BMBW Forum: Prosocial Giving

Leveraging intrinsic desires for self-expression can increase participation in prosocial giving

In their paper, “Penny for Your Preferences: Leveraging Self-Expression to Increase Prosocial Giving”, authors Rifkin, Du and Berger explore how we might leverage the power of self-expression to encourage consumers to be more prosocial. Du and Rifkin noticed the increasing use of dueling tip jars at cafes: in a bid to engage customer attention and increase their tips, baristas would leave out tip jars with two options – such as puppies or kittens – and customers would place their tip into the jar labelled with their preferred option. This approach appeared to be growing in popularity and the research team wanted to confirm if this really worked, and more importantly, why this tactic worked. They labelled this the ‘dueling preferences tactic’, defined as an act of prosocial giving (e.g. a tip or donation) framed as a choice between two options, and ran a series of experiments to understand the impact of this tactic on prosocial giving behavior.

Their first field experiment was run in a local café, and each hour for a single business day, the authors alternated a standard tip jar with ‘cats vs dogs’ dueling tip jars on the counter. They found that the dueling preference tactic lead to 77% of customers leaving a tip compared to just 41% of customers choosing to leave a tip in the standard jar. The team then wanted to understand if they could leverage this tactic to increase donations as another form of prosocial giving, testing this by running an online experiment in which participants either saw a standard donation appeal or a ‘chocolate vs vanilla’ dueling preferences donation appeal. In this study, 37% of participants donated when prompted with a standard donation appeal which increased to 54% for those participants given the dueling preferences appeal. Interestingly, the population prompted with the dueling preferences tactic also increased the dollar amount of donations by almost 30%. Confident that the tactic was effective in increasing prosocial giving – at least in small amounts – the team set out to explore why. What aspect of human psychology drives this? Prior research suggests that people have an intrinsic desire to express themselves. Reward centers in the brain become active when we are given the chance to say something about who we are, similar to the activation that occurs when we win a prize. The authors postulate that because people have this intrinsic desire to self-express, they should be willing to pay to engage in it. The dueling preferences tactic therefore increases prosocial giving because it provides consumers with such an opportunity to self-express valued identities. Based on their findings, the team designed a roadmap for implementation:

• Offer a choice – studies show that this tactic is more effective with just two opposing preferences e.g. chocolate vs. vanilla. These options do not need to have relevance to the cause or organization raising money.
• Make your content relevant. Because we are powered by the desire to express ourselves, this works well when options capture simple but engaging issues e.g. summer vs. winter. A trial with unengaging content – preference for the letter A over the letter B – had no impact on increasing prosocial giving, indicating that the options alone are not enough. There is a boost if you can tailor options to a specific market or time e.g. Bucks or Suns during the NBA championships. The team also found that non-controversial topics work best: a Republicans vs. Democrats duel run during the 2016 election proved ineffective at increasing donations, likely because it was a controversial election and people may have felt uncomfortable expressing opinion.  
• Dueling preferences tactics are most effective among people who prefer to express themselves; less so with individuals who prefer to keep opinions close to their chest.

Although prosocial giving is critical, it is not happening enough: the 6 million tipped workers in the US are 2x more likely to be living in poverty or relying on food stamps relative to the general population. The dueling preferences tactic could start to alleviate this burden by increasing prosocial giving – not only is it simple, effective and cheap, but we are able to offer this roadmap for best practices of implementation. In addition, this giving tactic allows people to be a little selfish by satisfying their need for self-expression. There are several emerging questions in this area that remain to be answered:

• How does this tactic work when employed over time? If consumers are faced with the same dueling options repeatedly, how does this affect their likelihood to give?
• How does one-time participation in a duel shape long-term financial support of an organization? Can we convert duel participants into repeat donors and how?
• Could this approach be used for other socially beneficial outcomes?

