09 Sep 2016
London Business School expert finds negative financial incentive effect
A recent paper showed that giving charity fundraisers financial incentives to raise money for charity can backfire even when potential donors have no idea incentives were involved.
Jonathan Z. Berman, Assistant Professor of Marketing, London Business School, and his co-authors, Alixandra Barasch, Assistant Professor of Marketing, Stern School of Business at New York University, and Deborah A. Small, Professor of Marketing, Wharton School at University of Pennsylvania, suggest that incentives may have this effect because the fundraisers are rendered less sincere to the people they’re trying to persuade, despite caring about the cause.
Professor Berman says: “The conflict between wanting to help others while receiving a financial incentive appears to inhibit persuaders from displaying a sincere caring for the cause they are trying to help.”
The findings published in Psychological Science are important as they will help charities and other non-profit organisations understand the costs and benefits of incentives in philanthropy.
While the incentives do have a negative effect on sincerity, the researchers note that there may be other reasons to use incentives in the context of fundraising campaigns. For example, incentives may be useful to engage people who would otherwise not help at all.
The team is currently planning follow-up studies to examine the cues – both verbal and non-verbal – that might convey sincerity.