Tuesday, June 3, 2008

The Scam of Matching Gifts

There is a method of fund raising called "matching gifts" where one giver says "I will give X amount of dollars if others will give the same amount within a given time period". A variation of matching gifts says "If others will give X amount of dollars within a given time, I will give three times that amount". Another variation is something like: if you pay the shipping of $20, we can ship $1000 of supplies to needy people.

Psychological Manipulation
While this is a common method of fund raising that seems culturally acceptable, it is little more than a psychological ploy to trick people into giving more. Because of the worthiness of the given charity we overlook this manipulation and call it acceptable.

Are there really people out there that are so cold hearted that they say to themselves and the world "this is a very good charity, so I want to give X dollars" but then if the matching funds are not raised they decide that the charity is no longer worthy of the gift? Not at all.

Now, I would understand if there were a large project, such as a building, that someone wanted to give to but would want to give only if the project went forward. So, I could see a donor honestly saying they they would want to give $1M towards a $2M building project, but only if the organization was able to raise the additional $1M in order for the project to go forward. It is possible that may have been how the "matching gifts" concept was initially deemed socially acceptable, but note that is not the situation in the vast majority of cases today (there is no project that will not go forward a specific gift is not matched).

Actually, at least as it is normally practiced today, people and companies who give matching fund gifts know perfectly well what they are doing. They want people to feel like if they give say $20, that they have effectively given some larger amount. That way people are more likely to give and more funds will be raised.

The Lottery Connection
That psychology is not far removed from the psychology of the lottery, which many states use now to raise funds for good causes such as education. Because of the lack of knowledge of statistics and heavy advertising of large wins, people are effectively tricked into giving their money away to the lottery. The lottery is effectively a tax on the statistically illiterate. I would feel much more comfortable with the lottery if the chances of, say, getting hit by lightning (one estimate being 1 in 700,000) were listed at the checkout so buyers could make a statistically informed choice. Just as the lottery artificially inflates in the buyer's mind the chances of their winning a large amount, matching gifts artificially inflates in the givers mind the amount they are effectively giving.

So, it is amazing to me that people who rightfully condemn the lottery as unethical turn around and use methods like "matching funds" to psychologically manipulate people into giving more. And they use the very same reasoning of "if we raise more money we can do more good, so please don't worry about this little issue of the methods we use. It is only marketing".

I say, tell the people what you can do with the money they give. Don't make them feel they have given more than they have. These are generous people and the least a fund raiser can do is to be straight and honest with them. Ethical marketing: Yes. Psychological manipulation: No.