Improving the Quality of In-Kind Donations: A Field Experiment

Abstract

Problem definition: Although in-kind donations contribute to charity’s triple bottom line (i.e., generating additional revenue for the charity, contributing to social welfare, and reducing environmental waste through rechanneling used items), inappropriate material donations impose additional costs to sort, process, or discard them. Minimizing the amount of undesired in-kind donations, however, is a challenge given charities’ sensitive relationship with their donors. This paper examines the effectiveness of behavioral interventions on improving the quality of in-kind donations gifted by individuals. Methodology/results: We conducted a field experiment to implement interventions motivated by two well-established behavioral mechanisms: information disclosure and social norm. We studied the reaction of 763 donors who were scheduled to make an in-kind donation at a local charity between October 31 and November 11, 2020. Our results show that using the social norm intervention effectively improved the quality of in-kind donations, whereas information disclosure, which is commonly used in practice as the industry standard intervention, was ineffective. We also conducted two postexperiment analyses. First, we collected additional data on 1,301 in-kind donations whose donors had received the social norm intervention during February 2021. Results show that the impact of the social norm intervention is stable over different time periods. Second, we studied the spillover effect of these interventions for a period of 12 months and did not find a negative long-term impact on in-kind donations. Managerial implications: A conservative estimation shows that implementing the social norm intervention reduced the junk donations received by 50% without having a negative spillover effect on donors’ in-kind donations or imposing any direct operating cost. Consequently, this field evidence provides an effective, cost-efficient, and scalable solution for charities to address the quality problem of in-kind donations. In addition, our results challenge the industry conventional practice of incorporating information disclosure in their communications with donors. Funding: This work was supported by Virginia G. Piper Charitable Trust [Grant 2020 Initiative].