Note to charitable givers: money if fungible

Okay, it’s good that charities can figure out how to get more people to give money, but it’s also depressing how this works.  Do they think that money magically gets to those in need without employees, staff, equipment, etc.?  Vox:

In a study published in Science on Thursday, a team of researchers showed that giving people the opportunity to donate directly to a charity program — with a promise that the money wouldn’t go to overhead — was far more effective than either matching donations or letting donors know about existing seed money…

Many people have started paying attention to overhead costs — such as administrative expenses, salaries, rent, and fundraising costs — when evaluating a charity. It’s a big factor in evaluation tools like CharityWatch. For some, high overhead might be seen as a mark of an inefficient charity.

But in the Science study, the researchers found that this wasn’t what was going on. People don’t actually mind charities that have high overhead — they just don’t want to pay for that personally. And that’s likely because they want to have the personal feeling of having an impact and donating directly to a good cause.

The results were stunning. The researchers partnered with a real-life education charity campaign that solicited 40,000 Americans, who randomly received different letters in the mail. Some letters promised donors that none of their money would go toward overhead. These letters, it turns out, were three times as effective as a simple solicitation: [emphasis mine]

The piece goes on to give all sorts of very good reasons on why it is foolish to evaluate a charity on overhead expenses alone.  But, again, what really kills me is the implicit idea of all these donors that money is not fungible.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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