Christmas is the traditional season of giving – from Scrooge to Charlie Brown, we all know that Christmas is really about eschewing commercialism and giving back to the community. But from a business-savvy perspective, is it really sensible to ramp up how much you contribute to charity just because it’s Christmas? As our founder, Wendy Kohli has previously pointed out, charity needs to be efficient and inventive just as business is, and that means we have to think carefully about how best to be charitable.
On the face of it, you might think not – after all, the most significant problems we must confront, from global warming to disease to poverty, aren’t seasonal, they’re year-round. So there seems no good reason to donate to, say, cancer research at Christmas than at any other time of the year.
Conversely, those problems that are seasonal are perhaps not the most pressing issues at hand. While it is undeniably worthy to, for example, give a present to the child of someone in prison, when you can only give a finite amount you have to think about what is the most efficient way you can be philanthropic – and that probably means dropping the seasonal giving in favour of something a little more long-term.
But this initial impression is mistaken. In fact, donating at Christmas can be much more efficient than at any other time of the year. This is down to the recent push towards match-funding, especially match-funding at Christmas. Match-funding is when your donations are doubled from a fund of extra donations made for exactly that purpose. What’s important to remember is that, if you don’t donate, that money from the fund won’t be donated at all – so it really is twice as effective to donate when you know your donation will be matched than at any other time. Research has indicated that match-funding increases both the likelihood of someone donating and the amount they donate, especially among wealthy, middle-aged men, so match-funding is a promising way to encourage charitable giving.
But what does this have to do with Christmas? To understand this, we have to realise that what makes match-funding hard is coordination – you have to both get people to donate to the charity, and also get backers for the fund that will match the donations of those in the first group. To solve this, we need what game theorists call a focal point – some period of time when both donors and people backing those donors can give money, without necessarily having to communicate with each other. And luckily for us, Christmas can serve just this function. Charitable giving goes up at Christmas, meaning both donors and backers will spontaneously coordinate to give at exactly the same time, Christmas. This means that match-funding drives become much easier to coordinate by placing them around Christmas, so charities have to spend less on publicity, and more of your donations go to the people who really need it.
So while you might think that the savvy philanthropist shouldn’t pay too much attention on the Christmas period, instead focussing on long-term causes that will have the greatest overall effect, in fact Christmas provides a valuable opportunity for donors to coordinate, maximising the efficiency of their donations. It seems that Scrooge was right after all – Christmas really is the time to give generously.