FUNDING UNITS VERSUS GIVING MONEY: A strategy for charities to influence response rates

While many charities ask potential donors how much money they are willing to give, others regularly use a different solicitation scheme: They ask how many physical units of a good the potential donor is willing to fund.

For example, development charities have solicited donations for bed nets in Malaria-infested regions of the world by explicitly asking how many bed nets a donor is willing to finance. Similarly, environmental charities have asked donors how many trees they are willing to fund for reforestation.

A recent study by Johannes Diederich, Raphael Epperson and Timo Goeschl finds that this alternative way of asking donors can have a substantial impact on the likelihood that people donate. The study will be presented at the annual congress of the European Economic Association in August 2020. 

So-called ‘unit donation schemes’ are frequently applied in the context of development aid, humanitarian aid or reforestation programmes. As in other solicitations, donors ultimately donate money. But there are important differences: donors state their choice in terms of physical units (for example, the number of bed nets), they receive information about the provision costs of the charitable good (for example, the price per bed net), and donors can typically only fund entire units (for example, not half a bed net). 

The researchers show that applying a unit donation scheme can both increase and decrease the likelihood to give, compared to the baseline of directly asking for money. The direction of the effect depends on the size of the unit: small units make people more inclined to give, large units less. Applied cleverly, unit donations schemes can therefore be an effective strategy for increasing the donor base. 

The study is based on an online survey experiment with about 850 US residents. Participants answered unrelated questions and had the opportunity to donate part or all of their reward of $7 to a food programme for malnourished children. The way in which participants were asked to donate was randomised. 

In the classic ‘money donation scheme’, donors were simply asked to give money for the provision of food to children in need. In the unit donation schemes, donors were instead asked how many rations of food they would like to fund, with a ration either feeding one child for a day at a price of $0.50 or for a week at a price of $3.50.

Hence, the unit donation schemes framed the question in terms of physical units (how many rations to fund), provided information on the provision costs (for example, $0.50 to feed a child for one day), and restricted the donor’s choice to complete units of the charitable good (rations of food). 

While 47% of those receiving the classical solicitation scheme donated, 60% donated in the unit donation scheme with daily rations and 26% in the unit donation scheme with weekly rations.

For the latter, the drop in the likelihood to give mainly came from forcing potential donors to give in steps of $3.50 (the price of one weekly ration). Surprisingly, the substantial changes in the likelihood to give did not affect the amount of money received by the charity: average giving was similar across the different solicitation schemes.

The study highlights that asking potential donors how much units of a charitable good they would like to fund rather than how much money they would like to give can boost the likelihood to receive donations. Since the effect of this strategy hinges on the size of a unit, further research is needed to investigate the optimal unit size, which is probably context-dependent. 

Johannes Diederich 
Post-Doctoral Researcher
Heidelberg University
Phone: +49 6221 54-8014

Raphael Epperson
PhD candidate
University of Mannheim 
Phone: +49 621 181-1772

Timo Goeschl
Professor of Environmental Economics
Heidelberg University 
Phone: +49 6221 54-8010