The perception of saving money derived through participating in price promotions can lead to an increase in charitable behavior

The second study “Do Promotions Make Consumers More Generous? The Impact of Price Promotions on Consumers’ Donation Behavior” explores how price promotions and promotional events can influence people’s donation behavior. Large-scale promotional sales events such as Black Friday, Cyber Monday or Double 11 sales are on the rise, with the media going so far to portray Black Friday as ‘America’s greatest holiday’. At the same time, there are increasing criticisms and concerns around the consumerism and materialism these events encourage. Authors Zhang, Cai and Shi therefore ask the question: are price promotions bad for society? Could these promotions potentially lead to some positive social consequences? The team analyzed the dataset of a large charitable organization in China for the month of November 2016 and found that donations peaked immediately following the Double 11 sales event through the platform hosting the sales, an effect not observed through other channels. Following this finding, the authors hypothesized that price promotions increase people’ perceived resources and that this perception, derived from taking part in these mega-sales, can increase consumer donation behavior. The team tested this in multiple studies. In the first study, Chinese shoppers participating in Double 11 sales were asked to recall a) how much they spent on their purchases in the sale; b) how much money they perceived they saved during the event; and c) whether they had engaged in any of the 13 types of charitable behaviors e.g. donating money since the date of the sale. They found that the more that people spent in the sale, the more they felt they had saved, and interestingly, that people’s self-reported charitable behavior increased as they spent more in the sales event.

In the second study, the authors partnered with a café in Shanghai to conduct a field experiment comprised of two conditions: in the first ‘control’ condition, people paid for their purchase as normal; in the second, people were offered a 10RMB / $2USD discount coupon to use. All participants then received a donation appeal flyer once they had made their purchase, and customers could then decide if and how much they would like to donate. The price promotion condition significantly increased people’s donation rate, as well as their donation amount compared to the control condition. The authors also found that the effect is stronger if the promotion offers immediate savings to consumers, tested through a third ‘rebate’ condition. In this condition, consumers received a coupon that could only be used on a subsequent purchase at and found that the instant discount improved donation behavior.

The time interval between the promotion and the donation request was also important. Similar to the first study, consumers were surveyed either immediately after the sale or at least one week after. The donation intention of those surveyed immediately was significantly related to their spending in the event; as the time gap increases, the effects were found to diminish.

This research therefore suggests that companies and charitable organizations could collaborate to create a win-win situation and provides best practices for implementation. Charitable organizations should look to target those consumers who have just participated in price promotions, who perceive their resources to be higher and may be more likely to donate. Donations should be solicited directly following a sales event for maximum participation, and pairing donation appeals with an immediate price discount also proves more effective.  The authors listed the following areas for further research:

• Is this phenomenon applicable to other types of non-monetary donation behavior?
• Is this effect more prominent among certain consumer segments?

Engaging givers across multiple forms of giving increase their lifetime value to non-profits

In 2019, US households gave nearly 2% of their household income to non-profit organizations. This type of individual giving constitutes 75% of total giving to charities – but half of newly acquired donors churn after they give once, and retaining donors can be expensive and time-consuming for non-profit organizations. In their paper, “Managing Members, Donors, and Member-Donors for Effective Non-profit Fundraising,” authors Kim, Gupta, and Lee explore ways that organizations can identify, nurture and invest in generous givers by answering the following questions: 1) What factors influence the choices of multiple forms of giving and the amount, and how do their effects change over time?; (2) how can non-profits utilize our framework to increase participation rates and contribution amounts; and (3) can we more accurately predict which contributors are more committed to the non-profit?

