In a previous blog, I wrote about optimism and its importance in both the business and the NFP world. Today, I would like to discuss altruism. What makes someone donate to a charity? If only NFP fundraisers knew the answer to this question… Neuroscientists and behavioral economists are trying to provide an answer. Donors and volunteers have a sense of altruism, gained from acts reducing their own well-being in order to help others. These acts include donating or volunteering. The reductions in savings and free time to help out arguably reduces the donors’ well being. Or, do they? Economists use the term “other regarding preferences” to describe altruistic acts. Giving time and treasure to a charity comes from internal motivation and a sense of identity. Donors and volunteers get a “warm glow” feeling or additional utility (to use another economic term) from these actions and neuroscience has developed evidence of this. Dopamine levels rise when altruistic acts are performed.
Are altruistic acts completely altruistic? Sometimes a seemingly altruistic act isn’t so altruistic. Donating and expecting returns is not really altruistic. For example, political donors may expect they will receive an appointment or their companies may receive additional business from the government. Donating significant amounts of money to a charity can send a signal to others of great wealth and conspicuous consumption. These would not be altruistic acts. To a lesser extent, don’t we expect some return for our donations? We might get tax deductions for our donations and some recognition for our volunteer efforts. The economist James Andreoni coined the term “impure altruism” in 1990 to describe how even the warm glow feeling we get from donating makes our motivation somehow tainted with self-interest.
While this discussion is intellectually stimulating, don’t look too deeply into the motivation of donors and volunteers. They are objectively doing a good thing so I suggest just leave well enough alone. There are philosophical treatises on mixed motives that are well beyond the scope of this article, but I would suggest human beings are complex creatures who may not be able to articulate their motivations to themselves let alone to anyone else. As a practical matter judging motivations of a donor or volunteer is at best a very, very tricky endeavor, not worth the time and effort of the NFP management. There is no moral, ethical, or legal requirement to do so. Running an NFP is difficult enough. Why take on the burden of figuring out the motives of donors?
Mark Koscinski CPA D.Litt. 