Dean Karlan is a professor of economics at Yale; president and founder of Innovations for Poverty Action; a research fellow at the M.I.T. Jameel Poverty Action Lab; and co-author, with Jacob Appel, of More Than Good Intentions. He’s guest-blogging for us about charitable giving. This week, he writes about Swipegood.
Swipegood: Will it Lead to More Charitable Giving?
By Dean Karlan
Does giving to charity make you feel better about yourself, even if done in tiny amounts? A new website, Swipegood, thinks so. It is modeled almost exactly on Bank of America’s?“Keep the Change“ campaign.? For those not familiar with the campaign, here is how Bank of America pitches it:
Saving is a whole lot simpler when you don’t have to think about it. That’s the idea behind Keep the Change. When you enroll, each time you buy something with your Bank of America debit card, we’ll round up your purchase to the nearest dollar amount and transfer the difference from your checking account to your savings account. You get to keep the change – so every cup of coffee, tank of gas, or bag of groceries adds up to more savings for you. What could be easier?
I fear this may actually reduce saving, not raise it.
Finding ways to gently guide people to save is one of the linchpins of Richard Thaler and Cass Sunstein‘s Nudge. Yes, Keep the Change leads to more savings in that Bank of America account. But, does participating in Keep the Change lead someone to mentally check off the “savings” box? And if so, when it comes time to really save, eg put money away for college or retirement, will these pennies really add up?? Or may we have found ourselves relying on a thoroughly insufficient mechanism to save?
A?2008 article boasted about the $1 billion that customers had saved through “Keep the Change.” But $1 billion split between the 8 million enrolled customers is only $125 each per year. Not quite enough to buy that car then, that holiday of a lifetime, or put a down-payment on a house.
So does it work?? I don’t know.? $125 on average means that some people saved a lot.? But I do know one thing: just showing us that lots of people signed up does not answer this question.? I wonder if Bank of America ran any internal randomized trials on this?
Now back to charity.
Swipegood is offering essentially the same product, but for good causes.? You can go online, provide a credit card, choose a charity and your “change” at the end of each month gets donated to the charity you chose.
When I first saw this, I was enthused, and saw it as a way to engage people about how they can make the world a better place, little by little.? But I have the same question here: I genuinely don’t know what the net effect will be. On the one hand, you might get a warm fuzzy feeling every time you make a purchase, “Hey, I just gave $0.73 to my favorite cause.” If this happens, it could actually lead to lower overall giving; just as with saving — if it makes you check the “charity” box in your head, and thus leads you not to give more later. But for some, signing up for Swipegood may mean giving more — even if marginally so — than they were giving before. Or, it may help people feel all the more loyal and connected to their favorite charity, constantly reminded of their good acts. Feeling part of a community and helping to support a charity each and every day may even make you more likely to support them at the end of the year with a more substantial gift.
Net effect? The only way to tell is through evaluation. It would be great to find a large charity willing to run a randomized trial: encourage half of their constituents to sign up for Swipegood, and another half not, and follow them all over time to see which half ends up giving more in the long run.
Would you sign up?? And do you think you’d give more or less if you did?
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“if it weren’t for the shame of the rich, there would be no charity.”
-Marc Maron
I have Keep the Change and use my debit card every day. It’s tallied me 632 dollars in about 2.5 years. Obviously not enough of a rate to retire on. Furthermore, jobs are scarce so that money has all been spent and bank savings accounts are a non-investment anyway.
I have account with both Keep the Change and SwipeGood. My Keep the Change membership has been ineffective (as it would for anyone who is not able to maintain savings – i.e. a college student etc.) but I am more optimistic about SwipeGood. In the same way that with my Keep the Change was ineffective because I wasn’t truly saving, I hope that my SwipeGood account will effective I am not regularly donating to charity.
My Keep the Change account is knicked with a $5 service charge every month for being under a minimum amount. Considering how low my account will remain by design, since money only trickles in, it seems BofA has found a way to slowly bleed money from many of its unwitting customers, as opposed to helping them save. Of course, this practice isn’t that surprising, considering their past behavior. Really my fault for still banking with them. This problem is somewhat unrelated to the issue of Swipegood; not sure how that program would work. Just thought I’d share.
Two ideas:
1. In keeping with the BofA monthly service charge mentioned by #4 above, Swipegood could have a minimum amount, so they get at least – say $5/month – or your spare change, whichever is more.
2. It is commonly said that donating your time to a charity is more important than donating money. Someone needs to invent a service that takes all of my moments of wasted time – standing in line at the grocery, stuck in traffic, flipping through channels – and accumulates them in the form of service or labor for a charity. I could continue to waste time and somehow important work would get done.
The place where I’d look for Swipegood to have the biggest effect is those endless “do you want to donate a dollar to cause X?” queries at the checkout of seemingly every single grocery and drugstore in the U.S. If one’s loose change just went to a cause, it’d be a lot easier to say no.
(SInce my habits include almost daily grocery shopping, I do routinely say “no,” having perfected the tone of somebody being offered an incredibly delightful treat.)
This is the first I’ve heard about Swipegood, but I think it’s a great idea. Rather than limiting donations I think it will allow people to donate who otherwise would not.
Working for a non-profit myself, I give a fixed amount every paycheck. I’m now considering signing up for Swipegood as another way to give, but I would not reduce the amount I’m already contributing.
Some years ago, I sent the CEO’s of several large banks–Citibank, Bank of America and JPMorgan Chase–an idea that I think would do wonders for charity.
Very simply, the banks would first create a list of “approved” charities. Credit card customers could then donate to those charities INTEREST-FREE.
Currently, you pay the same interest rate for giving to orphans in the Sudan as you do for buying a six pack. You would think….
Alas, not a single company budged. I even told them how this would be good PR, would provide goodwill, etc. But nope…. When they had a chance to encourage people to give more freely than ever before, they instead chose to feed their greed. And now it has resulted in a damaged economy and banks being distrusted and hated.
Maybe there’s something to karma after all?