Children on sale: The interactive roles of fundraising promotion and prosocial identity on charitable intent

In the United States, individuals donated over $220 billion in 2006 (Giving USA 2007). As an effort to increase charitable giving, prosocial acts have been extrinsically incentivized by offering monetary or physical incentives such as tax breaks and thank-you gifts, or by making a targeted prosocial act less costly (e.g., offering a discounted rate for joining a child sponsorship program as a sponsor). Such practices introduced by both a government and charitable organizations have spurred considerable research on the roles of extrinsic incentives in charitable giving, and researchers reported converging evidence for the detrimental effects of extrinsic incentives on prosocial behavior (e.g., Ariely, Bracha, and Meier 2009; Uri Gneezy and Aldo Rustichini 2000). For example, offering thank-you gifts decreased donations across a wide variety of charities and gift types (Newman and Shen 2012). Monetary incentives were found to decrease blood donation (Mellström and Johannesson 2008). Ariely et al. (2009) also suggested that offering monetary incentives decreases individuals' motivation to help. This finding was found to be more pronounced in a public (vs. private) setting. Although prior work has made a substantial contribution to the literature, we found three important gaps in the extant. First, researchers have been mostly focused on the effects of offering monetary incentives such as thank-you gifts. Second, researchers have not tested the psychological mechanism that dampens people's charitable intent in a controlled lab setting (Ariely et al. 2009). The third important gap is on the limited understanding of potential moderators in the relationship between extrinsic incentives and charitable intent. The present research aims to reduce the gaps in three important ways. First, we investigate a different type of external incentives: A fundraising promotion that makes a targeted prosocial act less costly. To this end, we focus on the context in which a charity offers a discounted rate for a targeted prosocial behavior. Specifically, since 2014, Save the Children runs a fundraising promotion targeting existing donors in its child sponsorship program. The promotion offers a discounted rate for being a sponsor of another child. All donors are required to donate $27 a month if they desire to join the child sponsorship program; but for those who join the program during the promotion period, a discounted rate of $17 a month is applied. This practice is relatively new, but seems to be quickly adopted by other organizations since it may cost less in soliciting donations than offering monetary incentives. Thus, the present research discusses a practically relevant issue in charitable giving. This setting of research also enhances a theoretical contribution since offering an incentive that makes a targeted prosocial act less costly is not identical to offering monetary or physical incentives. In the former context, donors do not receive any reward such as a thank-you gift, but they simply give less amount of resources compared to other donors who join the prosocial act or program during a non-promotional period. To the best of our knowledge, the present research is the first that investigates the role of a non-reward-based, extrinsic incentive in charitable giving. In line with prior work, we propose that a fundraising promotion that offers a discounted rate for a targeted prosocial act will decrease charitable intent. Second, we unravel the underlying mechanism that drives charitable intent, with a focus on trust toward a charity. Trust toward a charity is an important antecedent of donation behavior (Burnett 1992; Melendez 2001; Sargeant 1999). For example, Melendez (2001) found that donors only contribute to organizations that they trust and are confident about. Evidence also shows that trust affects people's willingness to become a donor and the amount of money they give (Burnett 1992; Sargeant 1999). Although trust is an important antecedent of donation behavior, prior work has overlooked its role in the relationship between extrinsic incentives and prosocial behaviors. In our research, we posit that a fundraising promotion that offers an extrinsic incentive (i.e., a discounted rate for a targeted prosocial act) will decrease trust toward a charity by giving unethical impressions such that the charity has not properly utilized the funds appropriately, thereby decreasing donation behavior. Third, we suggest an important moderator that could influence the relationship between a fundraising promotion (i.e., offering a discounted rate for a targeted prosocial act) and charitable intent: One's prosocial identity. In particular, we posit that the detrimental effects of the extrinsic incentive will be more pronounced in the donation context because it will hamper trust toward a charity among individuals who consistently engage in costly prosocial behaviors (i.e., those high on prosocial identity). Donation behaviors are considered highly involved, producing a socially recognizable prosocial self (Michelletti 2003). Therefore, individuals high on prosocial identity will be reluctant to donate if a charity offers a discounted rate for a targeted prosocial act since helping involves high responsibility and self-actualization for them. However, the extrinsic incentive will not influence charitable intent for those who are low on prosocial identity. Prior work has shown that individuals who are not engaged in costly prosocial behaviors will subsequently behave in consistent with the self-perception (Gneezy et al. 2012). Taken together, these findings suggest that offering an extrinsic incentive that makes prosocial acts less costly will cause reactance to individuals who are high on prosocial identity. In the remainder of this paper, three studies will be reported. Study 1 provides initial evidence for the hypotheses. Study 2 demonstrates the mediating role of trust toward a charity. Study 3 provides a confirming evidence for the mediating role of trust by directly manipulating the level of trust toward a charity. If the proposed effect is indeed mediated by trust toward a charity, offering a discounted rate for a targeted prosocial act should diminish the negative effect of the promotion on charitable intent when a charity puts effort for transparency (e.g., disclosing how donation funds are spent and an actual impact that the donation funds have on the cause or beneficiary group) (Bennett and Gabriel 2000; Hyndman 1990; Palmer and Randall 2000).