Can changing the type of performance indicator help charities to deal with overhead aversion? Peter Dragstra

Can changing the type of

performance indicator help

charities to deal with

overhead aversion?

Peter Dragstra

Can changing the type of performance

indicator help charities to deal with

overhead aversion?

Peter Dragstra

Department of Marketing

Master Thesis

1 The aversion for overhead costs in charity organizations is a big problem because charities have to adjust their strategy because they have to keep the costs as low as possible. Charities position themselves in a field where they cannot use business methods like companies do to improve their effectiveness because there is a negative correlation between the amount that people donate and the amount of money spend on fundraising and administrative costs. Personally I experienced the overhead aversion for charities because I joined the Alpe D’HuZes event before there was a

Acknowledgements

3.1. Data analysis ... 21

3.2. Effect of gender on the amount of money donated. ... 22

3.3. Effect of age on the amount of money donated ... 23

3.4. Effect of profession on the amount of money donated ... 24

3.5. Binairy logistic analyses of the condition and the personal traits... 25

3.6. Moderator effect of the personal traits ... 25

3.7. Discussion ... 26

Conclusion ... 27

Theoretical implications ... 28

Managerial implications ... 28

Limitations and recommendations ... 29

Literature list ... 32

APPENDIX ... 38

Appendix 1: Survey pretest ... 39

Appendix 2: Information brochure ... 40

Appendix 3: Survey Field experiment ... 42

Appendix 4: Debriefing ... 43

Extra ... 46

Introduction

spend to do research for cures for cancer. However, people still choose to stop donating to this organization even without any proof that the money did not contribute to the performance of the charity.

In the Netherlands the CBF (Centraal bureau fondsenwerving) is the institution that supervises the charity organizations and this institution created the 25% rule. This rule means that charity

organizations cannot spend more than 25% of their expenditures on creating new donors. People can check on the website of the CBF how much each charity organization spends on overhead costs and creating new donations. The examples mentioned above already showed that people tend to see costs in charity organizations as a taboo. This transparent system in combination with the fact that costs are taboo in charity organizations is limiting the possibilities for charity organizations to increase their performance. This is why charities in the Netherlands disapproved this rule (e.g., Volkskrant, 2015).

Like in business, organizations sometimes have to make costs to increase the growth in the future. To have a cost-effective organization which collects a lot of money to reach their goal, you need good and qualified people. However, getting good people in an organization will costs money. Because of the negative impact of the costs on the image of charity organizations the management of these organizations are limited in their human resource activities. Besides, spending money on marketing to get new donators is more difficult for charity organizations in the Netherlands because of the taboo about costs and the 25% rule of the Dutch government. Reducing overhead spending has a negative impact on the ability of charities to initiate fundraising campaigns, invest in long-term planning and sufficiently support the overall infrastructure (Gneezy et al, 2014)

Because of all these limitations in the amount of strategies charities can use, it is important that these organizations find a way to show people that these costs are made for a reason. Leliveld & Bolderdijk (2017) already showed that giving people the financial performance does not make people look past the costs that a charity organization makes. As an addition to the previous studies about the overhead aversion of people, it is interesting to investigate what will happen when we take the financial information away and add the ‘’physical’’ performance of the charity (in this thesis, read: the amount of lives saved).

1. Theoretical background

The results of the study where participants preferred an ineffective charity with low overhead costs shows that people are sensitive for overhead costs in the charity segment. Donors tend to avoid charities that have a high percentage of their expenses to fundraising and administrative costs, and hereby limiting the nonprofit organizations to be effective (Gneezy et al. 2014). This kind of behavior is called overhead aversion.

1.1. Overhead aversion

Websites on the internet which evaluate charity organizations, like charity watch, assign different ratings to charities based on their relative spending on overhead. There is a negative correlation between the amount that people donate and the amount of money spend on fundraising and administrative costs (Tinkelman and Mankaney, 2007), which means that costs are an important issue for charity because it has influence on the amount of donations they could gain. Solutions for this negative correlation and the limitation of the ability of charities to be effective are already investigated by Gneezy et al. (2014). In this study) the researchers investigated how third party payment of overhead costs could make people more willing to donate. Specifically, when major philanthropists would pay for the overhead costs and offer potential donors an overhead-free donation opportunity, that informing people that the overhead costs are already paid increased the donation rate significantly (with 80%).

charity organizations. Therefore this thesis has the following goal: to find a way to change the focus on the costs in charity organization towards an objective judgement about overhead costs. That is why effective altruism is an interesting movement for this thesis.

