Door to door fundraising is very popular in the Netherlands. The Central Fundraising Bureau (CBF) annually coordinates approximately 25 national collection campaigns for charitable foundations.
Based on promising results from theoretical and laboratory research, researchers at the University of Amsterdam had an idea on how charities could increase the amounts raised in such campaigns. A key way of doing so was through the use of ‘all-pay’ auctions. In this type of auction the bidder with the highest bid receives the ‘auctioned’ prize and the other bids are considered donations. However, a surprising finding emerged from a field experiment: people do not want to win a prize through charitable donations. The reason why this effect shows up here and not for example in a charity lottery like the Postcode Lottery, could be because people already participate here, without being asked. Or perhaps because the Postcode Lottery with its large prizes is perceived more as a lottery than as a charity collection.
Back to charities and their door to door collections. Arthur Schram is professor of Experimental Economics at the University of Amsterdam. With UvA colleague Sander Onderstal and Adriaan Soetevent of Groningen University, he carried out research on four types of door to door collections: anonymous donations, personal donations (in an envelope with name and address), lotteries where each euro results in an extra lottery ticket, and the all-pay auction mentioned above. The experiment was conducted during the annual door to door collection in Amstelveen for the Dutch Brain Foundation (Hersenstichting). A prize was offered for both the auction and the lottery: a Nintendo DS with a brain-training game. This was chosen at the Brain Foundation’s request, because it was considered to be an appropriate prize in line with the Foundation’s objectives.
Schram: “This experiment was the last part of a series of three studies looking for the best way to raise funds. It shows that it is always useful to combine various research methods. For example, you need the theoretical knowledge – otherwise you wouldn’t know where to start your fieldwork. What was most remarkable was that something new was learned in the fieldwork: people showed a moral objection to winning a prize in combination with donating to a charity. Fewer people gave and when they did, amounts donated were not significantly higher than those made in anonymous donations. Some donors were even offended. Their comments were put in envelopes and deposited in the collection box.” Schram found it interesting that in the all-pay auction, the people that did donate did not give significantly less than in the other types of collection campaigns. The fact that anonymous donations could raise more money than personal donations, was something that Schram can explain: “It probably has to do with the idea that you give to help others, not yourself.”
The expectation that an all-pay auction or a lottery could raise more funds than a regular collection emerged from theoretical analysis and different experiments, including field research carried out in the United States. There, donors gave more in a lottery than through anonymous donations. Schram can see that cultural differences play a role in the surprising results uncovered in the Netherlands. “The attitude toward what it means to give may be culturally determined. In the United States there is a very different charity culture. There it’s common to recognise major donors. You see that on plaques on the walls of museums and universities. However, this difference in attitude or culture hasn’t been formally studied.”
Schram is currently residing in Barcelona for one year. ‘I’m on a sabbatical leave, finishing research projects and setting up new projects. Sometimes it’s good not to have any teaching duties.” There are no plans for a follow up on the donations research. Schram: “But it could be interesting to investigate the cultural aspects of our findings. This research was part of a bigger project: creating scientific insight in why people donate to charity. By better understanding this behaviour, we can also hope to improve the process of fundraising by collection. In this case our advice to the Brain Foundation was clear: they were already on the right track. But of course research is all about the broader picture. More knowledge about what drives economic behaviour creates opportunities to design better institutions of many kinds.”