Kai Ryssdal: We do a series on philanthropy every year about this time, a look at the state of giving when that tends to be on people's minds. Three years on from the start of the financial crisis -- and in what we all hope is the trailing edge of a poor economy -- the short answer is that the state of giving isn't very good.
We'll begin with some of the basics about how we think about giving. Dean Karlan teaches economics at Yale. Welcome to the program.
Dean Karlan: Good to be here.
Ryssdal: So this is, perhaps, the most basic question of all when we're talking about philanthropy and charity, but why? Why do we give?
Karlan: You know, first of all, I have something fairly obvious to say, which is people do give for lots of different reasons. So there's some easy low-hanging fruit that do explain a lot of people's giving, which is to be part of something, to be part of a greater cause. And the striking thing about that and the tension that that creates is the question of whether people are giving simply to be part of a cause or because of what that cause actually accomplishes and how effective it is.
Ryssdal: That's actually interesting. It's a little bit like giving because you are seen to be giving, and giving because you believe in what's going on.
Karlan: That's exactly right. We did a little experiment here on campus a couple years ago where people were told if you give at least $100, then your name will go into a little newsletter. And that drove up giving a lot more than just asking people to donate more than $100.
Ryssdal: That all seems a little bit subjective, right? Is there a more rational and objective part of this that it is fundamentally doing good and you get a little monetary benefit giving as well?
Karlan: I mean, monetary benefit, there is obviously some tax benefits and there's certainly some charities that one can give to at the local level where they receive some private benefits. But I do think there's a sizable group of people that are genuinely moved out of altruism, and the challenge is: How do you both embrace the human element -- the emotional element -- that triggers people to give, while at the same time, getting that giving to go towards things that actually proven to be more effective. And that's a tricky balance to try to make.
Ryssdal: Yeah, it's tricky for the organizations, but it's also tricky for within the individual donor's mind, right? Because you have this emotional part of you that wants to give, but you want to be smart with your donations.
Karlan: Exactly. There's actually a sizable group that I think are skeptics and sit on the sidelines, particularly when it comes to things like human services and international aid. That the rational sort of 'hey, there are some things that work and here's actually good analysis which shows you that these seven things or these 10 ideas or these four organizations are really good,' actually converts the skeptic to then become a giver and becomes someone who becomes more active in giving to charity and giving more.
Ryssdal: Do we know, let's see, three and a half, four years on into this financial crisis -- what do we know about giving and how people are feeling about it, and more importantly, how the charities are feeling about it?
Karlan: Well there's certainly been a lot of hardship all around. Charities have seen a dip in giving, but it has not taken them down to zero or anything of this nature. It's caused everyone to have to cut back a little bit. So I'm optimistic that we will find our way through. The one thing which I would say I would like to think happens is that when times are tough, that's when we might be more likely to say, 'OK, since I don't have enough room here to make mistakes, what are the two charities, what is the one charity, that really has the evidence behind it for being effective, and let me go support that.' So I'd like to think that some of the recession will help focus the analytical side of us into supporting effective charities, and it can do that without turning off the personal satisfaction that we get from being a part of the larger cause.
Ryssdal: Dean Karlan teaches economics at Yale. His book about international aid is called "More Than Good Intentions." Dean, thanks a lot.
Karlan: Thank you very much.
Ryssdal: So how are Americans thinking about giving this year? We hit the streets to find out.
Jason Roby: I plan to cut just maybe 10 percent of my charitable givings this year.
Candace Blake: If anything, we've given more.
Yosef Grodsky: I'm definitely giving more.
Brian Mullady: Certainly, as much as we've given in the past and maybe a touch more, because the economy's tough and people have tougher times these days.
Aaron Biesen: Zilch.
Erik Bradley: Yeah, it's really bad right now.
Tom Hansen: There's actually nothing to give. Just making ends meet.