1.2. Effective Altruism

Philosopher Peter Singer, one of the main professors in the effective altruism movement, mentioned that effective altruism is based on the simple idea of doing the most good that you can do (Singer, 2016). Effective altruism is a utilitarian view on donating and recommends to donate to the charity that would do the most good per dollar donated and have the greatest positive impact (Macaskill, 2016; MacAskill, 2015; Driver, 2014). So by focusing on the amount of good you can do per dollar donated effective altruism does not look at overhead costs alone but at what the charity

organizations effect is,because only the results matter.

Inspired by effective altruism, the charity event ‘’Giving what we can’’ was created and this event motivates people to donate 10 percent of their income or more. ‘’Giving what we can’’ started in 2009 and already have 2699 members who have pledged to donate more than 1,3 billion dollars over the course of their careers (www.givingwhatwecan.org). The organization GiveWell was also founded by people in the effective altruism movement. This organization performs in-depth research to find charities that do the most good, a determination that includes, but is not limited to, being highly cost effective (Rubenstein, 2016). Effective altruists rely on this kind of organizations that evaluate and recommend charities and their interventions (Skelton, 2016).

a child drowning in a lake nearby. And afterwards? he asked if they would donate to a really effective charity that can save a life for a price that is affordably for the audience. The number of people that raised their hands for the second question was lower. The reason for giving this example is that a lot of people will help a drowning child, however, when it is in their power to saves lives by giving money to charity organizations, they do not act in this similar way. This example is interesting for this thesis because it shows that saving a life is not something people do automatically when they have the chance. Physically seeing a person in need gives a stronger reaction than using money to help a person. Besides, there are more factors that influence the decision to help a person in need. It is important to find an explanation for the difference between saving a drowning child and saving a child by means of a monetary donation. If we face a drowning child alone you should do the optimal helping act to save the child live (Arneson, 2004). However, if many people are in the position to help the children that need to be helped all over the world, the requirements of an individual to offer help does not increase if other people do not do their share (Murphy, 1993). People lose the focus on what is really important because of the fact that they do not physically see the person that is in a life-threatening situation. This can be explained by the fact that people have more emotional reaction when they can identify themselves better with a victim (Small et al., 2003). This example can be the first clue to overcome overhead aversion. This can suggest that charities should give potential donators more information about the amount of good which is going to be done in terms of physical results with the money they donate instead of using monetary terms.

1.3. Taboo trade-off

Consumers know that organizations profit from commercial strategies but find it morally destressing that organizations with communal obligations use these kinds of method (add refs). Consumers become upset when organizations use commercial strategies because they believe to see an organization that places profits over people. The decisions that organizations with a communal obligation have to make about commercial strategies are called taboo-tradeoff (McGraw et al., 2012). In the article of McGraw the focus lies on the religious and pharmaceutical markets but charity organizations are also constantly confronted by the taboo around the costs that they have to make to ensure reaching their goals. People can get critical to people or organizations who create taboo-tradeoffs (McGraw and Tetlock, 2005). To maximize the results of an organization people have to deal with these conflicting values (Tetlock et al. 2000). Charities need to find a balance between keeping the costs low , being effective, and reaching the goal of the organization. That is why it is interesting to investigate the possibilities that these kind of organizations have to change the prospective of costs in this segment.

However, how can you explain this taboo around costs in the charity segment? An interesting point of view comes from the article of Aaker about stereotypes (Aaker et al., 2010). People have

not aligned with the stereotype of a charity. But to find information which can make potential donators move past overhead aversion, we have to look what motivates people to donate.

