Charitable Giving When Altruism and Similarity Are Linked

Harvard Business School professor Julio J. Rotemberg looks at what makes people decide to contribute to a charity. He focuses on two psychological factors: that people feel better about themselves when other people agree with them, and that people tend to be more charitable to other like-minded people. Key concepts include:

The aforementioned psychological factors largely determine when and why people decide to donate to certain charities.

The fact that donations are often based on perceived camaraderie helps to explain why people continue to donate to a certain charity even when they know that the charity has been largely subsidized by the government or another organization that makes large donations.

This paper suggests that charitable organizations that differentiate themselves from other organizations with similar objectives by seeking funds from distinct donor groups may succeed in their competition with less focused competitors.

Full Story: http://hbswk.hbs.edu/item/6891.html?wknews=12142011