Offering Gifts Doesn’t Always Lead to Loyal Donors

Rewarding donors with a gift can help spur contributions and build a charity’s “warm list” for follow-up solicitations in the years ahead. However, a recent study suggests that not all gift programs are created equal: Some are notably better at identifying donors with the potential to be long-term supporters.

To measure the usefulness of gift programs, researchers sent fundraisers to homes in Pitt County, N.C., to raise money for the Center for Natural Hazards Research at East Carolina University. When offered the book Freakonomics, residents were twice as likely to give, and they gave more than twice as much as people who were not offered a gift. Potential donors who were offered a gift only if they made a donation equal to at least the cost of the book gave at half the rate of those who received the book without conditions.

The researchers returned three years later to test their list of donors who had given previously, but this time no gift was offered. The study found that people who previously were given the book without a required donation were more stingy this time around. They were 60-percent less likely to give in the second phase of the experiment compared with donors who had been attracted by a conditional gift, and the average size of their gifts was 63 percent lower that of the other donors.

One possible explanation: People may feel moved to respond to an unconditional gift regardless of whether they are motivated by the cause. As a result, such donors may not be an organization’s best bet for future contributions.

“Not all ‘warm’ lists are created equal,” says Michael Price, a professor at Georgia State University and co-author of the study. “There are a lot of nudges and behavioral tricks that are great at getting people to give the first time but don’t work as well when you go back.”

Mr. Price suspects that offering an item like a tote bag bearing a charity’s name in exchange for a gift may allow donors to show off their support of a fashionable cause and doesn’t mean they are willing to commit for the long haul.

Once donors can flaunt such a gift, they’re less loyal, he says, adding that more research on the subject is necessary.

The study was conducted by researchers at the University of Chicago, the University of East Carolina, Georgia State University, and the University of Hamburg.