1.4. Donation intention

This thesis investigates if people still have aversion for overhead costs when the performance is not described in monetary terms but in the amounts of lives the charity saves. To construct a hypothesis it is important to find out what motivates people to donate money to charity organizations.

Donation can be made in the form of money but donations can also come in forms of time, goods or services (Michaelidou and Micevski, 2015). Research shows that donations in money are more rational decisions than donations given in time and that there is low involvement with donating money (Liu and Aaker, 2008; Bennet and Gabriel, 2003). It is important for people to identify themselves with the organization and that there is a close psychological connection between the donator and the organization (Kwak and Kwon, 2016; Mackie et al., 2000). So donating money results in low involvement of donators. If this is true than one might argue as well that showing people only monetary results is not beneficial for the involvement of the donator.

The moral obligation to act when they see someone who needs help is also an important factor for the donation intention (Cheung and Chan, 2000; van der Linden, 2011). In moral situations people act out of moral responsibility even if this action can be unpleasant (Gorsuch and Ortberg, 1983). People behave ethically because of the moral obligation to do so (Haines et al., 2008). The desire to make a change is also an important factor in the intention to donate (Pentecost and Andrews, 2010). Literature on taboo trade-offs and overhead aversions showed there is no good fit between

investigating these findings overhead aversion can perhaps be set aside by showing donators information that is more aligned with their social responsibilities. If donators see the number of lives that are saved they might have less aversions towards business practices in the charity segment.

1.5. Hypotheses

As discussed above, people have the urge to contribute to a change and to make a difference. Also involvement with the goal of a charity is important for the donation intention. Showing people only the financial results will lead to focus on the overhead costs in the organization. A way of doing that is to justify the higher percentage of overhead costs by the end result of the charity. That is why based on the literature I have the following hypotheses for my field experiment:

H0: Replacing the amounts of donations raised by the amounts of lives saved will not make people look past overhead costs and choose for the less-effective charities over the more-effective charities.

H1 : Replacing the amounts of donations raised by the amounts of lives saved will make people look past the overhead costs and choose for more-effective charities over less-effective charities.

1.6. Personal traits

be described as personal traits that will moderate the effect on the intention to donate money to charities.

An article about willingness to donate tells us that there is no exhaust in the amount of possible variables which influence the intention to donate (Zagefka et al., 2013). Personal traits of the participants are a big moderator in the effect on donation intentions. In the literature there are four main categories of personal characteristics that are important for donation intentions: demographic, socioeconomic, psychological and behavioral (Bekkers and Wiebking, 2011b).

1.7. Conceptual framework

With this field experiment I want to find out if people are more willing to donate when a charity organization adds the number of lives that the organization saves to the information that they give to potential donators. People have aversion towards overhead costs in charity organization and

2. Methodology

To measure people’s behavioral preference (so not hypothetical) for less- vs more-effective charities with different information about the performance, I needed two actual charities who are working for similar causes. Otherwise, it would not be possible to let pps make actual donations. I found three charities that met all the criteria and were in the same category of charities (humanitarian charity mainly working in Africa on preventing/curing malaria); Simavi, Stichting Hakuna Matata Tanzania, and Against Malaria Foundation

It is also important that the charities do not variate to much in goals so that the participants do not base their donation on the goal that they personally prefer but only base their donation on the data they receive about both charities. Political issues like helping in specific war zones or money for refugees should be avoided because of the possibility of personal opinions or aversions towards this kind of organizations.

Hier zeggen welke drie je gekozen hebt voor pretest. To make sure that people perceive these charities as similar on reputation, familiarity or personal experiences, I ran a pretest to eliminate one of the three charities (N =xx, mean age = , SD = ; X% females) For each of the three charities, I asked the same five questions. S (i.e., I used a within-subjects design).The questions included the

recognition of the logo of the charity, the recognition of the name of the charity, the familiarity with its actions and goals of the charity, whether the participant would donate and whether the

participants would volunteer for this charity. I also asked questions about the attractiveness of this charity based on the logo and the previous experiences of the participants.. The questions were asked on a 7 Likert-scale. Because every participant gave an opinion about all three charities, a sample size 50 people was enough to draw conclusions for the fit of the charities with this experiment. The survey was taken in the Zernike complex of the University of Groningen and the participant were randomly assigned. The questions are shown in Appendix 1. . The results of the pretest are listed below:

Tabellen hebben altijd nummer en titel nodig. Daarbij is het duidelijker asl je table maakt met in de rijen de constructen (familiarity, appreciation) en in de kolommen de drie goede doelen. Je kunt dan de gemiddeldes presenteren met tussen haakjes de SD’s

Pretest Mean Std. Deviation N

Familiarity Simavi 1,0800 0,24 50

Appreciation Simavi 3,7400 1,31 50

Familiarity Hakuna Matata Tanzania 1,2920 0,51 50

Appriciation Hakuna Matata Tanzania 3,7467 1,35 50

Familiarity Against Malaria 1,4080 0,60 50

When analyzing the data of the pretest, I found out that against malaria foundation (M = 1.40) was more familiarthan Hakuna Matata Tanzania (M = 1.29) and Simavi (M = 1.08), F(df1,df2) = XX, p = .xxx These findings are in the line with the expectations because the against malaria foundation is the biggest charity organization of the three. The means of the appreciation of the charities based on the name and the logo of the organization was almost the same for Simavi (3,74) and Hakuna Matata Tanzania (3,75) while the mean of the appreciation of the against malaria foundation was higher (4,39).Furthermore, the against malaria foundation was not the favorite candidate for this experiment because it is the only charity of the three that contains the word malaria in it. This can possibly influence the decision of the participants. To keep level of appreciation on the same level for both charities and the bias of participants that already know the charity as low as possible, I chose to continue the experiment with Simavi and Hakuna matata Tanzania.

After finding the right charities, a background check is performed to check whether the charities are trustable. Because the donations in this field experiment will actually be donated, the charities should really make a difference and use the money effectively to reach their goals. Without this background check this experiment will not be justified by the spirit of this thesis.

The experiment took place at the Zernike complex of the University of Groningen and at the

and 42,4% was female. The percentage of students in this sample was 88,6%, 9,7% of the participants are working and 1,7% did something else.

The participants of the experiment will receive an information brochure and an informed consent form where they can read about confidentiality and where they sign if they understand the essence of the experiment. After reading this information, the participants received a cognitive test (see Appendix 2) with 4 puzzles that they had to solve in 90 seconds. The first 30? participants got 120 seconds to solve the puzzles, after participant 3 I adjusted this to 90 seconds. The reason for this change was the fact that people finished the first 3 puzzles quickly and then indicated frustration (weet je da took zeker; zeiden ze at aan jou? Je hebt het immers niet gemeten) because of the fourth puzzle (which was unsolvable). The data of the first 3 participants was still used for the data analyses because I could not find a scientific reason of a possible influence on the choice because of this change. The puzzles were, however, only a distraction of the main subject.

The participants also received 1 euro in different value coins in an envelope (50 cents, 2 x 20 cents and 10 cents, so that they could make any combination) for the second part of the experiment. To make sure I could link the data of the donation to the last part of the experiment, I marked the envelope with a number inside the envelope. The participants were asked to go somewhere private to minimize peer pressure to donate and to give them more focus for the cognitive test. The participants were asked to start solving the puzzles and after 90 seconds I gave them the signal to move on to the second part of the experiment (the donation).

charity D. The manipulation of less-effective versus more-effective charities is within subjects because the participants always had the option to choose between effective or ineffective charities. The four different charities that were presented are: Charity A (Simavi) who is inefficient (collects less money) but with low overhead costs, charity B (Hakuna matata Tanzania) who is efficient (collects more money) but with high overhead costs, charity C (Simavia) who saves less lives but with low overhead costs and charity D (Hakuna Matata Tanzania) who saves the most lives but with higher overhead costs. The four categories of charities are places in a diagram below:

The participants could not spread the euro over the two charities. A choice had to be made by putting the envelope in the box of the charity of their preference. They also have the option to keep the money for themselves but it was still required to put an empty envelope in one of the two boxes. The participants also had freedom in the amount of money they donated. The participants were asked to seal the envelope and put it in the box of the charity of their preference and return to me (read: the experiment leader in the instruction).