The team used econometric modeling to analyze donations and memberships, both common methods to solicit donations for major non-profit organizations. The model has three distinguishing features: 1) it separates participation from amount, allowing non-profits to understand which is more important to emphasize to the donor base; 2) it separates forms of giving instead of measuring total dollar value of the gift – assisting non-profits to understand behavioral patterns pertaining to different types of giving; and 3) it incorporates dynamics of giving e.g. lifetime value, recency, and seasonality, all key considerations when identifying and investing in potential repeat givers. The research team partnered with a scientific research center (SRC) to analyze their giving database – over 100K individuals support the SRC financially, with many more contributing to citizen science programs. SRC allowed for both donation and memberships. When individuals chose to give a donation, they received no benefits from the SRC, but when individuals chose to join as members, they received benefits like magazines, umbrellas etc. depending on their membership tier. The authors looked at pure donors, pure members, and member-donors through their research and found that member-donors give more, more frequently over time, than either of pure donor or pure member groups. It is therefore crucial to identify who may be member-donors in the future, and the team made the following findings to assist non-profits:

• The propensity to donate increases over time, meaning that people tend to give through donations repeatedly or that members add donations. The propensity to participate in a membership program is instead cyclical.
• However, the utility of repeat giving is low for the first ~7 months, peaking again ~11-12 months after the donation. At 24 months after the giving occasion, there is no positive predisposition to donate again. The authors find a different pattern for members: lapsed members feel positively predisposed to the non-profit for a duration of at least 24months after the last giving occasion – meaning that non-profits should continue to re-engage former members for a longer duration than former donors.
• Finally – and unsurprisingly – the authors found substantial heterogeneity in individual giving preferences, explained by observed variables such as age, gender and proximity to the SRC.

The team then utilized the data to predict which pure members or pure donors would become member-donors by using the first 2/3 of the data for the estimation and the last 1/3 of the data for the prediction. The estimation period included 284 pure donors, and among them, 52 became member-donors in the test period. The model helps to identify 90% of the member-donors, if you choose 50% of pure donors, with the 40% gap being the gain from the model. The predictive accuracy of the model was improved compared to restrictive models, with the team making similar findings in the conversion of pure members to member-donors too, showing how the model can help fundraisers predictively identify member-donors. The authors also calculated elasticities for different scenarios, showing that the model can assist fundraisers in developing more effective targeted campaigns – leading to an expected 1.5-2% revenue uplift. The team leaves the following guidelines for non-profits:

1. Provide multiple options to build a pathway to gaining committed givers e.g. member-donors;
2. Emphasize participation. This is much more productive than emphasizing amount;
3. Treat long-lapsed donors as new prospects, and do not give up on lapsed members too early; and
4. Optimize the timing of appeals.

In the course of research the authors found that changing the decision on the amount to give was extremely difficult, whereas changing decision on whether to donate or join as a member was relatively easy – examining why this occurs requires additional research. Additionally, the team was not able to analyze cost information on acquisition or retention, leaving open the question of what the most effective and cheapest design is for the organization.

Further detail on each study:

• Jacqueline Rifkin, Katherine Du, and Jonah Berger, “Penny for Your Preferences: Leveraging Self-Expression to Increase Prosocial Giving”
• Sungjin Kim, Sachin Gupta, and Clarence Lee, “Managing Members, Donors, and Member-Donors for Effective Non-profit Fundraising”
• Kuangjie Zhang, Fengyan Cai, and Zhengyu Shi, “Do Promotions Make Consumers More Generous? The Impact of Price Promotions on Consumers’ Donation Behavior”

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The Better Marketing for a Better World (BMBW) initiative has been established as a collaboration between Professor Rajesh Chandy, Professor Gita Johar from Columbia Business School, Professor Christine Moorman from Fuqua School of Business and Professor John Roberts, Professor at the University of New South Wales, Sydney Australia.  The aim of the BMBW initiative is to build community and support the development and dissemination of knowledge on how marketing can improve lives, sustain livelihoods, strengthen societies and benefit the world at large. There is natural synergy with the aspirations of BMBW and the Wheeler Institute, and therefore under the guidance of Rajesh Chandy the Wheeler Institute has taken a significant role in supporting the launch of the BMBW initiative (bmbw.org). Going forward members of the Wheeler Institute team will undertake a secretariat role in support of the BMBW initiative developing its operational frameworks related to organising forums, facilitating training, and maintaining online resources.