Does being wealthy make you more charitable?
By Ashley Whillans
Each year, the average American family donates approximately 3.4 percent of its discretionary income to charity. Most of these charitable contributions are made from October to December, known as the “giving season” in the nonprofit sector.
So what inspires individuals to donate to charity?
Given the incredible cost to solicit donations – US$1 for every $6 collected – understanding the answer to this question is critical. The recent election means the stakes are even higher.
The United States is a world leader in contributions to foreign aid. Yet, there is uncertainty about Donald Trump’s stance on such contributions. The new administration may also provide less support to social programs, such as Planned Parenthood. As a result, it may be increasingly necessary for charities to step up and raise more money to support these key policy areas.
One factor in understanding people’s decisions to donate to charity is how much money each potential donor has. Yet, the effect of wealth on charitable giving is not always clear. In recent research, two colleagues and I tried to find out what makes a person more likely open his or her wallet.
Do wealthy people give more?
It might seem obvious that wealthy individuals should be the most generous.
After all, they are in the best financial position to help those in need. It is, however, also possible that people who make the least money might be the most empathetic toward those in need because they can better understand what it is like to not have enough.
Interestingly, when looking at the data, both patterns appear to be true. Many studies show that the more money people have, and the higher in social class that people feel, the more money they donate to charity.
However, the evidence is not always consistent. Some studies fail to find a link between charitable giving and income, while other studies find that less wealthy individuals are more compassionate and that this compassion in turn predicts greater generosity.
Looking at the relationship between wealth and generosity, research suggests that lower-income households donate a greater proportion of their income to charity as compared with higher-income households – once again suggesting a complex relationship between wealth and giving.
Who’s the most generous of them all?
Given that financial generosity is possible for individuals across the socioeconomic spectrum, I along with colleagues Eugene Caruso at the University of Chicago and Elizabeth Dunn at the University of British Columbia conducted a series of experiments to find out the conditions under which both wealthy and less wealthy individuals are motivated to donate to charity.
As I noted, wealthy people should be the most generous, given their largess, but the problem for charities may be that they’re working against a behavioral bias.
Wealth – and even the feeling of being wealthy – can generate a feeling of autonomy and self-sufficiency, or what behavioral scientists call “agency” or “independence.” This feeling of agency can lead people to focus on personal goals as opposed to the needs and goals of others.
In contrast, having less wealth and the feeling of being less wealthy can generate a feeling of connection to others, what behavioral scientists call “communion.” This feeling of communion can lead people to focus on the needs and goals of others, rather than their own needs and goals.
Since charity is a fundamentally community-focused activity for the good of society, the idea that wealth may be linked to the absence of community-mindedness might create a hurdle for charities that typically emphasize the social relevance of contributing to their various causes.
‘You = Life Saver’
My colleagues and I suspected that if we tailored messages to the goals and motivations that coincide with wealth, we might be able to encourage charitable giving among those with the greatest capacity to give.
To test this question, we conducted three studies with over 1,000 Canadian and American adults. In these studies, we examined how the wording of the charitable appeals might influence giving among people with average and above average wealth.
In one study, one set of ads contained the text, “Let’s Save a Life Together. Here’s How.” Another read: “You = Life Saver. Like the sound of that?” Individuals with average and below-average levels of wealth were more likely to donate when they were shown the first type of ad. On the other hand, individuals with above-average levels of wealth were more likely to donate when they were shown the second type of ad. These effects may have occurred in part because these messages provided a better fit with each groups’ personal goals and values.
Indeed wealth would seem to be the only distinguishing factor between the two groups: There were no significant differences between age, ethnicity or gender.
Our team recently replicated these findings as part of a large annual funding campaign with 12,000+ alumni of an elite business school in the United States. In this study, wealthier individuals who read charitable appeals that focused on personal agency (vs. communion) and who made a donation to the campaign contributed an average of $150 more than individuals who read the charitable appeals that focused on communion.
Fundraising research matters
Taken together, our research suggests that by tailoring messages to fit with people’s wealth-based mindsets and motivations, it is possible to encourage charitable giving across the socioeconomic spectrum.
These findings dovetail with an emerging body of research showing that campaigns that remind donors of their identity as a previous donor provide donors with the ability to make public donations and remind donors that wealth incurs a responsibility to give back to society can also encourage charitable giving among those with the most wealth.
Fundraising solicits hundreds of billions of dollars each year, yet it is often a painstaking and costly practice. Using principles of psychological science can help charities efficiently meet their growing demands.