# Five philanthropic nudges: behavioural science insights that can steer donations

- Link: https://fundraising.co.uk/2014/01/30/five-philanthropic-nudges-behavioural-science-insights-can-steer-donations/
- Published: 2014-01-30T13:53:22+00:00
- Author: Howard Lake

Behavioural economics is a hot topic these days and you’ve probably come across 
its application in a variety of everyday situations; from choice architecture prompting
you to select healthier food in the canteen, to altered defaults which help you 
to save for your retirement, to social norms encouraging you to reduce your energy
bills. In this article we look at various research findings and insights around 
charitable giving, and list **five different ways in which a charity might be able
to increase donations**.

We’ll start with the UK government’s **Behavioural Insight Team** (BIT) which has
been trialling some interesting schemes to make charitable giving easier in the 
workplace, using behavioural economics. Together with the Charities Aid Foundation,
BIT recently published a new report on ‘Applying behavioural insights to charitable
giving’[^(3)](https://fundraising.co.uk/2014/01/30/five-philanthropic-nudges-behavioural-science-insights-can-steer-donations/#footnote)
which looks at the impact of several different trials.

 

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## 1. Donate more tomorrow

[⌊Tomorrow⌉⌊Tomorrow⌉[

[Tomorrow ](http://www.shutterstock.com/pic-151572575/stock-photo-loader-line-board-on-computer-screen-with-word-tomorrow-and-loading.html)
by Sukit Hanphayak on Shutterstock.com

BIT have been working with the Home Retail Group (which owns Argos and Homebase)
and the Charities Trust to trial a new way of encouraging charitable giving in the
workplace by using a system known as **auto-escalation**.

This is a clever adaptation of a famous US scheme called Save More Tomorrow, which
encourages people to save more for retirement by asking them to commit to saving
more when they get their next pay rise, thereby reducing the pain of what is known
by behavioural economists as ‘loss aversion’.

Saving more ‘today’ means we’re sharply aware of the resulting reduction in our 
take home income, but by committing to save more ‘tomorrow’ – as soon as we begin
to earn more – we experience no loss in take-home income, making saving easier. 
Auto-escalation has now become extremely successful in the US and many retirement
savings institutions offer it.

BIT adapted this model, and instead of committing to increasing retirement savings,
employees were asked to commit to auto-escalation of workplace donations by 3% each
year.

Initially take-up of the scheme was low, with only 10% of new donors opting in. 
So in October 2012, they changed the default, making enrolment to the scheme the
automatic setting, but allowing employees to opt-out if they preferred. This has
had a significant impact and the **take-up rate rose dramatically to 49%.** BIT 
estimate that this could raise an additional £3 million per annum for charities 
if launched across all payroll schemes.

## 2. Converting legacy desire into action

[⌊In memoriam - photo: Mr Doomits on Shutterstock.com⌉⌊In memoriam - photo: Mr Doomits
on Shutterstock.com⌉[

[In memoriam](http://www.shutterstock.com/pic-114898174/stock-photo-in-memoriam-inscribed-in-a-marble-grave-stone.html).
Photo: Mr Doomits on Shutterstock.com

Legacies are an important source of income for charities, and they also make financial
sense since inheritance tax is reduced for people who leave more than 10% of their
estate to a charitable cause. However, BIT noted that there was a disconnect between
people’s attitudes to legacies – around 35% of people want to leave money to a charity–
and their actual behaviour – only 7% of wills actually contain a charitable bequest.

So BIT looked at using a trigger to prompt more people into leaving money to charity
in their wills. They used social norms as that trigger, encouraging people to nominate
a charity in their will by reminding them that many other people had also left charitable
legacies.

Collaborating with Co-operative Legal Services and [Remember a Charity](http://www.rememberacharity.org.uk),
the trial ran on 1,000 customers who were given different messages by will writers:

 * **Will writer A [Baseline]:** Customers not specifically asked to donate.
 * **Will writer B [Plain ask]:** “Would you like to leave any money to charity 
   in your will?”
 * **Will writer C [Social norms]:** “Many of our customers like to leave money 
   to charity in their will. Are there any causes you are passionate about?”

