Donate.” Journal of Marketing Research.

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