‘Donate to charity for cash prizes!’

Kate Sahan, The Ethox Centre, Nuffield Department of Population Health, University of Oxford

Said one breathless charity rep who knocked at my door on a peculiar evening in late September. A grubby pamphlet was unfurled, designed to dazzle with pound signs, money fans, and testimonials. The charity reps, propping themselves up on the dodgy adjoining brick wall, were clearly at the end of another punishing day of pounding Oxford’s mean pavements. So my resistance to their win-win money-making idea was treated as just another of their usual street-side heckles: I blurted out something about perverse incentives, about how it would encourage gambling. I screwed up my face in a don’t-get-it-and-feels-icky kind of way.

‘It’s ok’ said the rep, ‘lots of other charities do it’. Ah, the habituation argument.

‘But don’t you think that ALL the money donated should go to the charitable cause?’ I asked. Or ideally would have asked. It came out as more of a ‘hrrgh…spending…on people…needing’ noise. Two reasons followed which capture the ethical issues well:

Reason 1: ‘It would normally be spent internally’ said the rep, ‘on our administration costs or similar. So it wouldn’t be spent on those people [the ‘cause’] anyway’.

Although we were talking past each other – I was talking about maximising donations, rather than spending decisions – the two statements are connected. Donors to charity don’t want donations wasted eg by a charity with poor accountability for spending. We want to know it goes to people who need it rather than randoms. We don’t want the charitable cause diluted. This could happen if some donations are packaged up and re-gifted to members of the public at random as cash prizes. It could also happen if a charity has dubious investment policies which risk its funds being used counter to its own interests[1]. We might trust a charity less to ‘do good’ with our donations as a consequence.

But in saying this we ignore a harsh economic reality for the voluntary sector. It may be that to make enough money to continue its mission, a charity now has to take the best (in profit terms) investments it can; it may have to attract donations by advertising cash prizes in an economic downturn where charitable donations are dropping. This cash prize idea could be a stronger incentive than others for being financial[2] in a time of austerity, and a market of multiple competing charities. Nevertheless, there may be accompanying harms to cash prizes:

1. A charity accrues less value for money than it could because:

1a. donations do not maximise financial value because some value is prized away
1b. some fund use through investment has dubious moral value;

2. Donor ‘players’ develop or feed gambling habits. Habits are given a moral sheen by the association with the charity: it’s good to gamble, it’s for charity;

3. In general the idea encourages the ‘wrong’ kind of reasons for why we should donate to charity.

Replying to harm 1a we could adduce the ‘peanuts’ argument. A number cruncher will have decided that the charity ‘house’ wins far more than the donor ‘players’. On 2, a more liberal account would not find gambling, on the face of it, so bad[3] as to taint the association with charity, or vice versa. And while it could still harm pathological gamblers for charities to give gambling a moral white-wash, the modesty of the prizes offered, plus the claimed small proportion of pathological gambling, could be too low to concern overall utility[4]. Finally, if the ‘house’ is from a not-for-profit sector, then wealth would be being re-channelled to address things we as a society find important.

But harm 3 and 1b are trickier to resolve. Standing on the doorstep, although my initial concern was to maximise donations, I discovered I wanted them maximised only in the right way[5] and would reject maximization based on profitability arguments alone. Giving money to a charity with the aim or outcome of receiving (more) money back – a sort of boomerang effect – seems to thwart our altruism, and confuses the charity’s aims with that of a company. It encourages us to demand a monetary fee for our altruism. Or does it? The second reason given by the rep is even more interesting:

Reason 2: ‘A lot of people’ said rep ‘if they win [a cash prize], they actually give it back to the charity’.

This suggested resolution tells us more about the ethical problem. The resolution is that if cash prizes cause people overall to donate more, then it’s not a bad thing to institute. Even if this is true[6], how would the moral justification work? Are we saying the cash prize should function to prick people’s moral sense such that their altruism increases? Does it assert a social duty to share back the wealth, even if technically belonging to the winner?

It feels as though the cash prize phenomenon lets charities pass their moral confusion about how they should stimulate and handle donations onto potential donors to grapple with. The reason of cash prizes being capable of honing altruism is idealistic and risky in the economic climate described. It is just as likely people could take the money and run, some perpetuating the confusion about how their donation and subsequent prize should function morally by connecting their largesse to the charity’s cause (see footnote 6).

As myself and the reps concluded our uncomfortable exchange, the other (more brooding and silent) rep sombrely noted:

‘You’ve got a spider crawling up your hair’.

‘Ah’ said I, thinking 1 how big is the spider and 2 how will this play out in terms of our altruism and obligations to each other since clearly I was not about to donate to them. ‘Don’t worry, it’s a small one’ and ‘I’ll take it off’ were the last things I remember as one of them wafted a hand through my errant fringe.

[1] See eg charity Comic Relief which defended investing in shares in tobacco and arms industries.

[2] Disagreement exists about the appropriate way to incentivise donors – eg the “flies in their eyes” tactics used by some global aid charities.

[3] Giving rise to terms like “a flutter”, a lottery, a leisure activity

[4] A quick and dirty internet search does finds more than one charity has had the cash prize idea, with total prize money not exceeding £10,000 for a “roll-over” deal.

[5] Prude alert.

[6] One counter example. Though I paraphrase, the jist of one online reaction from a cash prize winner from x medical research charity was: “my father had x; my son now has x and I’m delighted to receive £1000 from the x medical charity. I’m getting a new kitchen with it”.

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‘Donate to charity for cash prizes!’

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