The manipulated information is demonstrated below:

Performance indicator: number of lives saved

Simavi

Hakuna Matata

Tanzania

Percentage spend on salary (including

bonuses)

25%

48%

Donations raised Lives saved

Inefficient (Simavi)

Charity A (low money/low overhead)

Charity C (less lives saved/ low overhead)

Efficient

(Hakuna Matata Tanzania)

Charity B (high money/high overhead)

Bonus system for employees

No

Yes

Number of lives saved for every €1000

donated

254

952

Performance indicator: donations raised

Simavi

Hakuna Matata

Tanzania

Percentage spend on salary (including

bonuses)

25%

48%

Bonus system for employees

No

Yes

Donations raised per year

€120.000

€450.000

After people made their choice, they returned to the experiment leader. They received the last part of the experiment in which we measured personal traits of the participants.I asked the participants basic questions about age, occupation and gender. Moreover, I measured greediness of the

participants (cf. Seuntjes et al 2015) with a 7-item scale. This part of the survey is shown in appendix 3. The models fit better than a unidimensional scale (Greed ∆x (1) ≥ 21,74 p <0,01, Materialism ∆x (1) ≥ 33,58 p <0,01).If the process of the experiment was described in any form, I made a note on the survey of the participant and after the experiment I used this information to consider whether to delete the data of the participant for the analyses.

For this experiment it is was important to obtain a good debriefing of the participant. The debriefing is important because of ethical issues. Even with a low common knowledge of these charity

will be given to the participants. This might increase the donations to this charity on top of the donation that will be given to the charities by this experiment itself. The complete debriefing is shown in appendix 4.

3. Results

3.1. Data analysis

The results support the hypothesis that replacing the amounts of donations raised by the number of lives saved will make people look past the overhead costs and choose for more-effective charities over less-effective charities. In the saving lives condition, results from a chi-square test revealed that, on average, participants donated significantly more to Hakuna Matata Tanzania (78,5% of the

whereas participants in the monetary performance condition donated most often tothe less-effective charity.

3.2. Effect of gender on the amount of money donated.

In the survey the

participants

were asked to give their age, profession and gender. A one-way ANOVA was performed to compare the amount of money donated for females and for males. There is no significant difference in the amount of money donated between males and females ( F( 1, 172) = 2,581, p=0,069). The females participants in this experiment donated 0,99 euro on average compared 0,94 euro for the male participants. The effect of the gender is almost significant. A significant effect of gender on the amount of money donated would be in line with the literature about this subject. There is a difference between the amount of volunteering between men and woman, in general females volunteer more than males (Mesch et al., 2006). Altruistic behavior is

Performance

(monetary)

Performance (Number of lives

saved)

more developed with females (Mills et al.,1989). In this study however participants received a euro to donate and despite the fact that we gave participants the clear instructions that they could also keep all or part of the money , the vast majority of participants (provide %) donated all of their money. The average amount donated was 0,97 euro with the maximum of donating 1 euro. This explains that in this experiment, there was no significant effect of gender of the participants on the amount of money donated. When you take this in consideration some might argue that the

difference is still almost significant. This can be explained by participant number 67. The participants did not donate the money and told this while he was doing the experiment. Participant 67 also filled in the survey with a maximum level of greed for every question. It is highly doubtable if he

participated seriously with the experiment because he was also in a hurry while he joined the experiment. The difference in the amount of money donated between males and females when you delete participant 67 is less significant (F( 1,171) = 2,581, p=0,110). The average donation of the female participants stays the same but the average donations of the male participants increase to 0,95 euro. This is a more realistic effect of the gender on the amount of money donated.

