Do Free Gifts Increase Charitable Contributions?

Nowadays seemingly every charity offers you something in return for a donation. Give at least $25 and receive a free t-shirt, tote bag, half-eaten sandwich, etc. But the question remains: Is it actually a good strategy?

Yale researchers George Newman and Y. Jeremy Shen attempted to find an answer by looking at one specific free gift situation — when something is promised in return for a certain donation prior to the donation being made. They reasoned that on one hand, the presence of a gift could increase donations by creating feelings of reciprocity and an immediate “return on investment.” On other hand, research suggests that there may be a “crowding out” effect where the external motivation created by a gift replaces the intrinsic motivation to donate for the sake of donating. There is also evidence that external incentives decrease donations by creating an economical “monetary” mindset rather than a socially conscious altruistic mindset.

Newman and Shen conducted a series of six experiments, all of which suggested that in the end, free gifts are not such a great idea.

Results indicate that although people expect that the offer of thank-you gifts will increase donations, such offers actually reduce charitable donations. This effect was obtained across a wide variety of charities and gifts types, regardless of whether the donations were hypothetical or real, the gift was desirable or undesirable, the charity was familiar or unfamiliar, or the gift was more or less valuable. Moreover, such patterns cannot solely be explained in terms of inferences about the charity’s quality (e.g., either their efficacy or current wealth), the undesirability of the gift itself, or simple anchoring effects.

The big weakness of the study is that it only examined the first donation. I think part of the idea when giving away free booty is that the person keeps it, uses it, sees your name, and generates additional fondness for your organization. Then the next time a decision is made about who gets the most real estate on the charitable contribution section of the person’s tax deduction form, they’re more likely to choose you. The free gift thus acts as a type of loss leader for later donations.

If free gifts can increase donations at a later time, then the study doesn’t imply that charities shouldn’t give gifts, it implies that they shouldn’t give crappy gifts. If donors are immediately chucking your gift into the nearest legal garbage receptacle, it may be time to rethink your “institutional advancement” strategy. That’s bad news for all the tote bag manufactures who have already been hit hard by the recession-induced decrease in toting.

Newman, G., & Jeremy Shen, Y. (2012). The Counterintuitive Effects of Thank-you Gifts on Charitable Giving Journal of Economic Psychology DOI: 10.1016/j.joep.2012.05.002

3 Responses to Do Free Gifts Increase Charitable Contributions?

  1. faithskye says:

    This is a really interesting study. While I can see your point that nonprofits should give good gifts for marketing/branding purposes, I have to agree with the researchers that exchanging gifts for donations is a bad long-term strategy. In my fund-raising experience, nothing upsets donors more than wasteful or frivolous spending. Most people are just happy to see that their donations are doing good, and they’re turned off by nonprofits that waste money on stickers and tote bags.

  2. Chip says:

    Donors often times do things very differently than they say in surveys and focus groups. Premiums and gifts work very well in certain situations. The best answer is to test it for your organization.

  3. Melissa says:

    I think that when donations are given they should be given with no expectation of receiving something in return because when the donor expects something in return it changes the dynamics of gift giving…it becomes an Exchange.

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