It's not always the thought that counts.
Today is "Giving Tuesday," which kicks off the time of year when Americans dig deep in their wallets and donate to charities and nonprofit organizations. Individual donations are hugely important for a lot of them, making up the majority of revenue for most nonprofits and charities.
There are a lot of things donors are looking for: A reduction in taxes, a sense of doing good in the community, and the satisfaction that comes from donating to causes that go against the opposing political party (so-called "rage donating.") But it turns out what people really want is stuff.
According to fresh research from economists at Texas A&M University, donors are far more likely to give if they receive a gift — or "donor premium" — in return. And when they're presented with the option of donating with or without reciprocity, they'll usually take the gift. There are caveats though, and the gifts almost always end up costing more than the charity gets from the increase in donations.
"The preponderance of the evidence is starting to show that these unconditional gifts are not doing what you want them to do," said Jonathan Meer, an associate professor of economics at Texas A&M and a co-author on the paper, which is currently under peer review. Catherine Eckel of Texas A&M and David Herberich of payment services firm Marqeta are also co-authors.
The researchers worked with the Association of Former Students at Texas A&M to test the donation responses of alums who were solicited for money during a regular direct-mail fundraising campaign. The experiment was designed to test whether donor premiums — in this case, a luggage tag branded with the school's logo — would influence giving patterns.