Saudi Press

Saudi Arabia and the world
Friday, May 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

Saudi Press
0:00
0:00
Close
The Great Western Exit: Why Best Citizens Are Fleeing the Rich World [PODCAST]
The New Robber Barons of Intelligence: Are AI Bosses More Powerful Than Rockefeller?
The AI Gold Rush Is Coming for America’s Last Open Spaces [Podcast]
The Pentagon’s AI Squeeze: Eight Tech Giants Get In, Anthropic Gets Shut Out [Podcast]
The War Map: Professor Jiang’s Dark Theory of Iran, Trump, China, Russia, Israel, and the Coming Global Shock [Podcast]
AI Isn’t Stealing Your Job. It’s Dismantling It Piece by Piece.
Kennedy’s Quiet War on Antidepressants Sparks Alarm Across America’s Medical Establishment
Russian Oligarch’s Superyacht Crosses Hormuz via Iran-Controlled Route
Crypto Scammers Capitalize on Maritime Chaos Near the Strait of Hormuz: A Rising Threat to Shipping Companies
Changi Airport: How Singapore Engineered the World’s Most Efficient Travel Experience
News Roundup
Microsoft lost 2.5 millions users (French government) to Linux
Strategic Saudi-Bahrain Causeway Closed Amid Security Concerns as Trump Deadline Approaches
Saudi Arabia Keeps Red Sea Oil Exports Flowing Despite Regional Tensions
Pipeline Attack Cuts Significant Share of Saudi Arabia’s Oil Export Capacity
Saudi Business Leader Abudawood Appointed Chairman of Merit Incentives Group
TotalEnergies Confirms Damage at Saudi Refinery Following Security Incident
Saudi Arabia Launches Early Construction Phase for King Salman Stadium Project
Saudi Shift Away from Longstanding Dollar Oil Framework Gains Attention Amid Iran Conflict
Türkiye and Saudi Arabia Resolve Long-Running Transit Visa Dispute
Saudi Oil Capacity and Pipeline Flows Reduced as Supply Risks Intensify
TotalEnergies Reports Damage to Saudi SATORP Refinery Following Security Incidents
Gulf States Assess Prospects of U.S.-Iran Truce as Regional Stability Efforts Intensify
South Korea Resumes Honey Exports to Saudi Arabia Following Sanitary Approval
Saudi Arabia Carries Out Sentences in Eastern Province Following Security Convictions
Saudi Sovereign Wealth Fund Backs King Street’s Regional Credit Strategy
Saudi Arabia Secures World Cup Return as Egypt Celebrates Landmark Qualification
Iran and Saudi Arabia Intensify Diplomatic Engagement Amid Regional Tensions
Russia and Saudi Arabia Open Visa-Free Travel Corridor for Citizens
Saudi Oil Output Capacity Reduced by 600,000 Barrels Per Day Amid Regional Conflict
Saudi Arabia Suspends Operations at Select Energy Sites as Precautionary Measure
Saudi Arabia Halts Operations at Multiple Energy Facilities Amid Heightened Tensions
Global Markets Jolt as Iran Signals Ceasefire Breakdown and Rising Regional Tensions
King Street Aligns with Saudi Sovereign Wealth Fund to Expand Alternative Investments in Middle East
Attack on Saudi Arabia’s Jubail Petrochemical Hub Raises Global Supply Concerns
Debate Emerges Over Saudi Strategic Decisions as Gulf Cooperation Council Dynamics Come Into Focus
Saudi Arabia Expands Full Workforce Localisation to 69 Professions in Major Labour Reform
Emerging Alliance of Pakistan, Turkey, Egypt and Saudi Arabia Signals New Regional Power Dynamic Amid Iran Conflict
Iran Linked to Strikes Across Gulf States Following Refinery Attack Escalation
Saudi Arabia Voices Concern Over Fragile US–Iran Ceasefire Stability
Starmer Warns Sustained Effort Needed to Ensure US–Iran Ceasefire Holds
Saudi Arabia’s Key East-West Oil Pipeline Targeted Following Ceasefire Announcement
Iran Targets Saudi Arabia’s East-West Oil Pipeline in Escalating Regional Tensions
Trump Warns of Civilizational Stakes as Iran Halts Negotiations
Saudi Companies Expand Remote Work Measures Ahead of Iran-Related Security Concerns
Iran Warns of Strikes on Saudi Energy Infrastructure if US Targets Its Facilities
Iran Urges Civilians to Form Human Shields Around Nuclear Sites as Diplomatic Deadline Approaches
Saudi Arabia Raises Oil Prices to Record Premiums Amid Supply Pressures Linked to Iran Conflict
Key Saudi-Bahrain Causeway Closed Amid Heightened Security Concerns Linked to Iran
Formula One Calendar Gap Explained as Fans Await Next Grand Prix
×