Utility and the Charitable Contribution by David Stackpole


Iím not an economist, but Iíve written this page in confidence that the branches of economics, in their winding intricacy nonetheless tie into a foundation of the fundamentals.  So, with rudimentary knowledge I offer the following.

Among the primary drivers of our economy is (a) labor, though which we earn income to satisfy both our needs and utilities, and (b) parameters that define these needs or desires, including material gain (money to buy goods and services) and emotional gain (recognition, power, and influence).  In the case of charitable contribution in which we provide pro bono time, money and labor, our returns for our services are typically limited to the emotional rewards of our conscience.  And it is our conscience that often determines whether we contribute. 

The pool of potential volunteers for any charitable cause can be divided into two distinct sets of volunteers and non-volunteers, with the non-volunteer set divided into non-potential contributors (those who are unlikely to contribute under any condition) and potential contributors (those who are inclined to contribute with the right incentive, but who do not contribute at present).

This site discusses how charities might be able to increase involvement by appealing to the subset of  potential contributors by using material and non-material benefits as incentives for charitable participation and, by doing so, modify the paradigm of charitable involvement.

Some reasons people decide to not be charitable include:
a. Lack of money to give to a cause
b. Lack of time
c. Lack of other incentives to engage the potential volunteer

What we find in these examples is too high of a monetary cost or too high of an opportunity cost for the non-volunteer potential.  As discussed earlier, charitable service is often limited to the benefits that conscience provides; however, this not need be the case.  From a material perspective, if greater benefits could be provided, such that they outweigh the monetary and opportunity costs limiting the potential contributor from involvement, it stands to reason we should successfully engage a number of these potential contributors into contributing to the charitable cause.

Letís look at the limitations above and include some example benefits to clearly define this idea :

(Limitation a) Lack of money to contribute to a cause

(Solution) Provide a way in which greater number of dollars can be saved than are contributed 
(i.e., exclusive volunteer discounts from local businesses).
(Limitation b)  Lack of time (Solution) Exchange services and  charity stacking (explained below)
(Limitation c)  Lack of other incentives
(Solution) Media recognition and other services to participants to increase the emotional reward.


Solution to limitation B
Exchange of Labor

Example:
Swap services in accordance with skill level to maximize time and productivity of participants. An example would be the following:

Mr. Harris, a financial analyst and local volunteer, has no time to assist the economically disadvantaged Jones with their debt problem.  However, part of his time is taken up in mowing his lawn every other Saturday.  Billy, who mows several neighborhood lawns, volunteers to relieve Mr. Harris so he is able to work with the Jones.  In this scenario, time is used more efficiently by tailoring tasks to appropriate skill types.  An incentive to participate is realized by receiving a service in return for a service, community interchange is increased, and valuation in their activity due to the net result rises. (See chart).

Billy may have lacked money to pay for the Jonesí consultation, but he could volunteer services that are fungible to currency. The value of Billy's service is increased, because he not only services a lawn in need, but also plays a key role in servicing the Jones, since he frees Mr. Harris up to consult with them.  His incentive to mow the lawn is increased and his emotional reward is greater, because he realizes he is an important contributor to the more, highly valued, specialized consultation the Jones receive. 

Mr. Harris is also more inclined to help since he will not be sacrificing his time to consult, but simply redirecting it.  He also makes better use of it by applying his specialization instead of mowing his lawn.


The value of Billy's service is increased because he doesn't simply service Mr. Harris by mowing his lawn, but also services the Jones' by freeing Mr. Harris up to engage his specialized skills and resources as a financial analyst . The increase in value lies somewhere in the gap (gray area) between the wage of a financial analyst less that of a lawn mower .

Solution to Limitation B
Creative Time Efficiencies

Example:
Using your time to participate in more than one charity

Mrs. Hailey  volunteers to record books for the blind and dyslexic. Once a year this charity has a record-a-thon, in which volunteers spend the day reading from and recording as many books as they are able.  Mrs. Hailey also participates in the annual walk-a-thon  for heart disease, sponsored by the local hospital.  Unlike the read-a-thon, the walk-a-thon requires sponsors who contribute according to the distance traveled by the walker. 

By fusing the read-a-thon with the local walk-a thon, volunteers are able to sharply increase the number of books on tape for the blind and dyslexic and, at the same time, provide charitable contributions for heart disease by engaging sponsors who pay, not according to miles walked, but hours spent recording. This solution is limited, but possible under these conditions. 

The incentive for sponsors is a two-for-one benefit from their charitable contribution.  For the participants it is better use of time that potentially increases sponsorship due to the two-for-one benefits.


Tying It Together:
A Benefits Network

How do we create more than the typical feel-good concept of increased value for Billy and Mr. Harris?  Material compensation provides a better incentive than conscience alone.  Below is one possible strategy to use material incentives to incline the potential volunteer to participate.  The example is that of a volunteer network that provides the following:

1.      Ability for a network of participants to tap into one anotherís expertise. 
      When Mr. Harris needs a professional help, he can get it free or at a reduced rate through other participants.

2.      A Material Option: Engaging commercial resources for tangible rewards:

  • Providing personal recognition through media for services rendered (I.e., free round of golf from the local club)

  • Providing discounts and free goods and services from merchants

  • Providing services that free up time of the professional volunteer (I.e., free or discounted lawn, maid service)

A Benefits Network

Through a network of participants, we can engage additional incentives by providing rewards for labor that satisfy participant needs and desires. The result is galvanization of more people to volunteer and more participation among existing charitable volunteers

Example Strategy

 


Possible Strategy: A Network managed by "time=credit, credit=currency" 

The plan is to transform a volunteerís service time into a form of earned "currency"  in the form of credit for goods, services, and other perquisites.  Credits are then exchanged for products and services found within the network of participants and according to a set hourly scale.  For example:

Tax CPA:                     $120

Attorney:                      $100

Carpenter:                   $ 60

Delivery:                      $ 20

The delivery volunteer will in effect earn currency through 3 hours of volunteer labor to ďhireĒ the carpenter for one hour. This same idea can also be used to manage discount levels offered by local businesses as payment to volunteers in the network.  In this respect, scaled discounts are provided in proportion to the level of charitable monetary commitment or service commitment to a charity.

 


Conclusion: Redefining the volunteer
The approach arguably conflicts with the ethical or humanitarian precept of why we should be charitable contributors.  I would argue, however, that it is more beneficial, from a material perspective, to provide material rewards to increase participation in charitable causes, as it is more important to improve on the number of dollars contributed and the number of people who volunteer their time since this translates into tangible improvements and wider benefits for those who need it.