Last month I had the chance to listen to Professor Judd Kessler of the Wharton School during the Ruffalo Noel Levitz Annual Fundraising Conference in Minneapolis. He shared insight on how behavioral economics can affect nonprofit fundraising.
Wait, what the heck is “behavioral economics”? Think about it as simply understanding the factors and situations that influence behavior and motivate people to take action.
But behavioral economics isn’t only the territory of PhDs. Professor Kessler encourages all nonprofit marketers to consider themselves to be scientists and to use simple A/B tests as experiments in their fundraising laboratory to sort out what will drive their donors to give more.
So, what are the principles that can affect fundraising for both small and large nonprofits? Here’s a quick overview of six common concepts and how you can use them in your fundraising strategy.
1. Accountability & Recognition
What it is: This is the idea that if someone cares what other people think of them, they may give to appear more generous, responsible, or important.
The research: Gerber, Green & Larimer (2008) showed that voter turnout in Michigan was affected when registered voters received a message that indicated other voters would be notified of their neighbors’ voting habits. In a different study, donors were found to give more when they were recognized as consistent donors to a fund.
How to do it: Accountability and recognition are two sides of the same coin, with recognition being usually perceived as the more positive of the two. Offering public recognition for donors can inspire donors to give to achieve and maintain the recognition, and this same attention can influence others to give to gain the same status. Give donors a special status when you feature giving opportunities on your website, in your newsletter, and in upcoming appeals.
2. Peer Pressure
What it is: In this case, the peer pressure comes from the simple power of the personal ask. If someone personally asks you to do something (especially in person or on the phone), you’re more likely to go along with the request to avoid embarrassment and disappointment, or to win praise.
The research: Meer and Rosen (2009) showed that those who were called in addition to receiving a mailed solicitation were more likely to give.
How to do it: In addition to your direct mail and email appeals, make sure you are calling or meeting with key supporters to make that personal connection and encourage them to complete their gift. Bonus: you’ll likely learn more information that will help you nurture the relationship or fix issues that may have prevented future giving.
3. Social Information/Social Proof
What it is: This is really peer pressure of a different kind. We take our cues on what to do to fit in (and avoid guilt) by looking to social norms–what other people are doing in the same situation.
The research: Frey and Meier (2004) studied the decision to give to student funds at the University of Zurich. When students were told that historically more than half of students gave to the fund, they were more likely to also contribute. Shang and Croson (2009) also showed that when donors were told what others had contributed, it affected the size of their gift.
How to do it: In all of your fundraising materials, make it clear that others support and value your work. Some of the easiest ways to show this social proof include: donation tickers and thermometers, testimonials and quotes from current donors, and charity ratings badges based on positive reviews of your work.
4. Gift Exchange/Reciprocity
What it is: A gift exchange happens when people feel obligated to repay gifts or return a favor, even if they know the gifts are intended to get them to take action.
The research: Falk (2005) found that illustrated cards from street children in Bangladesh increased the relative frequency of donations.
How to do it: Although address labels and totebags come to mind, get more creative when it comes to using the idea of reciprocity in your fundraising. Think about how your incentives or tokens of appreciation tie back to your mission and connect your donors with the end result of their gift. This could mean an exclusive tour of your facilities, a personalized note from a beneficiary, or a custom video from your volunteers. A gift exchange doesn’t need to be expensive, it just needs to be sincere.
5. Identifiable Victim
What it is: When our minds turn to statistics or large numbers, we tend to think about problems in abstract, and feel less connection to them. To be inspired to give, donors need to be able to connect with your ask on a personal and emotional level.
The research: Small, Loewenstein and Slovic (2007) discovered that highlighting an “identifiable victim” made donors give twice as much as when donors were presented with an abstract story or “statistical victim.”
How to do it: We’ve written a lot about this phenomenon on this blog, but essentially it all boils down to focusing on one person to illustrate the human impact of your issue. Tell a compelling story that donors can comprehend, and they’ll be moved to give.
6. Donor Identity
What it is: We tend to think of ourselves in a certain way or with certain ties to our social groups, community, or experiences. Therefore, when we are reminded about the identity, we are compelled to act in ways that feel consistent with it.
The research: Kessler and Milkman (2015) showed that when donors were reminded of their identity as previous donors, they were more likely to give again.
How to do it: In your fundraising appeals, invoke the idea of your donors’ identity to make your ask feel more relevant and personal. This might mean underscoring their connection to a certain neighborhood in your community, a specific alumni group, or a special factor that binds them to your cause.