Beautiful Virgin Islands

Saturday, Aug 22, 2026

Why do we give money to charity?

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner but from their regard to their own interest. We address ourselves not to their humanity but to their self-love and never talk to them of our own necessities but of their advantages."

When economist Adam Smith was writing his highly influential book The Wealth of Nations, in the 1770s, his mail probably didn't include envelopes with arresting images of hungry children.

And when he strolled around his home town of Kirkcaldy, Fife, he was not accosted by clipboard-wielding young women trying to sign him up for a monthly donation.

These days, we are frequently spoken to not of our advantages but of other people's necessities.

Charity has become big business, though it's hard to say how big: there's little good data.

One recent study estimates the British, for example, donate 54p in every £100. That's three times more than the Germans but three times less than Americans give.

By my reckoning, that's also roughly what Britons spend on beer, not much less than they spend on meat and three times what they spend on bread.

In economic significance, the charity fundraiser is up there with the butcher, brewer and baker.

Charity, of course, is as old as humanity.

The ancient religious custom of tithing - indirectly giving a 10th of one's income to worthy causes - makes modern donations of less than £1 in every £100 seem derisory.

Still, taxes have replaced tithes and many modern fundraisers don't have the advantage of claiming to speak for God.

They need to be professional about persuasion - and there is a man who's regarded as the father of the field: Charles Sumner Ward.

In the late-19th Century, he started work for the Young Men's Christian Association (YMCA).

He was "a medium-sized man," according to the New York Post, "so mild of manner that one would never suspect him of the power to sway hitherto reluctant pocketbooks".

That power first gained wide attention in 1905, when his employers sent him to Washington DC to raise money for a new building.

Ward found a wealthy donor to pledge a chunk of cash - but only if the public raised the rest. He then set an artificial deadline for this to happen. The papers lapped it up.

Ward applied his methods far and wide: a target; a time limit; a campaign clock, showing progress; publicity stunts planned with military precision.

In the modern world, they all seem familiar but when Ward came to London in 1912, they were novel.

The Times was suitably impressed by his "knowledge of human nature, and an extremely shrewd application of business principles in securing the advantage at the psychological moment".

World War One brought more fundraising innovations: lotteries; and flag days, which have modern equivalents in wristbands, ribbons and stickers that show you've given money.

By 1924, Ward had a fundraising company and was advertising how much it had raised for everything from boy scouts to masonic temples.

For the modern heirs of Charles Sumner Ward, what counts as a "shrewd application of business principles"?

We can get some clues from advertising executives interviewed for the Guardian newspaper. Images of starving children don't rack up many "likes" on social media, they say, build your brand instead, engage and entertain.

Economists have also studied what motivates donations. One theory is called "signalling": we donate in part to impress other people. That might explain the enduring popularity of wristbands, ribbons and stickers: they display not only the causes that matter to us but our generosity too.

Then there's the "warm glow" theory, which says we give in order to feel nice - or less guilty, at least.

Experimental investigations of these ideas have produced results that are - well, a little depressing. Economist John List and colleagues sent people to knock on doors; some asked for a donation, others sold lottery tickets for the same good cause. The lottery tickets raised a lot more; no surprise there.

But the researchers also found attractive young women who asked for donations fared much better - about as well as the lottery sellers. As the study drily acknowledges: "This result is largely driven by increased participation rates among households where a male answered the door."

That's evidence for the signalling theory of altruism - and you can see exactly what kind of pretty young lady these gentlemen were keen to signal to.

Another economist, James Andreoni, studied the "warm glow" idea by asking what happened to private donations when a charity started getting a government subsidy?

If donors gave purely from an altruistic desire to ensure the charity could function, then the donations should move to another worthy cause when the subsidy arrives. But that doesn't happen, which suggests we aren't purely altruistic - we just get a warm glow from feeling that we are.

It's starting to sound like Adam Smith's logic applies to charity after all. "It is not from the benevolence of the donor that we expect a contribution," a fundraiser might say, "but from their regard to making themselves feel good or look good to others."

But if charities are selling a warm glow and the ability to send social signals, that doesn't give them much incentive to do anything useful. They just have to tell us a good story.

Some people, of course, take very seriously the question of how much good charities do. There's a movement calling for "effective altruism", featuring organisations such as GiveWell, which studies charities' effectiveness and recommends who might deserve our cash.

The economists Dean Karlan and Daniel Wood wondered whether evidence of effectiveness would improve fundraising, and worked with a charity to find out.

Some supporters got a typical mailshot, an emotional story about an individual beneficiary called Sebastiana. "She's known nothing but abject poverty her entire life," it read.

Others got the same story but with an additional paragraph noting that "rigorous scientific methodologies" confirmed the charity's impact.

The results? Some people who'd previously given big donations seemed impressed and gave more. But that was cancelled out by small donors giving less. Merely mentioning science seemed to have punctured the emotional appeal and cooled the warm glow.

And this may explain why GiveWell hasn't even tried to assess the household names of the charity world - the likes of Oxfam, Save The Children, and World Vision.

