Water the Flowers You Want to Grow? Evidence on Private Recognition and Donor Loyalty

We study donor loyalty in the context of church membership in Germany. Church members have to make substantial payments to their church but can opt out at any time. In a large-scale field experiment, we examine how private recognition for past payments affects church members’ loyalty. We find that recognizing past payments reduces opt-outs, but the response is temporary. The effect of recognition on retention is most pronounced among members in the bottom quartile of baseline payments to the church. Consistent with optimization frictions prior to the experiment, we observe a spike in opt-outs after treatment for particularly costly memberships.