What are the factors that encourage donations?

This is a fascinating question that has been discussed by researchers and scholars in many different disciplines for many centuries. Even though we usually associate the word “donation” with gifts of money, donations can also take other forms.

In addition to the 6.5 million Austrians who made monetary donations worth roughly € 750 million last year, 3.5 million people volunteered to work for a charitable cause (Fundraising Verband Austria 2020), around 215,000 people gave blood (Austrian Red Cross), and between 250 and 300 people even donated a piece of their liver or a kidney (IRODaT 2021). Add to that tons and tons of donated goods. These figures show very clearly that the type of the donation and the associated costs for the donor have a significant influence on how likely people are to donate.

Individual factors: Morals, warm glow, and social recognition

To understand why people make donations, we need to start by looking at the individual. The moral values we learn in our families and in society play a key role here. They determine how important it is for us to help the needy and work towards the common good, and how deeply ingrained such charitable activities are in our daily lives. However, most donations are not completely selfless because donations always also involve a positive effect for the donor. This can be in the form of what is called a warm glow, i.e. the pleasant feeling of having done a good deed, or social recognition by people whose opinion matters to the donor. This means that the factors that encourage us to donate are both intrinsic (e.g. personal moral values) and extrinsic (e.g. social recognition).

Emotionally laden issues: hunger, homelessness, and children

Another factor that motivates us to donate are issues that are particularly close to our hearts. Globally, these issues are hunger and homelessness (13%), issues affecting children and young people (12%), or health care for the needy (12%)(Global Trends in Giving Report 2020). Most donations in Austria also go to organizations working on these issues, although interest in animal welfare, environmental conservation, and science funding has increased recently (Fundraising Verband Austria 2020).

Aid organizations: effectiveness and transparency inspire trust

For aid organizations, it is important to create trust, so donors feel their donations are being used sensibly, effectively, and cost-efficiently. Good aid work with the lowest possible overhead costs (personnel, operating costs, etc.) is one key factor for success. The other is to make this work visible and tangible to donors.

Identified Victim Effect

People perceive their donation as more effective if aid organizations provide transparent information on how a donation is to be used. The Identified Victim Effect, however, causes donors to react more strongly when shown individual fates than they do to statistics on the extent of suffering. As a result, arousing compassion and emotions is also a relevant factor in donation advertising. In addition, the perceived effectiveness of a donation and thus the likelihood of making a donation increases if donors are allowed to choose for which specific project their donation is to be used through so-called earmarking.

Little information about the actual use of the donation

Interestingly, aid organizations are usually only transparent before the donation is received, while information about the actual use (with the exception of individual sponsorships) is usually less specific. This is particularly surprising, as global surveys show that 54-69% of global donors would give more regularly if they could also find out more about the impact made by their specific donation (Global Trends in Giving Report 2018). A rare exception is the blood donation center of the Austrian Red Cross for Vienna, Lower Austria, and Burgenland, which has been successfully informing blood donors  about when and in which hospital their specific blood donation was used since 2016.

How can governments encourage donations?

A number of instruments are available to policymakers to encourage their citizens to donate. Economic incentive systems, for one, are an effective instrument here. In Austria, for example, the volume of donations has more than doubled since  charitable donations were made tax deductible in 2009 (Fundraising Verband Austria 2020).

Opting in vs. opting out

On the other hand, there are also more subtle regulatory approaches which can nudge people towards more prosocial behavior. The fact that a small nudge can have a major effect can be seen when comparing the number of registered organ donors in Germany and Austria. In Austria, 99.5% of the population are registered as post-mortem organ donors. In Germany, the figure is only about 36%, even though Germany has spent much more on advertising in recent years. The reason for this significant difference is a different default setting for entry into the organ donation registry. While Germany has an opt-in system, where people are not organ donors by default until they actively register, Austria relies on an opt-out standard, where all people are registered as organ donors by default unless they actively opt out. Pre-selecting this more prosocial standard results in significantly more post-mortem organ donations in Austria.

Baris Pascal Güntürkün, Assistenzprofessor am Department für Marketing