Helping out at Destra

I recently read a 2009 working paper from researchers at Harvard Business School and the University of British Columbia titled The Benefits (and Costs) of Self-Interested Circular Behavior. Despite its bookish title, this paper is pretty concise and readable. It’s relevant to anyone interested in happiness research, fundraising, or cause marketing.

The paper looks at the effect of charity on personal happiness, consumer philanthropy, and the effect of sending donors gifts or rewards.

First, does happiness run in a circular motion? There are many claims that donating (time, money, etc.) to others makes us happier. Happier people are also more likely to give. The cycle of happiness and donating may be self-perpetuating. Research on this happiness effect is actually surprisingly sparse, but the causal effect is there.

The question then becomes, how much should organizations motivate donors by appealing to our own interests? Will I give more if I think it will benefits me?

The (RED) campaign embraces “self-interested giving” in their mission. Profits made from (RED)’s “luxury goods” go to fight AIDS, though the campaign site is exceptionally vague about how this actually works. Bono, (RED)’s co-founder, said in 2006 that the campaign “is about doing what you enjoy and doing good at the same time.” The American Red Cross tries to drum up blood donors with the slogan, “the need is constant. The gratification is instant.” This is the opposite approach of guilting donors into giving by showing them pictures of sad children. (Problematic on an entirely different level.)

The authors find that trying to incentive donors – by saying it will make them happier, for example – may backfire. Donors who did not receive gifts were more likely to make large donations than donors who received gifts. Other incentives such as matching funds often cause short-term increases in immediate donations, but overall, long-term decreases in total donations.

Removing some of the altruistic feelings may be disrupt the giving cycle. Or as they put it, “receiving gifts may crowd out some inherent motivation to give.” If donors don’t feel they’re acting selflessly, they may be less inclined to donate, and the fundraising strategy becomes unsustainable.

The question remains, do we give to feel good, or to help others? You could argue that giving is giving, and the cause is less important than the effect on the ground for beneficiaries. Perhaps for individual donors, but less so for non-profits. Receiving more donations means doing more for your beneficiaries, and the average non-profit will take any kind of competitive advantage to sustain and grow its impact.