Using Charity Performance Metrics as an Excuse Not to Give

Abstract

There is an increasing pressure to give more wisely and effectively. There is, relatedly, an increasing focus on charity performance metrics. Through a series of experiments, this paper provides a caution to such a focus. Although information on charity performance metrics may facilitate more effective giving, it may also facilitate the development of excuses not to give. Managers of nonprofit organizations should carefully assess this tension when determining whether and how to provide information on their performance metrics. This paper was accepted by Axel Ockenfels, behavioral economics.

Empathic and Numerate Giving: The Joint Effects of Victim Images and Charity Evaluations

“…Some lab experiments provide evidence that people favor efficient charities in forced choice questions, especially when the contrasts are very clear (0% vs. 50% overhead; Gneezy, Keenan, & Gneezy, 2014). Yet, other studies suggest that people attend to efficiency information as a potential excuse for not to donate (Exley, 2015) and beliefs about effectiveness are colored by subjective preferences (Berman, Barasch, Levine, & Small, 2018). Further evidence suggests that people give based on a subjective sense of making a difference (e.g., when they can help a charity across the finish line with a fundraising goal; Cryder, Loewenstein, & Scheines, 2013;Cryder, Loewenstein, & Seltman, 2013) rather than based on objective metrics of charity efficiency or effectiveness.…”

Ambiguity and excuse-driven behavior in charitable giving

“…Indeed, subjects may have a better recollection of previous decisions that could lead to some anchoring effect. Also Exley (2015b) provides converging evidence of the existence of excuse-driven response to charity performance indicators: the low-rating of a charity gives individuals an excuse not to give. A low rating affects the benefit of the donation and is thus related to risk-for-charity.…”

The Psychology of (In)Effective Altruism

“…For example, people consider it wrong to support a charity that relies on a relatively ineffective medication if another charity addresses the same cause with a more effective intervention [14]. Many donors are especially concerned about supporting organizations with excessively high overhead costs [51,52] (see Overhead Myth later). These tendencies indicate that donors do care about effectiveness.…”