In an exasperated-sounding blog post, the organisation explains such charities "tend to publish a great deal of web content aimed at fundraising but very little of interest for impact-oriented donors".

Or, as Adam Smith might have said: "Never talk to them of our own effectiveness".

The author writes the Financial Times's Undercover Economist column. 50 Things That Made the Modern Economy is broadcast on the BBC World Service. You can find more information about the programme's sources and listen to all the episodes online or subscribe to the programme podcast.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Petrol Bombs Set Luxury Cars Alight Outside Birmingham Wedding as Police Hunt Three Men
Bitcoin Surges Toward $80,000 as Short Squeeze and ETF Inflows Ignite Crypto Rally
Twenty-Nine US States Take Meta to Trial Over Alleged Child Addiction on Instagram and Facebook
Former Scottish National Party Executive Peter Murrell Jailed for Five Years Over £400,000 Embezzlement
Moderna and Merck's Personalized Cancer Vaccine Succeeds in Historic Late-Stage Melanoma Trial
Prince Harry and Meghan to Move Back to Britain With Their Children
England and Wales Have Fewer Than 1,800 Prison Places Left for Men
Suspected People Smuggler Arrested After Investigation Identified Him
Children's Doctors Warn That Vaping Can Lead Young People to Smoking
Hundreds of Thousands of Students Receive GCSE and Vocational Results Across England, Wales and Northern Ireland
Here Is What Can Never Happen in Your Country: Taiwan Is Giving Money to All Its People Because It Collected Too Much Tax
UK Inflation Rises to 2.9% as Energy Bills Jump
UK Issues New Conduct Guide for Asylum Seekers on Consent and Respect
A Sleepless Night on Wall Street: Nasdaq to Begin Nearly Round-the-Clock Trading
"The First in the World": 69-Year-Old Protested Artificial Intelligence—and Went to Jail
Ukraine's Ousted Defence Minister Calls for Wartime Presidential Election
China’s Lifelike AI Humans Move From Livestreams Into Real-World Service Roles
Sarah Ferguson Reportedly Retreats to Late Ex-Boyfriend's Swiss Chalet
Cristiano Ronaldo and Georgina Rodríguez Sign Prenup Protecting Their Separate Fortunes
Thieves Steal Antonello da Messina Renaissance Masterpieces From Sicilian Museum
Better.com Founder Who Fired 900 Employees on Zoom Is Ousted as CEO
Italian Speed Camera Issues Nearly 32,000 Fines in 10 Weeks, Worth More Than €3 Million
AI Manager at San Francisco Store Recommends Firing Human Employee
Google Launches Pixel 11 With Gemini AI at the Center of Its Hardware Strategy
Reform UK Unveils Plan to Cut Welfare Spending by More Than £50 Billion a Year
Prime Minister Andy Burnham Praised Extinction Rebellion for Doing a 'Great Service'
UK Wildfire Phone Alert Triggers Backlash as Users Switch Off Emergency Warnings
Heathrow Roads Reopen After Burst Water Main Floods Access to Terminals 2 and 3
Former NBA Players Enes Kanter Freedom and Royce White Say They Will Enter 2027 WNBA Draft
Former Cambridge Professor Jason Arday Found Dead Days After Resigning Amid Plagiarism Row
US Appeals Court Rules AI Agent's Website Actions Are Legally Attributed to the User
France's Constitutional Council Blocks Social Media Ban for Children Under 15
Liechtenstein Changes Royal Succession Rules to Allow Women to Inherit the Throne
Women Allege Rape and Sexual Abuse at British Army College for Teenage Recruits
Minnesota: Two independent investigators posed as Muslims (one wearing a burqa) and showed how they could vote in elections without identification.
China’s Kimi Launches AI-Focused Credit Card With Agricultural Bank of China and American Express
Former Labour Adviser Arrested on Suspicion of Spying for China Held Privileged Access as Top Party Donor
Turkish Parliament Passes Landmark Bill Granting Conditional Amnesty to Disarmed PKK Members
Donald Trump Warns FIFA Against Ousting Gianni Infantino Amid Revolt by Global Football Leaders
Jeff Bezos Joins Investor Group Closing In on $6 Billion Liverpool FC Stake
UK Councils to Receive Sweeping Planning Powers to Ban New Vape and Betting Shops
Russia’s A7 Builds a State-Linked Payments Network Beyond Western Sanctions
Hyper-Realistic Reborn Dolls Draw Collectors Seeking Comfort and Craft
Gen Z Cuts Back on Dating as a Night Out Nears $200
Patients Turn to Artificial Intelligence for Therapy as Psychiatrists Warn of Privacy and Clinical Risks
Couples Embrace ‘Sleep Divorce’ to Protect Rest and Reduce Tension
Meta Ordered to Pay $567 Million and Change Facebook and Instagram Safeguards for Children
Up to only 10 Months in Prison for Swedish Officer’s Murderer Sparks Anger
Success: Nvidia Turned Gaming Chips Into the Engine of the AI Boom
Jorge Messi, Lionel Messi’s Father and Longtime Agent, Dies at 68
×