The Effect of Effectiveness: Donor Response to Aid Effectiveness in a Direct Mail Fundraising Experiment

29 Pages Posted: 2 Jun 2014

See all articles by Dean S. Karlan

Dean S. Karlan

Yale University; Innovations for Poverty Action; Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab (J-PAL); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Daniel H. Wood

Federal Trade Commission

Multiple version iconThere are 3 versions of this paper

Date Written: April 2014

Abstract

We test how donors respond to new information about a charity’s effectiveness. Freedom from Hunger implemented a test of its direct marketing solicitations, varying letters by whether they include a discussion of their program’s impact as measured by scientific research. The base script, used for both treatment and control, included a standard qualitative story about an individual beneficiary. Adding scientific impact information has no effect on whether someone donates, or how much, in the full sample. However, we find that amongst recent prior donors (those we posit more likely to open the mail and thus notice the treatment), large prior donors increase the likelihood of giving in response to information on aid effectiveness, whereas small prior donors decrease their giving. We motivate the analysis and experiment with a theoretical model that highlights two predictions. First, larger gift amounts, holding education and income constant, is a proxy for altruism giving (as it is associated with giving more to fewer charities) versus warm glow giving (giving less to more charities). Second, those motivated by altruism will respond positively to appeals based on evidence, whereas those motivated by warm glow may respond negatively to appeals based on evidence as it turns off the emotional trigger for giving, or highlights uncertainty in aid effectiveness.

Keywords: aid effectiveness, charitable fundraising, pure altruism, warm glow

JEL Classification: D64, H41, L31, O12

Suggested Citation

Karlan, Dean S. and Wood, Daniel H., The Effect of Effectiveness: Donor Response to Aid Effectiveness in a Direct Mail Fundraising Experiment (April 2014). CEPR Discussion Paper No. DP9941. Available at SSRN: https://ssrn.com/abstract=2444964

Dean S. Karlan (Contact Author)

Yale University ( email )

Box 208269
New Haven, CT 06520-8269
United States

Innovations for Poverty Action ( email )

1731 Connecticut Ave, 4th floor
New Haven, CT 20009
United States

Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab (J-PAL) ( email )

E60-246
77 Massachusetts Avenue
Cambridge, MA 02139
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Daniel H. Wood

Federal Trade Commission ( email )

600 Pennsylvania Ave NW
Washington, DC 20580
United States

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