The Principled Agent

Thoughts on development economics and impact measurement

Quantifying Gates Foundation’s Brand Equity

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IPA continues to find inventive new ways to use randomized controlled trials to better our understanding of giving and development. While usually the focus is on how well programs help their beneficiaries, a recent study explores how individual giving is affected by a matched donation campaign. With the cooperation of the Gates Foundation and Technoserve, Dean Karlan and John List tested the impact of a matching grant solicitation on individual giving (with a solicitation with no mention of a match as the counterfactual), as well as the impact of naming the Gates Foundation as the matching donor  (with an anonymous grant match solicitation as the counterfactual). The former test was directed at prior donors while the latter at prospective donors. The offer was a $3:$1 match.

Besides identifying the income generated by a matching program, this study is an important step in quantifying the brand equity of organizations like the Gates Foundation.  That is, what’s the value of the reputation that the Foundation has established in the field. For example, while the average return was $0.57 for the match offer from an anonymous donor, the return was $0.81 for a Gates grant, a 42% increase.  It’s worth noting that the populations of the two different tests in the study are not identical: one solicited donors that had previously given and the other solicited individuals who had not previously given. Still the pair of experiments allows for at least an intuitive understanding of the Gates’ value-add. Further by examining how this reputational impact varies by donor type, Karlan and List find that there are significant distinctions in reputational value between different audiences.

The Gates brand is an asset with significant value, and this study clarifies one part of that value. The business world has long observed the value of experiments for market research purposes, perhaps this is a first step for the philanthropic world in similarly leveraging experiments to better understand the value of their less-tangible assets in order to support better-informed management.

Some of the key results:

Gates reputation test: Solicitations targeting non-prior donors with and without Gates named as the 3:1 match donor
The total revenue per solicitation was $0.81 for Gates-named solicitations and $0.57 for anonymous-match solicitations. In the match period, the revenue per solicitation in the $0.29 with anonymous matching, and $0.41 with Gates named (40% increase).

Matching test: Solicitations targeting prior donors with and without Gates 3:1 match offer
Total revenue per solicitation during and after the match period was $0.64 for the Gates match solicitations, versus $0.29 for the no-match solicitations. Average revenue per solicitation during the match period went from $0.15 to $0.28 with the Gates match (81% increase). This was driven largely by an increase in the probability of a gift, with no change in size.  It also increased the likelihood of giving again after the matching program ended, as the likelihood of a repeat gift increase from 0.24% to 0.46%. This suggests that the increase in giving was driven by the perception that the organization was of a higher quality due to the Gates endorsement, rather than the matching program itself.

Heterogeneous impact on “poverty-oriented” charities
The study finds that the Gates brand has a larger impact on individuals who have previously given to poverty-oriented charities. Karlan and List speculate that this may be because the effect of the quality signal is greater with individuals who know more about the sector and presumably the importance of the Gates Foundation.

Disclaimer: This is based on a quick read of the article, please let me know if there are any errors or misinterpretations of the results.

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Written by Chris Prottas

April 3, 2012 at 4:42 pm

Posted in Uncategorized

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