A charity must honor what it promises donors or risk losing their financial support, volunteer hours, and positive comments when donors talk to others about the organization, according to new research. Donors whose preferences are not honored are also more likely to switch their support to another organization.
As Inside Philanthropy has reported, some unhappy donors file lawsuits against recipients of their largesse. In 2018, a foundation run by twin brothers Timothy and Thomas Pearson sued the University of Chicago to recover $22.9 million they’d paid on a $100 million pledge. (The university quickly took its own legal action to have the case dismissed and to demand $13 million, the next installment on the gift the brothers had promised.)
While few disgruntled donors ever take nonprofits to court, they have plenty of other ways to act on their displeasure with how their gifts are used—starting with closing their checkbook.
Lessons From the Consumer World
The latest research, a series of studies with more than 400 individuals, was the result of the authors’ intention to see if consumer research on customers’ reactions to poor service from companies would apply in the charitable sector. Led by marketing professor Jeff Joireman at Washington State University, the researchers examined people’s reaction to learning that a charity had spent money earmarked for one project for another purpose.
The researchers gauged subjects’ responses when they were given money to distribute to either a traditional charity such as the Salvation Army, which decides how contributions are spent, or a donor-directed organization that allows people to select the project that receives their money. In the latter case, subjects could choose to support work providing clean drinking water or to establish a library.
Participants imagined interacting with either a traditional charity or a donor-to-recipient charity. Those in the traditional charity condition were asked which project they preferred, but were also told that the charity ultimately would choose which project to fund. Participants in the donor-to-recipient charity actually made a choice between a water well versus a project to create a library. Later, half of the participants were told the charity used their donation for their chosen project, while the other half were told the charity used the money for the project they did not choose.
Individuals who elected to either support clean water work or creating a library were later informed that their money had in fact been used on the other project.
Feelings of Betrayal
When donations were redirected, subjects in both the traditional and donor-to-recipient charity conditions Both groups of subjects experienced a heightened sense of betrayal after learning their contributions had been used differently than what they preferred or what they had chosen to support. Notably, the sense of betrayal was magnified among subjects given a choice of which project to support, presumably because the donor-directed mission of the organization was obviously not upheld.
In every case, in response to questions, participants said that they would give less money and volunteer less—or not at all—in deciding whether to support the same organization again. They also were more likely to make negative comments about the organization and to say that they would start supporting an alternative charity.
The results suggest that charities are viewed as “moral actors” and held to high standards, the researchers said. That can magnify people’s sense of betrayal when a charity re-directs funds, said Joireman.
If people are motivated by pure altruism, they shouldn’t really mind that much when their money is redirected, as long as it helps others, Joireman added. “The research shows that something else is going on.”