Options and donations #2

Previous post was about the effect of number of available option on donation amounts.

It turns out that more options give a sensation of more need, which in turn increases the willingness to donate and the donation amounts.

How would one, then,  distribute those contributions when there are multiple options?

This is important, as there is a variety of  NGOs out there competing for our contributions.

In an article published in Judgment and Decision Making, Robin Hogarth and I looked for answers.

We found that the more NGOs we face, the more variable are our contributions. Known NGOs enjoy more the benefit of larger donations due to higher number of options. Unknown NGOs, on the other hand, get less and less as the number of alternatives increases. Competition favors the known organizations.

Interestingly, when we considered campaigns, we observed the opposite. The contributions became more equally distributed across campaigns as the number of options increased from 1 to 13.

Finally, in terms of how NGOs ask for donations in online environments,  results suggest that when organizations make us choose one option among many through some drop-down menus, donations do not increase with the number of options. The positive effect due to increased options disappears.

All the donation sites we reviewed feature some kind of a menu: they offer large number of options, but constrain us to choose one of them as the recipient of our contribution.

This strategy is not optimal!

They should instead let us distribute our donations across their campaigns.

Options and donations #1

Say you want to make a donation.

You have maximum 10o dollars to spare.

You first look for organizations that need and ask for your money.

Let’s say you notice 3 of them; say

Unicef
Oxfam
Mercy Corps

How would you give your 100 dollars away?

Would you give all of it? Or maybe keep some for a next time?

What if, instead of 3, there were 8 of them actively auditioning for your money?

Children’s Network International
Every Child
Global Fund for Children
Mercy Corps
Oxfam
Stop Child Poverty
Unicef
United Children’s Fund

How would you feel now?

What if there were even more of them, say 16?

Care
Children in Crisis
Children’s Network International
Doctors Without Borders
EveryChild
Global Fund for Children
Mercy Corps
Oxfam
Plan International
Serving Our World
Save the Children
SOS Kinderdorf International
Stop Child Poverty
Unicef
United Children’s Fund
World Emergency Relief

It turns out, people donate more when they face more alternatives.The reason, I suspect, is that when there are 3 NGOs asking for help, we perceive a certain need for aid, But when there are 16 of them, the need for aid we perceive is much greater.

Now the question becomes?

How would you distribute your money when there are 3 NGOs?
How would you distribute when there are 16?

More on that later…