Fundraising: Higher donation income by soliciting relief supplies instead of asking for money

When charitable organizations solicit support from the public, they typically ask for monetary amounts with the question "How many euros do you want to donate?". Sometimes, however, potential donors are also asked how many units of an aid item - be it blankets, water pumps or daily rations of baby food - they would like to donate, at a certain price per unit. Under certain circumstances, this seemingly small difference in the question can have a major impact on donation behavior. This is shown by the online study conducted by Prof. Timo Goeschl, Ph.D. (University of Heidelberg), Dr. Raphael Epperson (University of Innsbruck) and Dr. Johannes Diederich (University of Kassel).

Around 8,700 crowdworkers had the opportunity to donate part or all of their remuneration for online work to an aid organization - either as a pure cash donation or according to the system of financing units of aid supplies. Before making their decision, donors were always informed that the money was intended for ready-to-use therapeutic food rations for children in developing countries. The result of the study: when comparing unit and cash donation systems, the most successful unit campaign achieved 57 percent higher donation income than the classic cash donation campaign.

According to the researchers, the reason for the differences in donation behavior is not that potential donors are better informed about the actual costs of the aid. Rather, the question in units directs the donors' focus more strongly on the effectiveness of their donation and also uses familiar behavioral patterns. The unit sought for a campaign must be well chosen: In the study, the request to donate monthly rations of special food for 30 dollars per unit did deter more donors than the daily ration for one dollar per unit. Nevertheless, it led to a higher volume of donations.

"Unit donations can be an attractive alternative to the usual cash donations. However, they need to be used with the right design to achieve strategic goals such as increasing the total donation amount or expanding the donor base," says Timo Goeschl, Professor of Economics at the Alfred Weber Institute for Economic Sciences at Heidelberg University and one of the co-authors of the study. "The current investigations confirm our previous research: fundraising with donation units has great potential, but only for prudent fundraisers."

The results of the study are therefore directly relevant for managers in the charitable sector, for donation officers and fundraisers. "The size of the effects definitely justifies thinking about this format," says Johannes Diederich, who conducts research in the field of environmental and behavioral economics at the University of Kassel. However, they also make an important contribution to philanthropic science, which asks how altruistic behavior is justified. "The study provides new insights into the donation behavior of individuals and behavioral economic mechanisms in fundraising," says Raphael Epperson from the Institute of Public Finance at the University of Innsbruck.

Original publication:
R. Epperson, J. Diederich, T. Goeschl: How to Design the Ask? Funding Units vs. Giving Money, in: Management Science (published online June 20, 2024), https://doi.org/10.1287/mnsc.2021.00157

Contact:

Prof. Timo Goeschl, Ph.D.
Heidelberg University
Alfred Weber Institute for Economic Sciences
Phone: 06221 54-8010
Email: goeschl[at]uni-heidelberg[dot]de

Dr. Johannes Diederich
University of Kassel
Department of Environmental and Behavioral Economics
Phone: 0561 804-2995
Email: johannes.diederich[at]uni-kassel[dot]de

You can find the article here.