Selling Virtue: How Charities and Their Donors Work Together to Create a Better World for Themselves
As conventionally understood, nongovernmental organizations (NGOs) exist to fulfill what they perceive as an unmet need for improvement in human welfare. While it may seem obvious that NGOs pursue fulfillment of these unmet needs, there is more than meets the eye. A large body of research spanning psychology, economics, and biology suggests that people have hidden motives when donating to charity. People primarily donate to benefit themselves reputationally even though they often say they donate to help other people. Their central motive is to appear virtuous to their social communities and signal that they possess socially desired traits in order to attract and maintain allies and mates.
My dissertation takes research on the demand-side of social signaling to generate testable implications regarding the supply-side of social signaling in the human rights sector, i.e. the behavior of human rights NGOs. Taken together, this research offers a third-generation approach to NGOs, what I call the social signaling theory of NGOs. My central claim is that human rights NGOs supply goods that have the spirit of benefiting others but ultimately serve to benefit their donors' reputations by helping donors appear virtuous. More important to donors is being seen donating to charity because they are socially rewarded for their conspicuous displays of charity. Less important is the effect of their donations on the welfare of the stated beneficiary.
Donor signaling creates what I call an alignment problem: the social incentives for donating create financial incentives for human rights NGOs to de-prioritize strategies that are vital to effectively accomplishing their stated goals and to prioritize strategies that are irrelevant or harmful to effectively accomplishing their stated goals.
First, donors do not demand that human rights NGOs effectively advance human rights, and as a result, they do not demand rigorous impact information. Human rights NGOs do not supply rigorous evidence of their impact because they do not need to supply this information to recruit donors. Instead, they supply impact evaluations to help their organization appear effective rather than be effective.
Second, donors do not create demand for oversight mechanisms to ensure that human rights NGOs effectively produce public benefits because they are not primarily interested in delegating the production of public benefits to NGOs. Accountability organizations, therefore, do not hold human rights NGOs accountable to performance, impact, or effectiveness standards. Instead, accountability mechanisms supply information about NGOs that are demanded by donors, including information relevant to successful social signaling, which pertains to recipient type, financial impropriety, and expenditures on programs versus administrative overhead.
My dissertation takes research on the demand-side of social signaling to generate testable implications regarding the supply-side of social signaling in the human rights sector, i.e. the behavior of human rights NGOs. Taken together, this research offers a third-generation approach to NGOs, what I call the social signaling theory of NGOs. My central claim is that human rights NGOs supply goods that have the spirit of benefiting others but ultimately serve to benefit their donors' reputations by helping donors appear virtuous. More important to donors is being seen donating to charity because they are socially rewarded for their conspicuous displays of charity. Less important is the effect of their donations on the welfare of the stated beneficiary.
Donor signaling creates what I call an alignment problem: the social incentives for donating create financial incentives for human rights NGOs to de-prioritize strategies that are vital to effectively accomplishing their stated goals and to prioritize strategies that are irrelevant or harmful to effectively accomplishing their stated goals.
First, donors do not demand that human rights NGOs effectively advance human rights, and as a result, they do not demand rigorous impact information. Human rights NGOs do not supply rigorous evidence of their impact because they do not need to supply this information to recruit donors. Instead, they supply impact evaluations to help their organization appear effective rather than be effective.
Second, donors do not create demand for oversight mechanisms to ensure that human rights NGOs effectively produce public benefits because they are not primarily interested in delegating the production of public benefits to NGOs. Accountability organizations, therefore, do not hold human rights NGOs accountable to performance, impact, or effectiveness standards. Instead, accountability mechanisms supply information about NGOs that are demanded by donors, including information relevant to successful social signaling, which pertains to recipient type, financial impropriety, and expenditures on programs versus administrative overhead.