3.3. Effect of age on the amount of money donated

A regression analyses was performed to assess the ability of age to predict the amount of money donated. The age is described in years and the amount of money donated is described in euros (one decimal). Age does not have a significant effect on the amount of money donated,  = 0,00 , t(172) = -0,17, p = .865. The age of the participant does not explained a significant proportion of variance in the amount of money donated , R2 _{= -0,006, F(1, 172) = 0,029, p = .865. Research already shows that}

there is a positive relation between age and donation intention (Bekkers et al., 2011b). Donations are higher if people have the age between 40 and 84 (Auten et al., 1996). In this study however

participant donated on a huge scale. The average amount donated was 0,97 euro with the maximum of donating 1 euro. This explains that in this experiment, there was no significant effect of the age on the amount of money donated.

3.4. Effect of profession on the amount of money donated

3.5. Binairy logistic analyses of the condition and the personal traits

A binary logistic regression is performed to assess the ability of personal traits and the condition on the choice that the participants make. The chi-square test already showed that the effect of the condition on the choice of the participants is significant (∆x (1) = 63,2 p ≤ 0,05). The personal traits of the participants is described in a mean of the results of the survey that was performed with a 7-likert scale. The survey measures the greed and materialistic characteristics of the participants. The choice of the participants is labelled 1 for the participants that chose Simavi and 2 for the participants that chose Hakuna Matata Tanzania. The personal traits did not have a significant effect on the choice that the participants make, b = 0,241 , t(172) = 1,698 , p =0,193. The amount of greediness of the participant does not explained a significant proportion of variance choice that people make ,

Nagelkerke R2 _{= 0,447, F(1, 172) = 0,185, p = 0,193. In line with the chi-square test the condition has a}

significant effect on the choice that the participants make, b = 2,913, t(172) = 53,739, p =0,000. The condition that the participant performing the experiment in does explain a significant proportion of variance choice that people make , Nagelkerke R2 _{= 0,447, F(1, 172) = 0,397, p = 0,000.}

3.6. Moderator effect of the personal traits

between moderator and social support was entered, and did not explain a significant increase in variance in the choice of the participants, ΔR2 _{= 0.367, F(1, 172) = 34,303, p = 0,490. Thus, the effect}

of the personal traits of the participants was not a significant moderator of the relationship between the condition and the choice of the participants.

4. General Discussion

In this study, people’s donation behavior was investigated by manipulating the information that the donators receive to motivate their donation. The goal of this research is to find a performance indicator of charity organizations that make donators look past overhead costs. Charity organizations have to make costs to improve their effectiveness and struggle with overhead aversion because they have to be careful with using business practices that increase the overhead costs of their

measured in monetary terms but also in terms that are more aligned with the stereotype of the charity. Non-profit stereotypes are focused on doing good and not focused on money (Aaker et al., 2010). Adding information in terms of the physical results of the charity would be more in line with the stereotype that Aaker showed in his research. The results of the ‘’saving lives’’ part of the experiment showed that if participants see results that are more aligned with the stereotype of the charity, people focus more on the effectiveness of the charity and look past higher overhead costs in effective charities.

A moderating effect of the greediness and the materialism of a participant could not be found and this is probably because of the fact that in this experiment people could donate only one euro. Because the participants received this euro from the experiment leader, they did not feel the urge to keep it. The vast majority of the participants donated all their money. Because of this lack of variance in donation amount, variables which have proven to be drivers of donations (such as gender,age, and greed) were not significant in this study. This meant that the choice of the participants was measured and not the amount of money donated by the participants. If the amount of money that the

participants received would have been higher, there might have been a more clear connection between the amount of greediness and the amount of money donated.

Conclusion

The results of this experiment clearly show that overhead aversion is strong when you show potential donators performance indicators in monetary terms. By giving information that is more aligned with the stereotype of charity makes potential donators look past the overhead costs and let them appreciate effective charities. An experiment with this setup is not the ideal way to

relationships between the amount of money donated and other variables. Age, gender and

influence on the way potential donators perceive overhead costs. Dit is eigenlijk wat in eerste alinea van GD moet

Theoretical implications

This field experiment tested if you can overcome overhead aversion by replacing monetary

information by information that is more aligned with the type of organization a charity is. This study contributes to the current literature in a number of ways. Analyzing the data from the monetary situation shows that charity organization should be careful with using monetary terms in forms of success. Showing monetary results can make donators focus on the overhead costs of a charity organization. Being more effective than other charity organizations is not going to help the organization raise more money if they only show donators the monetary results.

