Donors Likely to Give Less if They Stand to Benefit

Socially responsible investing allows people to earn a financial return while doing good. But the promise of receiving a personal benefit from a charitable act may actually lower the amount wealthy donors are willing to give, according to a new study. Millionaires tended to be more generous, the study found, when a gift was an act of pure charity rather than a transaction that benefits the donor.

The Test

Researchers from Maastricht University, the University of California at San Diego, and the University of Amsterdam used an online survey to test a variety of giving scenarios on millionaires — people with more than 1 million euros in a Dutch bank. The subjects were asked how they would distribute 100 euros if someone gave it to them and asked them to share with others. Of the 633 millionaires who participated, some were polled on how they would split the money with a low-income person — a straight-up test of their charitable impulses. Some of the others were asked how they would split the money with a low-income person if the recipient had the power to veto the original offer, in which case neither would get anything, thus turning the exercise into a game of risk and strategy. Other scenarios also were tested.

Results

The researchers found a strong charitable response when millionaires were asked simply to split their newfound 100 euros with the poor; 46 percent said they would give all of that money. The results in the strategic scenario, however, were much different. When the recipients could veto the transaction, with the result that both parties would forfeit all the money, only 30 percent of the millionaires gave away the full amount. The difference, according to Uri Gneezy, one of the study’s authors, is that donors in the first test were operating in a “communal” frame of mind and gave out of generosity. The second test triggered an “exchange” mentality, which Mr. Gneezy says resembles the motivations behind socially responsible investing. In such a frame of mind, he says, “it’s not clear whether you’re a good person or you just wanted a return.”

Digging Deeper

The research also showed rich people to be more generous than previously thought. Similar studies that have attempted to show how people would give if they were wealthy — but not involving millionaires as test subjects — found that donors gave away 28 percent of the money they received. On average, wealthy participants in the current study gave away 71 percent when the recipient was poor.— Alex Daniels

Find It

“Giving Behavior of Millionaires” was published in August in the Proceedings of the National Academy of Sciences.