More Satisfying: Spending Money, or Donating It?

Would you rather donate $100 to a charity you believe in, or spend $50 in your favorite shop?

That’s the crux of an offer SunTrust bank is making to people who open new checking accounts with the bank between now and the end of the year: receive a $50 gift card, or have SunTrust donate $100 to the charity of your choice.

The quandary reminds us a little of the “beggar or hot-dog vendor” question Dubner put to five respondents on this blog last summer; except substitute “street canvasser” for “beggar.”

(Hat tip: Jake Pruner)


The decision of giving the 100$ can easily be rationalized by considering that people's utility incorporates a concern for identity (as Akerlof and Franton did in "Economics and Identity"). If, for some reason, you perceive a gift as something that enhances your self-image (your identity), then you can rationally leave the 50$. You don't even need to be an altruist person.


I've gotta go with the $50 gift card. Taking $100 away from one group of strangers (Suntrust shareholders?) and giving it to another group of strangers (the board of some charity) doesn't have very much utility at all. Maybe if I was on the board of a 501(c)(3), and could oversee the spending of the $100, I'd feel differently. As is, Nicolas, the gift doesn't enhance my self-image (my identity) at all.

Peter S

I have to say if my bank did this just because i opened an acount i would switch bank. If they can afford to give away 100 bucks then how much am I paying them? If they can give away money. How much does there CEO feels entitled to "give" to himself.

The money gotta come from somewhere.


Times are hard as we can tell from today. Any source of income is more than welcomed. In college and buying high-cost-unfair-priced books I would take the fifty dollars.

CT Reader

Without question...Donate $100. From time to time I'll call my local foodbank and ask them what they need. Last time I called, they said there were lots of people wishing for fruit. When you show up with bags full of groceries, you are treated like a rockstar. Probably the best money I spend all year.


For anyone who is already making charitable contributions, this is a no brainer: you can take the hundred dollar option sent to a charity that you are already funding, then reduce your personal giving to that charity by $100. You are now $100 better off with the same money flowing to your choice of charity. and can choose to up your consumption or your giving or whatever you want. (Well, maybe only $75, if as @23 eludes to you lose the deductibility of the gift, but $75 still beats $50.)


This is a very interesting offer for people who are opening an account in SunTrust. I see this as kind of subsidizing their accounts because it provides an incentive that not everyone provides and donating the money will make you feel a bit better about yourself and taking the money means you have more money so it is a win-win for the customer.Personally, I would give the money to charity but I'm not so sure everyone else would. I mean, American citizens are heavy consumers and they like to buy things. So many people will take the money just for the simple reason that they are getting any kind of money at all. On the other hand, some people would think that their $100 dollars being donated to any charity will not really change anything because how much can $100 dollars really do these days? So they might think it is not worth it. Some people will obviously donate to a charity because it is the moral thing to do but it would be interesting to see how many people actually do.



Great, now I have to admit I'm greedy and selfish...

i think if their goal is to give as much of the available money away to charity (which i hope it is), they may be more effective in providing two "different" savings accounts. A regular and a charitable, the only difference being that initial 50 dollar bonus or 100 dollar donation. By making the moral decision more explicit, they should succeed into guilting people who would not regularly do such a thing.


Because it's a charity of my choice, and especially because the alternative is a gift card (which I think is an annoyance), I'd probably donate the $100. But it would enter into my mind that the matching $50 isn't exactly free money. It's $50 that the bank may partially pass on to consumers. I think the same thing about advertising-heavy companies, blowing all that money on a "brand". This bank is blowing money on a gimmick rather than maximizing the competitiveness of their interest rates, etc.


Shouldn't charities be advertising that if you choose the $100 donation, they'll send you a check for $51?


People face an economic and moral situation here.

People who are opening a bank account are likely to have much more than $50. Sometimes, people might really need the $50 for something, so that way, they won't give the money to charity, but they would decide to stay with it. If people have enough money, and they don't actually need these $50, then they are much more likely to give the $100 to charity other than staying with the $50.

This decision can be made setting the pros and the cons for any of the two decisions possible. People have to look who benefits from each decision and how much they benefit from it. The $100 donated to charity would probably be taken more than the $50 to yourself. This is because charity will do much more with the $100 than people will do with the $50, and besides this, people know charity will spend the money wisely, rather of them spending it on anything they find.



Will it be any Federal tax exempt organization or one from a list provided by the bank? If the former, I would chose an organization to which I already donate. Some of them have "membership" levels, such as $100 Sustaining Member. Assuming the bank sends the money in my name, I would simply have the bank send in the money and save $100 that year by not making my usual donation. If the organization sent me a letter thanking me for my $100 donation, I would claim the exemption (if legal to do so), increasing my own benefit to more than $100.

If from a list of organizations to which I do not donate, I probably would keep the $50, not wanting to spend a $100 to get on a mailing list and pestered with appeals for the next several years.



Donate the $100! What if it's one of those "We'll donate $100 for each person who opens an account up to $100,000" things... If that's the case, how do i know where they are against the grand total.... I think I might take the $50 if those were the parameters.

Daniel Reeves

People behave differently when you actually give the money to them. I.e. if I gave you $50, and then a minute later I said, "you can give this back to me, and I'll throw in another 50 dollars that will go to a charity of your choice," then you'd get a lot more people saying, "no, I'll keep it."


Are these statistics being captured? I'd love to know at the end of the promotion what percentage of customers took which offer. Or better yet, have that data broken down along various demographic lines.


I am fortunate enough that $50 wouldn't be significant to me. That said, I don't care about other people so I'd still take it over giving $100 to charity.


What are the tax consequences of this? Do I have to claim the $100 and then deduct it as a charitable gift? Can I claim nothing and still deduct the $50 that I didn't take?


Apart from the irrational psychological factors already mentioned, it's must be a simple question of the marginal utility of a $100 charitable donation vs the marginal utility of $50 (athough I notice that you don't get $50, but a "gift card").

Another way of looking at this question would be to ask people how large would charitable donation have to be to have the same utility as $50.


Two or three days into the ten-day-long semi-annual fundraising campaign, my NPR affiliate offered, instead of the free tote-bag or coffee mug that accompanied a donation, to make a donation to Meals on Wheels for some nominal amount.

The response from the listenership was overwhelming. People who had donated two days before asked to have their thank-you gifts changed to the donation. Because of the demand, the affiliate continued the program for the rest of the campaign.

Granted, the donors were already charitably minded. Many had already recieved the other nominal gifts in previous campaigns. Also, donors that received a thank-you gift had to adjust the tax deductible portion of their donation to account for the value of the gift, while donors who instead chose to give to Meals on Wheels did not. I don't think, though, that the radio station expected the public to be so generous.



Ill take the 50.

I barely trust the banking industry to hold my spare change.