01 Sep 2016

Why We Do—or Don’t—Donate Time and Money

Assistant Professor Christine Exley on the motivations behind donations
by April White


Photo by Susan Young

What is the role of volunteerism and other charitable giving in the United States?

About one in four adults volunteer every year. About one in two adults give more than $25 to charity every year. The estimated combined value of their giving is about 3 percent of our GDP. So it’s a significant number—and that’s just counting the formalized giving. When you think about prosocial behavior more broadly—for instance, when you do favors for neighbors or family and friends—it’s an even larger component of our society.

Why do we volunteer?

There are a lot of reasons. People want to support a cause. They want the “warm glow”—to feel good from doing it. They want to signal something about themselves—that they are nice, for instance, or that they hold certain political tendencies. Volunteering is—or perhaps increasingly can be—a consumption good. People get utility from volunteering, and in fact, there are some charities where the volunteer opportunities are so popular, you have to pay to volunteer. When you get into situations like that one, it can start to share traits with other consumption goods, like going to the movies.

How do perceptions of volunteering change when there’s money involved?

I’ve studied what happens when you introduce financial incentives into the volunteering environment. From a more traditional economics viewpoint, if I pay you to do something, you’re more likely to do it. But if your desire to volunteer is driven by the fact that you want to appear nice to others, this may not be the case. If I monetarily incentivize volunteering, you might be less likely to volunteer because it is now more difficult to signal that you’re doing so because you’re nice.

In my research, I’ve found that individuals are less likely to be discouraged by monetary incentives if their past volunteer behavior is already known—you already think they are nice so they may be less concerned about their image. But for individuals whose past volunteer behavior is not known, you are more likely to see a detrimental effect when you offer monetary incentives.

You are currently studying time (or volunteering) versus money (or donations) in charitable giving. What have you observed?

People have different available resources. If someone has more money, we expect them to give more, and if someone has less money, we expect them to give less. But if someone has less available free time, we don’t necessarily expect them to volunteer less. A really common anecdote you hear is that everyone is expected to volunteer at their child’s school, say two hours a month. In my new work, I’m asking whether this is because people are more inequity averse over contributions of time than money.


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