Allow donors to choose how their money is spent

Researchers from Erasmus University Rotterdam and Universite Libre de Bruxelles have published new research documenting effective and inexpensive strategies for making fundraising campaigns more effective.

This research journal of marketingis entitled Empowering Donor Agencies to Improve Charitable Giving: Strategies and Heterogeneity and is authored by Emilie Esterzon, Aurélie Lemmens, and Bram Van den Bergh.

One sector that has been hit hard by the current economic downturn is often overlooked. It’s a charity. Fears of a global recession, exacerbated by the OECD’s announcement that Europe must prepare for its worst energy crisis since the 1970s, have forced many charities to struggle to donate. As austerity measures take hold around the world, many nonprofits, especially smaller ones, are reassessing their fundraising plans.

According to Giving US, donations account for nearly 70% of the estimated $470 billion in US charity revenues in 2020. Previous research has proposed a variety of strategies to increase individuals’ motivation for giving, including distinguishing between ‘pure’ motives such as altruism and ‘impure’ motives such as seeking to enhance reputation. increase. Some researchers argue that most donors donate based on spontaneous emotional responses, such as when moved by an identifiable victim.

This new study offers an inexpensive strategy for making fundraising campaigns more effective. The research team found that by allowing donors to choose the charitable projects they donate to, they could dramatically increase their fundraising income. Extensive field research has documented this effect and how it works.

the power of agency

Agency is an important concept in charitable giving. Donors rely on charities (agents) to perform charitable services and contribute because they believe in the charity’s mission and ability to carry it out efficiently. However, it is up to the charity to decide how the funds raised are spent, and there will always be times when the charity uses the funds for purposes (e.g. overhead costs) that are not valued by the donor. Many donors turn to watchdogs like CharityWatch to let them know how the charity is spending their money.

Giving donors greater autonomy could be a solution. In a series of studies, researchers found that increasing donors’ belief that they can control the outside world through their actions motivates them to donate. “By allowing donors to select or target specific philanthropic projects, we give them more control over the charitable resource allocation,” she says.

In the experiment, charities described three unique projects that involved sending donation requests. Some donors can express their preferences and decide which charitable projects they fund. Other donors did not receive the opportunity to control how the charity should distribute its resources.

Donors responded positively to the opportunity to decide what they would like to donate, resulting in a 42% increase in fundraising revenue. Results show that donors experienced a greater “sense of agency” when they were able to tell the charity what to do with their money.

loyalty value

Lemmens adds: strong habits. For example, a donor who only makes donations during his holiday season or a fixed amount each month will be less responsive to the opportunity to choose a particular charity.

The study offers two important takeaways for charities.

• By contacting a select set of donors and offering only a subset of them the possibility to decide which projects the donation will fund, rather than sending out a solicitation request to all donors. , you can design more effective fundraising campaigns.
• Note that more committed donors (captured by longer tenure and/or larger, more recent, more frequent, and disorganized donations) were particularly responsive to the experiment.

For those of you managing a charity and overseeing fundraising efforts, here are some lessons learned for optimizing your next campaign.

• Consider empowering your donors by letting them decide which projects you want to fund.
• Identify donors who value being able to manage the projects they fund. “For example, randomly ask half of the donors to choose a charitable project, and let the other half contact them, but not choose. You can identify who to contact for which type of request in your fundraising campaign.” Van den Berg.
• Check out our Open Science repository to learn how you can use data like this to optimize your next campaign. This code will help you determine which donors to target and what to say to maximize your chances of giving.