Why Do People Give to Charity?

Americans are very charitable. Despite the pandemic, last year total U.S. giving reached $484.85 billion, 4% more than 2020. While more is being given to charity each year, the number of people giving continues to decline according to Mitch Blonde, Vice President for Institutional Advancement & Public Affairs at Tiffin University. "It's the personal relationships with those who have the ability to make large gifts are what are driving the increased dollars." Marketers spend time and money on marketing research to determine why people buy their products. Charities use the same marketing methods to determine why donations are given to attempt to get them to give more. There are many reasons people give. Most studies suggest that first and foremost is an altruistic impulse that most people have to help somebody else. The fulfillment of religious obligations, including the biblical concept of tithing. Other reasons after that are less-altruistic, like engaging in virtue signaling. People want to show others how kind and generous they are. Another reason is self-centered quid pro quo. Contributing to non-profit organizations can create a tax deduction. Or the donor may receive a gift from the charitable organization. A more general reason that appears in the academic literature is "warm-glow altruism." This suggests that giving to charity simultaneously fulfills both altruistic and selfish motivations. Blonde said people give because they believe their support will have impact on changing or saving lives. "They give to missions that they believe in and to people who are trustworthy." Once someone has given to a charity there is a good chance that donor will be inundated with more requests to give more to the same organization. As with other types of businesses, someone who has already given to a charity is a good prospect to give again. There is a much higher return on investment to keep asking past donors than to look for new ones. One of the ways organizations use to find people to solicit is by buying mailing lists. If someone gives to a charity there is a good chance that same person will be asked to contribute to another charity that has similar objectives. Postal mail requests for giving are usually more effective than email requests. The sheer volume of emails most people receive today makes them a less successful tool for raising funds. Postal mail can also be used to send small gifts like return address stickers that hopefully create a feeling of obligation that will motivate the recipient to give to the organization. Donors need to be careful about the legitimacy of charities to which they make donations. Charity Navigator is an organization that provides information about how charities spend the money provided to them. A general rule of thumb is to look for organizations that direct less than 30% of their total costs to administration and fundraising expenses. Another place to check on a non-profit organization is the IRS. For a giver to receive a tax deduction for a donation, the charity must be a qualified organization, which means it is registered as a 501(c)(3) tax exempt organization with the IRS. Finally, the Better Business Bureau tracks complaints about potentially fraudulent charities. A list of these complaints can be found at the web site Give.org. "Charity Navigator, IRS and BBB speak to larger, distant charities that a person can't engage with" Blonde added. "For someone in Seneca County giving to a charity in Seneca County, there should be ample opportunity to get to know the organization if they're willing to make a personally meaningful gift." Perry Haan is Professor of Marketing at Tiffin University. He can be reached at haanpc@tiffin.edu.