Give If You Win

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"Give if you win"

Background

Millions of employees anticipate end-of-year bonuses, particularly in the financial sector. Before the bonuses are announced many are uncertain whether they will get a bonus, and how large it will be. For example, in 2014-15 UK bonuses totalled £42 billion. In the wake of recent financial turmoil these bonuses are coming under increasing public scrutiny as politicians call on bankers to “palliate their guilt” and give their bonuses to charity. While the banking sector is no stranger to charitable giving it can seem that a celebrity’s $1000 tip will get more public recognition than a $100 million development project. High-profile ‘give if you win’ initiatives may help make the bonus culture more socially acceptable: when bankers succeed, so will charities. This is a win-win situation: bonuses are a ripe target for fundraising, and banks are eager for better press. So how should charities and professional fundraising organisations go about this?

In particular, should they ask bankers in advance to commit a share of ‘their bonus in excess of expectations’ or should they wait and ask until bonuses have been revealed?

There are strong arguments – and significant evidence – that, in certain environments it would be better to ask conditionally, and in advance.

Experimental evidence

David Reinstein and co-authors have run a series of experiments to compare differences in charitable giving between two key environments. Participants had a ½, ¼ or 1/10 chance of winning a (£5 - £20) prize, and were asked to donate under one of two conditions, either,

  1. asked to commit to donate if they won, with the donation automatically deducted from the prize

    or

  2. asked to donate after they found out they had won the prize/bonus.

The results were similar across lab and field experiments, on students and on the general UK population: Overall, participants were more likely to donate, and committed to donate more in the first condition than in the second condition. They did not reverse these commitments when given the chance to do so.

This is consistent with previous behavioural economics work suggesting:

  1. people quickly adapt to, and are reluctant to part with ‘money in hand’,
  2. are more generous with less tangible income and wealth, and
  3. pursue reputation and self-esteem by committing to behave pro-socially in the future.