What Will My Gift Buy? How Effectiveness Signals Shape the Perceived Price of Giving and Donations

Abstract

Perceptions of a nonprofit's effectiveness shape charitable giving, but less is understood about the route by which an effectiveness signal becomes a gift. This study asks whether one specific belief, the perceived price of giving, helps account for that relationship. Perceived price is how much a donor believes it costs, in dollars given, to deliver a dollar of program benefit to the organization's beneficiaries, and it rises as more of a gift is expected to go to overhead. Prior work shows that both effectiveness signals and overhead ratios shape giving, yet few studies test whether effectiveness signals work by way of donors' beliefs about the price of their gift. In partnership with a small, newly established nonprofit, an online survey experiment was conducted (total N = 1862). The experiment manipulated reputational effectiveness across control, low, and high conditions and measured the perceived price of giving, giving intentions, and a small-stakes incentivized donation decision. The perceived price of giving mediated the response to the low-effectiveness (reach) cue, but there was little evidence that it mediated the response to the high-effectiveness (outcome) cue; the mediation was clearest for stated giving intentions and weaker for the amount donors were willing to give and for the small-stakes donation decision. Because the high and low conditions differed in dimension as well as in valence, we do not attribute this asymmetry to the sign of the signal alone. For fundraising practice, how an organization communicates its effectiveness can shift what donors believe a gift will accomplish (a lever available even to organizations without audited financial figures), though this belief is one mechanism among several rather than the whole story.