Effects of Feedback about Overhead Spending from Charitable Organizations on Overhead Aversion

ABSTRACT

Charitable organizations spend donated funds for programs and overhead. Donors expect their donated money to be used to help the cause rather than the overhead (i.e. overhead aversion). Donors expect feedback on the use of their donated money for helping the cause and for overhead. However, donors seldom receive proper feedback from charities, which is one of the reasons for not continuing donation. This paper highlights the importance of transparent feedback that presents information on the use of donated funds to help the cause and for overhead. Study 1 shows that attitude toward the charity is more favorable when the feedback is transparent than opaque. Study 2 shows that the transparent (vs. opaque) feedback sequentially affects perceived donation impact, charity attitude, and donation intention. Study 3 tests the framing effect of the feedback message. Donors perceive the impact of donation to be greater when the feedback on overhead presents the amount spent in terms of helping the cause than the amount spent on overhead.

KEYWORDS:

• Donation impact
• feedback
• framing
• overhead aversion
• transparency

Disclosure statement

Authors have no known conflict of interest to disclose.

Data availability statement

The data and codes that produce the findings reported in this article are available at https://osf.io/8gz7f/?view_only=8ec3f6f4dca847bbb16a3544c53246bd.

Notes

1. Another type of feedback applied in donation research is performance feedback (i.e., feedback on the progress toward the goal: Tolli & Schmidt, 2008). Performance feedback has been studied mostly in the domain of fundraising, which targets potential donors (e.g., Jones & McKee, 2004; Koo & Fishbach, 2012) rather than people who have already donated their money.

2. In the domain of blood or organ donations, many studies have examined the influence of impact feedback (e.g., Gemelli et al., 2017; Goette & Tripodi, 2020; Moussaoui et al., 2019). However, it is not directly applicable to monetary donations because of the difference in terms of ease of tracking individual donation contributions. For blood and organs, informing donors how their donation was or will be used is easier. For blood donations, for example, informing donors can be easily made through messages, such as “Your blood has gone on to save lives at Moruya District Hospital today” (Gemelli et al., 2017).

3. The test results with donation experience as a covariate were statistically the same (F(3, 411) = 8.49, p < .001). The donation experience covariate was also significant (F(1, 411) = 169.46, p < .001), indicating an overall positive attitude for people with more donation experience.

4. A majority (96.3%, n = 154) were UK nationality and only 3.8% (n = 6) were US nationality. Additional tests with UK participants yielded the same statistical results as the reported findings using all participants.

5. A series of ANCOVA with donation experience covariate yielded the same statistical results. The influence of feedback type was significant on attitude toward the charity (F(1, 157) = 5.00, p = .027), donation intention (F(1, 157) = 5.01, p = .027, d = 0.36), and perceived impact (F(1, 157) = 3.77, p = .054).

6. We also tested the model with donation experience as a covariate and the result was statistically the same, except that the influence of feedback type on perceived impact was significant at the alpha level of .10 instead of .05 (p = .054).

7. The analysis with the donation experience covariate showed the same result (F(1,198) = 6.87, p = .009).

Additional information

Funding

This research was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea, Grant/Award Number: NRF-2022S1A5A2A01039211