Adding exchange to charity: A reference price explanation

Abstract

Charities often request donations while offering of a near-worthless token, like a key chain, in exchange. Little research has examined whether such 'exchange' requests are met with higher compliance rates than merely asking people to donate. Our studies suggest that in mere donation settings people may have difficulties to estimate a socially acceptable donation amount and therefore prefer opportunities that provide them with an anchor price. The value of a material good in a donation setting can play this anchoring role and signal a reference price. To the extent that the suggested reference price is low enough, exchange requests lead to more compliance than mere donation requests. In addition, our results indicate that, when accompanied by specified amounts, mere donation requests result in even better compliance rates than exchange requests.

Cause-related marketing of products with a negative externality

“…The higher is consumers' perception of the donation, the more likely it is that decrease in direct donations will be under-compensated by indirect donations, leading to a decrease of overall funds raised by the NPO. This crowding out of donation is likely given that, most of the time, indirect donations are relatively small compared to direct donations (Briers et al, 2007).…”

“…Therefore, consumers may prefer opportunities that provide them with an anchor price (Fraser et al, 1988). Briers et al (2007) argues that a low-priced exchange product may signal a donation price that is lower than the perceived donation price in mere donation settings and may legitimize small contributions. This strategy renders most excuses for noncompliance (e.g., "We can't afford to help.")…”

“…This rationale is consistent with the results of Cialdini and Schroeder (1976) who found that a reminder to potential donors that 'even a penny will help', significantly increased the number of donations without affecting their average size. In short, the difficulty of determining the socially appropriate amount may be overcome with cause-related products where the value of the material good may play this anchoring role and signal a reference price (Briers et al, 2007 and references therein).…”

Exalted Purchases or Tainted Donations? Self‐signaling and the Evaluation of Charitable Incentives

“…Although a substantial body of research has examined the effects of product incentives on charitable giving (Briers, Pandelaere, & Warlop, 2007;Chao, 2017;Holmes, Miller, & Lerner, 2002;Newman & Shen, 2012;Simpson, Irwin, & Lawrence, 2006), to date, the majority of the research in this area has treated "donations with a gift" and "charitable purchases" as relatively interchangeable forms of product-based incentives. That said, a recent paper by Zlatev and Miller (2016) (hereafter, Z&M) directly compared these two types of offers and found that "charitable purchases" appear to encourage more giving than analogous "donations with a gift."…”

Selling Good: The Big Picture of Marketing for Social Enterprises

“…Nonprofit research showed that diverse "price" strategies help increase the funds collected. Some nonprofits frame the donation as a commercial exchange, i.e., they offer a small material present in exchange, such as donation ribbons or postcards (Briers, Pandelaere and Warlop, 2006). In such a situation, the social norm of reciprocity applies and people want to return the gift by making a fair donation.…”