Altruism tainted by profit

New research from the Yale School of Management suggests that charitable giving may harm a company’s image.

Inspired by a company that raised money for charity while still bringing in a profit, the research found that participants viewed selfish actions that benefited society as less moral than selfish actions that had no benefit to society — an effect dubbed “tainted altruism.” The finding suggest that companies should reevaluate how they advertise charitable giving, said George Newman, a professor of organizational behavior at the Yale School of Management and co-author of the study.

“When you hear about someone who is doing good but also earning a profit, you think, well, why can’t they be all-the-way good,” Newman said. “Why did they have to take something for themselves? But when somebody is only self-interested, you don’t spontaneously think, could they be doing some good?”

Newman said the study was inspired by the fate of Daniel Pallotta, whose company — Pallotta Teamworks — organized major fund-raising drives for charitable causes including AIDS and breast cancer research. Despite raising more than $305 million for charity over 9 years, the company collapsed when it was revealed that it was a for-profit organization.

To investigate just what was behind Pallotta’s downfall, participants were asked to rate the morality of scenarios in which fictional characters acted selfishly both with and without benefit to others. For example, a man attempting to impress a girl would volunteer at a homeless shelter with her in one scenario and take a job at a coffee shop with her in another. When viewed separately, the participants believed volunteering at the homeless shelter was less moral than working at the coffee shop.

To explore the mechanism behind this effect, the researchers reminded participants of each scenario’s alternatives, where the person benefiting themselves and others could have only benefited others, and the person only benefiting themselves could have also benefited others. After going through such explanations, participants perceived the purely selfish actions as less moral than the selfish actions that also benefited others.

This, Nelson said, shows that the participants were intuitively thinking about how people who benefited both themselves and others could have benefited others more, but seemingly not considering how someone only benefiting themselves could have been more altruistic.

“I think we tend to think that if we do nice things we are going to get credit for doing nice things,” said Michael Norton, a professor of Business Administration at the Harvard School of Business who was not involved with the study. “I think the study is so interesting because it suggests that sometimes doing a little bit of a nice thing is worse than not doing a nice thing at all.”

The findings have implications for how corporations should go about donating to charity, said Clayton Crither, a professor of marketing at UC Berkeley’s Haas School of Business.

Crither added it was possible that businesses could start to be less charitable if they begin applying the conclusions of this study to their marketing.

“What this suggests is that at least when it’s pointed out that companies aren’t giving all of their profits away to charity, they might take a penalty for the good works they do,” Critcher said.

While the problem of tainted altruism is a serious barrier to charity, there do appear to be solutions.

According to Newman, it appears that organizations can learn to be charitable in a more nuanced way. Just as introducing alternatives to study participants manipulated perceptions of altruism, Newman said companies could become more conscious of how they frame charitable actions.

“More broadly, I think [the findings] not only shed light on the existence of this bias, but also suggests that it seems to be pretty malleable,” Newman said. “Presenting pretty subtle information could lead to pretty drastic differences in [response].”

Newman said he plans to continue to research the intersection of selfishness and selflessness. He cited his own work showing that gifts in exchange for donations to charity lower donations, and said he would like to continue to investigate how mixing social and market concerns influences behavior.

The study was coauthored by Daylian Cain, another professor of organizational behavior at Yale’s School of Management.

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