The Effect of Social Rewards on Intrinsically Motivated Donations

Organizations that raise funds through charitable donations face response rates as low as 0.5% to 2.5% (Bray 2008; Sharpe 2007). To help attract donors, many organizations offer rewards in exchange for donations, from small tokens like coffee mugs to the chance to win expensive prizes. Between 55% and 60% of nonprofit organizations use some form of tangible reward in fundraising (Koop 2005). While these rewards have been found to increase the likelihood that an individual will make a donation (Falk 2007; Holmes, Miller and Lerner 2002; Shang and Croson 2006), rewards have also been found to reduce individuals’ intrinsic motivation to donate (Gneezy and Rustichini 2000; Mellstrom and Johannesson 2008; Newman and Shen 2012).This study examines whether this effect also holds for a social reward. While social rewards are not well defined in the literature, research has suggested that individuals can be motivated to make a charitable donation in order to gain social benefits or avoid social punishments for not donating (Fehr and Falk 2002). This has been alternately referred to as social motivation (e.g. Rege and Telle 2004), prestige motivation (e.g. Harbaugh 1998), image motivation (e.g. Ariely, Bracha and Meier 2009), or status-based motivation (e.g. Wichardt 2008). Benefits such as social approval (Satow 1975), social status (Harbaugh 1998), and public recognition (Karlan and McConnell 2012) have been found to increase charitable donations. Based on this research, we regard a social reward as any reward which provides the donor with social capital, such as social approval, prestige, or status, as a result of their donation. These rewards often take the form of public recognition of donation behavior by the charitable organization, or rewards that provide opportunities for donors to make their association with the charitable organization publicly known.Although social rewards have been shown to motivate donation behavior (Harbaugh 1998), the effect of these rewards on intrinsic motivation has not yet been fully examined. Researchers have proposed that social rewards might reduce intrinsic motivation less than tangible or financial rewards (Frey 1994), but this proposition has not been empirically tested. However, previous research does suggest that social motivation may occupy a type of middle ground between intrinsic and extrinsic motivation. Donors have been found to attribute their donation behavior to social motivations regardless of whether they held a communal (intrinsically oriented) or exchange (extrinsically oriented) relationship with the nonprofit organization to which they had donated (Johnson and Grimm 2010). Researchers have also suggested that tangible rewards may reduce social motivation to donate as well as intrinsic motivation to donate (Ariely et al. 2009; Janssen and Mendys-Kamphorst 2004). This suggests that social rewards may not be interpreted by donors in the same way that tangible rewards are, and consequently, that social rewards may not have the same negative effect on intrinsic motivation. To test this prediction, we use a single factor design to manipulate the rewards for donation behavior presented to participants in an incentivized, framed field experiment (Harrison and List 2004). We compare the effects of a social reward, a tangible reward, and a hybrid reward that combines both social and tangible properties against a control condition in which no reward was offered on participants’ donations to a real charity. Participants’ donations were collected via sealed donation boxes to ensure that participants could not see what others were donating. In all conditions, participants were given the option to donate to a “no reward” box. In the reward conditions, participants were also given the option to donate to a box that gave them an opportunity to win the stated reward. The reward type was manipulated between subjects through the description of the reward given to the participants. Since in all conditions, participants were given the option to donate without receiving a reward, this was considered to represent an intrinsically motivated donation.The results are summarized in Table 1. Compared to the no reward condition, offering a tangible reward resulted in a significant reduction in both the overall donations to the charity and the number of participants who chose to donate to the no reward box, consistent with the findings of previous literature. However, both the social reward and hybrid reward conditions led to a significant increase in overall donations to the charity and did not significantly reduce the amount donated to the no reward box. In addition, while the number of participants who chose to donate did not differ across the reward conditions, the average donation amount per donor was higher in the social reward and hybrid reward conditions than in the tangible reward and no reward conditions. These differences were not found to be explained by differences in participants’ attitudes toward the rewards or the perceived desirability of the rewards.These results suggest that social rewards do affect intrinsic motivation differently than the well-established negative effect of tangible rewards. While offering a tangible reward was consistently found to reduce intrinsically motivated donation behavior, offering a social or hybrid reward did not reduce the number of tickets donated with no expectation of a reward, and reduced the number of donors who donated exclusively with no reward less than a tangible reward did. In addition, while offering a tangible reward reduced total donations, offering a social or hybrid reward appears to lead donors to increase their overall donation level in order to donate to receive the reward without reducing their intrinsically motivated donation behavior.