University of Delaware economists have published new research that shows how non-profits or charities can increase the amount of donations they receive.
The key term to understand is “default.” Most of us, who receive salaries, are familiar with defaults in our paychecks — as the percentage amount by which we automatically set aside for retirement.
Kent Messer, an economics professor at UD, wanted to understand how charitable organizations might use defaults like this to increase donations.
So he used his students as subjects in his study, and chose the Delaware Wild Lands as the charitable organization. Over the course of the semester, students listened to lectures given by the Delaware Wild Lands about its conservation efforts.
Meanwhile, the students were also supposed to receive earnings for work they’d done earlier that semester. So Messer split his students into two groups. One group received their earnings in full and filled out a form to state how much they wanted to donate. The other group had their donation deducted from their earnings and could have it refunded if they filled out a form.
“Both groups were essentially identical tasks, except for one thing: were they donating or asking for a refund?” said Messer.
75 percent of the refund group donated to the Delaware Wild Lands – compared to 44 percent of the donation group,
Messer says the results demonstrate the way a donation is framed can have a powerful impact on how much an organization receives.
“It didn’t matter who the students were, if they were male, female, whether they were environmentalists, or not,” said Messer. “They had the same underlying preferences, which in general were, ‘we like to support Delaware Wild Lands, so this would be a nice thing to do.’ However, the changing in how it was framed as a refund led people to actually give money.”
In real life, nonprofits and charities can’t just go and deduct from people’s paychecks. But Messer says that they can use defaults to increase their donations–for example, by encouraging sustaining donations that would charge donors’ credit cards on a monthly basis.
The study appears in the Journal of Behavioral and Experimental Economics.