Choices for donors: More or Less?

Choices for donors: More or Less?

Background: conceptual framework and practical importance

We know that choice is complex for individuals as consumers; particularly that more choice is not always better. But what about choices for individuals who give charitably? How likely is it that choice overload makes charitable giving less effective? Could fundraisers and development managers reduce this problem by changing how they ask for donations?

To explore this, we draw upon the ‘paradox of choice’ (Schwartz, 2004). We will investigate the choices made by individual donors presented with several options — by fundraisers and development managers — when they express an interest in charitable giving.

The paradox of choice literature shows that more choice is not necessarily better and that beyond some optimal level, more choices become overwhelming, lead to decision paralysis, and less sense of control. Individuals may surmount this paralysis, but they might still be less satisfied due to greater regret, escalated expectations, and self-blame from their decisions.

We are interested in how the choices — on how and where funding can be used —presented by development/fundraising teams to potential donors, have effects on giving behaviour. Through an online experimental methodology, our findings will inform the work of fundraising and development teams to improve their engagement with donors and make fundraising more efficient. Our core research question is whether the paradox of choice, in charitable giving, can be reduced by changing fundraising strategies.

Research methodology and experimental design

The salient features of our online study are a survey and a ‘purchase’ experiment. Subjects will be given the choice to make a charitable contribution using all or some of their participation payment. Our core assumption is that subjects will make charitable contributions differently – in terms of speed and size – depending on how much choice they are given.

To recruit subject participants, we will partner with an external organisation that provides services to clients across the voluntary/ third sector. This will ensure that participating subjects have some familiarity with charitable giving using online platforms and have made a donation to a charity at least once in the past 24 months. Subjects will be asked to register on Prolific and use this platform for the experiment. Subjects will be placed in one of three groups: Treatment Group 1, Treatment Group 2, and the Control Group.

In the experiment, all subjects will be given information about various charities and the different initiatives which require donor funding and to which they can contribute. All subjects will eventually be asked if they are interested in making a contribution from their participant payment. They will also have the option to not to make a contribution.

Treatment Group 1 will be given a large number of choices. Treatment Group 2 will be given a small number of choices. The Control Group will be given the same number of choices that clients of our partner organisation are regularly given, which will be between the number in the two treatment groups. Their giving choices will be redirected to the partner organisation who will make payments to the selected charities anonymously on behalf of the subjects.

Sample size

We take anchor-based methods (Anvari & Lakens, 2019) to determine the smallest sample size required for this experiment. Iyengar and Kamenica (2010) find that an increase of 10 funds in the choice set reduced the participation rate in equity funds by 0.03 (3 percentage points). We take this as the likely effect size and the difference between the treatment and control groups in our study as 10 choices. Using a significance level of 0.05, with a power of 0.8, and the sample standard deviation of 0.34 (assumed the same for the treatment and control groups), the sampsi command on Stata estimates the required sample as 2,017. With an allowance of around 10% for dropouts and non-serious answers, we round this up to 2,300 observations required; for this we will plan to recruit 357 participants who will each make multiple choices.

We will use various data analysis methods, in particular multiple regression analysis which controls for the correlations between the observations.

Study costs

Payment per participant: £20.00

Total number of participants: 357

Participant payments: £7140

Prolific service fee (33% of participant payments): £2380

VAT (20% of service fee): £476

Total cost: £9996

Preregistration

Our study is registered on AsPredicted with the title: “The Paradox of Choice in Philanthropic Giving” (#68418). AsPredicted: Captcha

Open and reproducible research

We are committed to making the study material openly available after having the first draft ready. Key findings, methodology used to test hypotheses, the data acquired, data analysis and outcome interpretation will be explained in detail in the paper. Appendices of the paper may include further details of estimates, the instructions for the participants, and questionnaires with the results discussed in the main text.

We will create an online archive or utilise journals online repositories to make study materials and analysis codes (Stata/R codes) with specific instructions to use them openly available. In addition, our personal and professional web pages will contain a data-repository link. Furthermore, we have the backing of our institutions to organise workshops to disseminate findings, and webinars to share the study material with a wider audience.

The data that support the findings of this study will be made available on request as they will not be publicly available due to ensure the privacy and anonymity of participants. The data supporting the findings of our study will be available within the article [and/or] its supplementary materials.

References

Anvari, F., & Lakens, D. (2019, February 1). Using Anchor-Based Methods to Determine the Smallest Effect Size of Interest. Redirecting

Iyengar, S. S., & Lepper, M. R. (2000). When choice is demotivating: Can one desire too much of a good thing?. Journal of personality and social psychology, 79(6), 995.

Iyengar, S. S., & Kamenica, E. (2010). Choice proliferation, simplicity seeking, and asset allocation. Journal of Public Economics, 94(7-8), 530-539.

Schwartz, B. (2004, January). The paradox of choice: Why more is less. New York: Ecco