Boost the Effectiveness of Your Donations: A Guide to Smarter Giving

Whether they’re shopping or investing, people want to get the most value for their money. However, when it comes to charitable donations, research suggests that most people don’t seem to care about the effectiveness of their donations (in other words, how “far” their donations go toward helping others). For example, less than 10% of U.S. donors even consider effectiveness when donating.

In this report, researchers explored the psychology behind effective vs. ineffective giving, including the inner challenges preventing people from choosing charities that will maximize their gifts. They also offer insights to encourage donors to consider more effective charities in the future.

Emotional Obstacles To Effective Giving

According to the authors, donating is typically viewed as a personal choice. Many donors give to charities that they feel connected to, such as victims suffering from a disease their loved ones also suffer from. Even when they are informed that other charities are more effective, donors often continue to give to the more familiar cause. A study of 3,000 U.S. donors showed that a third didn’t even research the charity they gave to.

The same idea applies to donors who choose animal causes: the authors point out that most people prefer to donate to companion animals, even though farmed animals suffer at a much larger scale.

Other emotion-related obstacles to effective giving include the following:

• Distance: Many donors prefer to give to local (vs. foreign) charities, humans over animals, and current generations over future generations.
• The Statistical Effect: Studies have shown that compassion often wanes as the number of victims increases. In other words, asking for donations for a single, identifiable victim is usually more successful than listing out large numbers of victims. (Editor’s note: A Faunalytics study from 2019 found that the same isn’t true for farmed animals — people are willing to give the same amount whether an identifiable victim or a large number of victims are used in the appeal.)
• Reputation: The authors argue that, historically, “effective” giving can be hard to track and display. As society tends to value a donor’s personal sacrifice over the social benefit of their gift, this means that they likely value donors who give ineffectively but with highly visible gifts over those who give effectively with less to show for it.

Knowledge-Based Obstacles To Effective Giving

The authors go on to explain that misconceptions and cognitive biases are also major challenges to effective giving. Some people, for example, simply don’t understand the statistics behind effective giving, while others assume that the charities can’t be compared in terms of effectiveness (especially if they are working on different problems).

A common misconception is the so-called “Overhead Myth.” Many people believe that high administrative costs make charities ineffective, but research shows that this isn’t the case. Further misconceptions are that helping a large number of people is “just a drop in the ocean” or that charities responding to disasters are particularly effective, when in fact research shows that charities working on ongoing problems tend to be more effective.

While some charities are more than 100 times more effective than the average charity, laypeople on average think that the most effective charities are 1.5 times more effective. The authors claim that across causes most charities are ineffective, with only a few charities vastly more effective than the rest. This is because, in their view, donors don’t stop “shopping” at ineffective charities the way they might stop patronizing an inefficient company. Because of this, there is no incentive to improve.

Encouraging Effective Giving

The authors offer several suggestions to overcome the challenges listed above. Knowledge-based problems can be tackled by educating people about their misconceptions and biases, although studies have shown mixed results for this strategy. Meanwhile, governments and advocates can use choice architecture (e.g., making effective charities a default choice when asking donors who they want to give to) and incentives (e.g., tax incentives).

Overcoming emotional obstacles may be more challenging, especially as it may require a long-term shift in social norms around donating. In the short term, the authors note that one strategy may involve asking donors to split their donations between an emotional choice and a more effective choice.

While many people consider charitable giving to be a personal, individual choice, encouraging donors to make more effective decisions can go a long way toward helping countless farmed animals around the world. Animal advocates should therefore seek to understand the psychology behind giving and how to shape people’s donation decisions.