The holidays are approaching and many nonprofits will be depending on the end of the year to increase their fundraising. Known as the ‘season of giving’, November and December are the peak months for giving to charity, with the Charities Aid Foundation reporting that in 2018, 39% of people in the UK said they had made a donation. donation over the past four weeks compared to an average of 32 percent throughout the year. Other research has found that up to 20% of annual giving takes place in December, with a particularly high concentration in the last days of the year.
When you think of “Giving Season”, it’s easy to imagine scenes from old holiday movies. A volunteer in festive attire stands outside a mall as passers-by drop dollar bills into a donation bucket. However, in reality, a large portion of the donations received this year will not be in person at all. According to NonProfits Source, an SEO agency for nonprofits, The problem with online donations? On the street, six in ten people will stop to speak to a fundraiser. In the digital world, barely 0.08% of fundraising website visitors end up donating. So when a visitor hits the donation page, it’s only a fraction of a second for nonprofits to get it right.
Successful street fundraisers are engaging, motivating and persuasive. They adapt quickly to the emotional and cognitive needs of potential donors once they have captured their initial attention. Nonprofits need to recreate this experience in the digital world. But how?
Co-authors Frank Bilstein, of the Donanto Foundation, and Fabian Farkas, Florian Fleischer and Mehdi Damak, of Simon-Kucher & Partners, conducted two separate studies, focusing on fundraising and non-profit organizations: Foundation , and the Behavioral Nudging Study by Simon-Kucher & Partners. Both suggest behavioral economics as the answer, with the results of the Simon-Kucher study first revealed to the public in this article.
Shaping Online Donation Behavior
Behavioral economics research has shown that people don’t always make the rational decisions that we would expect. Instead, humans often act irrationally, with various social, cognitive, and emotional factors shaping decision making. This subject is already widely covered in the literature, as in Dan Ariely’s bestseller Predictable irrational and that of Enrico Trevisan The irrational consumer.
Simon-Kucher and Donanto’s studies shift the focus from economics to how behavioral nudges can be applied in the nonprofit world, and complement previous ideas shared here at SSIR. Many nonprofits assume that a large increase in donation amounts will require a lot of effort and investment. On the contrary, both studies show that certain nudges – small changes in the presentation of the gifts – can have a disproportionate impact.
Fill in the blanks
Donanto’s Online Fundraising Quick Wins study highlights three key changes in the way donations are raised and their impact on fundraising income, using a baseline scenario where donors could freely enter the amount they donate. ‘they wish to give. The study then replaced this open field with several different options:
- Add an anchor to your online donation form: The study found that simply pre-populating the donation field with an amount greater than your average donation amount can have an increase effect of up to 20%.
- Focus on recurring donations: Making monthly donations the default option and reducing the accessibility of the “one-time donation” option can have a positive effect of 20-50%. As expected, most of this increase is driven by the incentive of donors to make recurring donations. In a real application, the share of recurring donors increased from 10% to 57% (while the number of donations also increased). Our colleagues discussed other ways to boost recurring revenue in a precedent SSIR article.
- Give effective advice: Submitting at least three (but not more than five) suggested monthly donation amounts was the most effective behavioral boost in the study, with donation increasing over 100%. Here, the lowest suggested amount should be close to the most frequent recurring donation, the intermediate amount two or three thresholds above it and the highest amount at least twice the most frequent recurring donation.
(Graphic courtesy of the Donanto Foundation)
Small nudges, bigger numbers
As Donanto’s study showed that effective counseling was the most powerful tool for increasing fundraising, Simon-Kucher’s team took a closer look at the different types of counseling that were possible. In the base case of the new Behavioral Nudging Study, three pre-filled donation thresholds were presented to potential donors. Here, only 28 percent of donors chose to donate above the lowest suggested amount. This percentage was then improved in the study by applying additional nudges to provide effective advice:
- Highlight the value proposition: Donors are more willing to invest their time and resources if they clearly understand how far their efforts will go. When given examples of what could be achieved with each amount donated (e.g. textbooks for 60 children, vaccinations for 90 children, clean water for 125 children), 40% of participants in the study chose to give a higher amount than those which had not been provided. with the boost (an increase of 43 percent). Building on work already carried out by Donanto, the Simon-Kucher study showed that various examples of value propositions did not have a significant effect on the amount of donations: what matters most is the amount of money donated. makes a clear value proposition come up.
- Preselect a donation: Suggested donation levels send a signal about what is usual and expected. Similar to the Donanto study, in the Simon-Kucher study, participants were given three options for donating within the usual thresholds. However, in the Simon-Kucher study, when the middle option was preselected by default, 40% of participants chose to donate a higher amount, compared to 28% in the base case with the same three cutoffs but no preselection. .
- Take advantage of the herd effect: People want to conform to social norms, especially when given credible evidence of these normative behaviors. In the Simon-Kucher study, when participants were shown the average amount donated by other contributors in the same region, 37 percent chose to give a higher amount.
The Simon-Kucher study also explored other effects such as the ordering effect (placing the highest donation amount first), but confirmed that providing counseling is the most effective tool for increasing income from donations.
Behavioral nudges: naughty or nice?
Nudges are interventions that can shape a donor’s intuition, remove barriers, and simplify actions. The question for every nonprofit is how to use them in ways that are both effective and perceived to be fair. Donors need to see their needs best addressed, not tapped, and a successful boost will be invaluable both to the nonprofit and to the donors themselves.
In some cases, a clear value proposition with details of how fundraising money is spent will allow donors to make more informed decisions. In others, providing an anchor, showing the “norm” among peers, or preselecting a default amount can ease the decision-making process and alleviate some of the mental strain associated with the donation.
A good example of these in-game nudges can be found on Charity Water’s donation page. First, the value proposition is clear, informing donors that the default monthly donation of $ 40.00 can provide clean drinking water to 12 people each year. Additionally, the donation page features several donation options at different thresholds, with the middle option pre-selected, while allowing donors to enter their own suggested amount under “other amount”.
The nudges your donors will appreciate the most may depend on the unique nature of your own fundraising approach. One of the main things to remember when applying behavioral nudges to online fundraising is this: Testing is crucial. Although behavioral economists would describe humans as “unpredictably irrational,” only A / B testing can tell you for sure what motivates your target group. A multinational Donanto-backed nonprofit decided to combine its two donation buttons (“Donate” and “Become a member”) into one, only to find that this so-called improved clarity reduced the number of clicks on its 40% donation forms!
A / B testing is relatively straightforward, but it is important to collect data based on a sample large enough to derive appropriate (i.e. statistically significant) information from the results. Nonprofits that rely on November and December for increased website traffic can use this time as a time to test out various nudges and then stick with the more successful ones in the New Year. If you already have a significant number of visitors coming to your donation page today, now is the time to start.
Gathering this information in advance will allow your nonprofit organization to capture the real magic of the holiday season!
Read more stories from Fabian Farkas, Frank Bilstein, Florian Fleischer and Mehdi Damak.