Saturday, July 23, 2011

Competitive Giving

Capital campaigns and fundraising drives often try to tap into the competitive spirit.  But, does this actually generate more gifts?   Economics professors John Duffy, from the University of Pittsburgh, and Tatiana Kornienko, from the University of Edinburgh, investigated this question in the laboratory.  The researchers wanted to find out if competition, by itself, could increase charitable giving.  In other words, would competition matter even if there was no opportunity for prestige or public acclaim from winning?

To test this, the professors recruited participants to play a series of “dictator” games.  In each round of the game, subjects received $10 to divide between themselves and a randomly assigned, unknown person in another room.  Participants could choose to share any amount or nothing at all.  Participants also chose a secret ID code, known only to them.  Researchers divided participants into one of three different rooms, with ten people in each room.  In the “generosity tournament” room, experimenters ranked the most generous participants after each round.  The secret ID codes were ranked and written, in order, on the board.  Because the codes were secret, only the participant knew which code was his or hers.  So, only the participant knew where he or she ranked.  In the “earnings tournament” room, the competition was described differently.  Here, experimenters ranked those who had earned the most playing the dictator game.  The top rankings went to those who kept the most money.  Again, the rankings listed only the secret ID codes.  Finally, in the third room, the secret ID codes were not ranked. 

In all, 200 participants played ten rounds of the game.  Did ranking the secret IDs after each round affect the generosity of the participants?  Yes.  Those who played under different ranking schemes shared dramatically different amounts.  Participants in the “generosity tournament” ranking gave away 26% of their money grants.  Those with no ranking gave away 14% of their money grants.  Those in the “earnings tournament” ranking shared only 7% of their money grants.  This dramatic difference occurred even though each person’s relative standing was hidden.  Only the participant knew which secret ID code belonged to him. 

Because individual identities were secret, the researchers believed that this difference in giving was caused by pure competitiveness.  Prestige or reputation should not have been a factor, given the individual anonymity.  Further, in a personality survey given to participants afterwards, those who scored highest on competitiveness were also the most likely to be influenced by the rankings design.  Also, rankings were mostly influential for those who were not ranked at the top already.  A top ranking apparently sent the message that previous behavior was more than sufficient – at least until the ranking changed.

Publishing donor names at various giving levels can combine public recognition with the potential for mild competition.  These findings suggest that donor rankings, even if not publicly shared, could influence charitable giving.  Might some donors find it motivational to see how their ranking has changed over the years?  Rankings could be assigned by percentile, top 100, or subdivided into regional or other categorical divisions.  Even if such rankings were never made public, this research suggests that donors’ knowledge of their rankings could significantly influence financial decisions to share income.  Perhaps you might consider other ways to inspire donors with new competitive giving opportunities in your organization?

Source: Journal of Economic Behavior & Organization, 74, 82-103

Russell James, J.D., Ph.D.

Director of Graduate Studies in Charitable Planning

Texas Tech University

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