Study Shows a Way to Double Charitable Donations

Cupped hands holding coins

A recent study shows which part of a charity receives donation money can affect the amount donated.
Image: Shutterstock

New research published today has come up with a way to potentially double charitable giving.

In a study appearing in Science, University of California San Diego researchers, led by Uri Gneezy, determined that assuring potential donors that their contributions would not go to charity overhead costs increased the amount of donations.

The idea, Gneezy suggests, is to reassure donors that their contributions are going directly to the cause versus more general operating expenses.

The study focused on two unspecified charities, each starting with $10,000. The researchers randomly solicited 40,000 Americans for donations. Some of these letters promised none of the donations would go toward overhead, while others focused on matching donations or existing seed money. The dollar-matching letters brought in $12,210, while the overhead-free letters brought in $23,120.

Gneezy suggests those giving to charity want to feel they are directly affecting the causes they care about, rather than paying for background support.

It doesn’t seem to be the overhead itself has a negative effect on donors: a previous study showed that the percentage of overhead didn’t deter donors—they just didn’t want to have to pay toward it themselves.

However, Gneezy and associates warn that absolutely no support of overhead could be detrimental to charities even if they are receiving more donations for other areas. After all, basic operating costs are what charities have to deal with day to day to keep doing the work they do, and without financial support, they can’t accomplish their missions.

One solution might be to separate donations for overhead costs from donations that go directly to the cause. Charity: Water does this, letting private donors cover overhead costs while other donations go to clean water projects. However, in order to make this work, a charity would have to line up some dedicated private donors willing to entirely fund the overhead costs while others get to be in the spotlight.

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