The study shows that donators are in fact overhead averse (Gneezy et al, 2014) but that there are ways to overcome those problems. By showing donators results that have a closer connection to the social task that the organizations have, donators will be able to choose for the effective charity and look past higher overhead costs. Je theoretische implicaties missen hier. Wat betekent jouw onderzoek en bevindingen voor wat we al wisten over bijv overhead aversion? Hoe dragen die bevindingen bij ana die kennis? En hoe past dit onderzoek in een bredere context van theorieen over prosocial gedrag etc. Theorieen die je niet per se nodig had voor je hypothesevorming maar wel interessant zijn ter vergelijk met jouw studie?

Managerial implications

money. For example the website of this organization shows a constant count of the money that is raised during that year (website Alpe D’huZes). The question that rises after the findings in this experiment is if this is a smart tactic. Perhaps the organizations of these kind of organizations can try to show people physical results instead of monetary. Especially because people are very overhead averse when it comes to this organization because of the ‘’scandal’’ that happened in 2013 (for more information see extra).

This study shows that it is hard for donators to picture the end results that can be reached with a higher amount of money raised by a charity organization, without seeing the actual physical results. Charity organizations have to find a way to make people more aware of the facts that costs have to made to get better results and to improve cost-effectiveness of the organization. If all charity organizations try to improve their demonstration of physical results to the public, people can choose their charity in a way that is in line with the effective altruism movement. People will base their donation on a combination of results, effectiveness and the amount of overhead costs.

Limitations and recommendations

income that can influence the donate intention of a person. Differences in income and culture might influence the intention to donate to charities. For example in Hungary the middle income, married people with high education are the most likely to donate (Mainardes et al., 2015). Important for our thesis is the results of a study in the Netherlands and the United State, that show us that people in the Netherlands are very generous in general. 73% of the people in the Netherlands donate

(compared to 57% in the United States) and this shows us that we cannot draw conclusions from our results about the amount that will be donated in general (Beldad et al., 2014). In a previous

mentioned article, evidence shows that there is also a big difference in donation intentions between students and not-students (Pentecost and Andrews, 2010). This information is important because I did a field experiment in Groningen and in specific in the University of this city. Groningen is a student city where 57.100 people are student and the total population is 200.000 (numbers of the Dutch government from the year 2015). So drawing conclusions about general population has not a solid motivation. It can be interesting for further research to see if the results from this study also reflects on the general population.

During the experiment I got the feedback that participants thought that the less effective charity in the monetary situation was a starting charity that needed the money harder than the other one. By leaving out a lot of information about the charity, some participants created their own story and did not base their donation not exclusively on the information I gave them. It is hard to detect this bias afterwards because giving the participants privacy was an important aspect of the process of this experiment. Asking the participants to give the reason why they donated the money would not guarantee this privacy. In further research this bias should be eliminated by telling the participants that the charities are both respected charities that they are not charities which just started their activities.

more difficult to measure those kind of physical results compared to the monetary results. Some charities might not even save lives but for example educate children or rescue animals. Charities have to find the right way to measure results that motivate people to donate money to the charity. Different kind of charities can have different physical results and it can be interesting to investigate in which segment the effect of showing physical results is the highest.

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Appendix 1: Survey pretest

Naam: Leeftijd: Geslacht: m/v

Simavi 1: not at all 2 3 4 5 6 7: Absolutely

Do you recognise the logo of this charity organisation ?

Have you ever heard about this charity ? How familiar are you with this charity? Have you ever donated for this charity ? Have you ever volunteered for this charity ? How appealing is this charity to you? How attractive is this charity to you? To what extent do you think this charity can benefit society?

Stichting Hakuna Matata Tanzania 1:Not at all 2 3 4 5 6 7:Absolutely

Do you recognise the name of this charity organisation ?

Have you ever heard about this charity ? Could you name some of its actions ? Have you ever donate for this charity ? Hakuna matata Have you ever volunteered for this charity ?

How appealing is this charity to you? How attractive is this charity to you? To what extent do you think this charity can benefit society?

Against Malaria Foundation 1:Not at all 2 3 4 5 6 7:Absolutely

Do you recognise the name of this charity organisation ?

Appendix 2: Information brochure

Cognitive test

We would like you to complete the following 4 cognitive tasks (note: this survey is printed

two-sided). If you do not know the answer, you can put a “?”.

Answer:

Answer:

Question D

Appendix 3: Survey Field experiment

1. What is your gender:  male  female

2. What is your age? I am ……… years old.

3. What is your profession?

 I am a student  I have a (part time or full time) job  else

4. Below are some statements about how you as a person can be described. Please

indicate to what extent you agree to each of these statements.

Stron gly disagr ee 1 2 3 4 5 6 Stro ngly agree : 7

I always want more

Actually, I am kind of greedy

One can never have too much money

As soon as I have acquired

something. I start thinking about the

next thing I want

Appendix 4: Debriefing

Debriefing

Dear Participant,

Thank you for participating in this study. It was designed to study people’s preference for

charities. We know from research that people do not like charities with high overhead costs

(e.g., costs to pay salaries for employees, set up marketing campaigns, etc.). However, these

overhead costs might not necessarily be lost money: it could be that because of these costs

charities do very well, and even better than charities who have a low overhead.

In order to test this, we provided information about two existing charities. However, this

information was NOT real. We only needed to do this to vary between high and low overhead

costs and how well the charity supposed to perform. In reality however, both charities are CBF

approved (a Dutch organization which makes sure charities are acting correctly) and are doing

a good job.

Note that despite the fact that we provided false information, we will transfer the money donated

to the charities. We will not keep the money ourselves.

Please let me know if you have any questions or concerns regarding your participation in this

study. If you would like to contact me, you can contact us via phone (0031 651 787 293) or

e-mail (m.leliveld@rug.nl).

Kind regards,

Marijke Leliveld, Ph.D.

Simavi heeft als doelstelling de gezondheid van mensen in ontwikkelingslanden te bevorderen. Deze doelstelling richt zich op alle mensen ongeacht ras, sekse en politieke of religieuze overtuiging, waarbij prioriteit wordt gegeven aan de armste bevolkingsgroepen. De doelstelling richt zich op duurzame versterking van de basisgezondheidszorg en op gezondheidsbevordering en gezondheidsbescherming, in het bijzonder rond de thema`s drinkwater, sanitatie en hygiëne; seksuele en reproductieve gezondheid en rechten, en de preventie van meestvoorkomende ziektes. Simavi ziet het als deel van haar missie om mensen in Nederland te betrekken bij ontwikkelingssamenwerking in het algemeen en haar werk in het bijzonder.

Onze stichting zet zich in voor het verbeteren van de leefomstandigheden van de inwoners

van het dorp Mkwajuni in Tanzania.

Wij willen dit bereiken door in overleg met de lokale bevolking verschillende projecten op te

zetten. De projecten hebben betrekking op het zorgen voor schoon drinkwater, het geven van

voorlichting over AIDS, Malaria en hygiëne, het bieden van goede scholing en het verbeteren

van woonomstandigheden.

Extra

The 23th of august of 2013, a big shock came through the community that was involved with the Alpe d’huzes event that over the years became one of the largest charity events in the Netherlands. One of the co-founders of this event, Coen van Veenendaal, had transferred money to his own company. In 2011 Coen van Veenendaal billed his own charity organization with his own company for 160.000 euro saying that it were ‘’organizational costs’’. This was strictly against the policy of the charity organization KWF that received the money of the Alpe d’huZes event. As a results of this news, the trust in the Alpe d’huZes event decreased and people became more skeptical about donating to people who are still making efforts for this event. The total amount of money collected by the event in June 2013 was 29 million Euros, the year after in 2014 that the amount decreased to 13.5 Million (Donateurspanel September 2013). And the number of participants in 2013 was 7800 where in 2014 the number of participants decreased to 5350 and went even further down in the year after. So there was a huge reaction to the costs that the organization made without a good evaluation of how this money was going to be used.