[⌊Signing up to legacy giving⌉⌊Signing up to legacy giving⌉[

Signing up to legacy giving: source: The Behavioural Architects

BIT found that **using social norms increased the percentage of will customers leaving
a legacy to a charity to over 15% from around 5%** and also doubled the size of 
contributions. The social norm group raised twice as much as the Baseline group (
see graph below) and in total raised £990,000 from 1,000 individuals, which represents
an increase of £825,000 above the baseline group.

## 3. Anchoring low to build donation rates

 [⌊Oxfam donate options⌉](https://www.fundraising.co.uk/wp-content/uploads/2014/01/oxfam-donate-page.jpg)

Something that causes a bit of a dilemma for charities is the issue of small requests.
Asking for a small donation can often lead to a small donation, and a correspondingly
low level of funding raised. Yet asking for larger donations can generate the standard
excuses: ‘I don’t have that kind of money right now,’ or ‘I already give to many
charities,’ with the additional problem that because they’ve been asked to make 
a large donation people feel that it is not acceptable to give a smaller amount 
instead, leading to low response rates.

_**This tiny addition not only led to an increased rate of contribution of 50% vs
29% – it also (notably) made no difference in the size of contribution.**_

Behavioural scientists Robert Cialdini and David Schroeder tackled this problem 
in a fascinating field experiment and found a simple solution. They recruited a 
team of researchers who posed as fundraisers in a door-to-door campaign across a
middle-income suburban housing area. They tested two scripts: a control group were
told ‘I am collecting money for the American Cancer Society. Would you be willing
to help by giving a donation?’, and an intervention group were told the same, but
with the additional line ‘Even a penny will help.’

This tiny addition not only led to an **increased rate of contribution of 50% vs
29%** – it also (notably) made no difference in the size of contribution. So more
people were giving and were not giving any less. Cialdini and Schroeder believe 
that this was due to what they call a ‘legitimising effect’ – making it ok to give
a little (altering what behavioural economists call the ‘**subjective norm**’ – 
what we think we should really be doing according to our perceptions of societal
norms) rather than directly asking for small amounts.[^(4)](https://fundraising.co.uk/2014/01/30/five-philanthropic-nudges-behavioural-science-insights-can-steer-donations/#footnote)

Another strategy for raising donation amounts uses the behavioural economic concept
of **anchors**. When making a choice, we are often affected by the context in which
we make that choice and the other options available. We anchor to extremes and tend
to pick the middle option as a compromise – a phenomenon called ‘**Extremeness Aversion**’.

For example, [Oxfam present three pre-set options](http://www.oxfam.org.uk/donate)
for people who want to make a one-off donation online. It changes from year to year–
currently it’s set at £18, £50, £100 on the website. £100 probably seems a bit high
for the average person, even for a one-off donation, but £18 feels quite low and
is perhaps a deliberately odd amount. So donors are subtly directed to opt for the
middle option of £50. (The circle is already helpfully marked at £50 too.) Donors
are further encouraged to see the £50 level as desirable by its also being suggested
in the ‘Own amount’ box and so they are given another helpful nudge in that direction.

## 4. “I’ll match you” – If I give, they give

[⌊Two pound coins⌉⌊Two pound coins⌉[

[Two pound coins](http://www.shutterstock.com/pic-61598314/stock-photo-two-pounds.html)
by Daniele Carotenuto on Shutterstock.com

Over time, charities and non-profit institutions have come to rely on a simple rule
of thumb for fundraising – that of matching gifts, where a $100 donation from an
individual to a non-profit organisation is matched by another $100 from another 
donor such as an employer. Oxfam’s donation page above is

Looking at this technique through the eyes of behavioural science, we might speculate
that its success could be due to reciprocity and commitment effects. It is motivating
if we know that someone else has pledged to match whatever we donate. However, it
has often been thought that the higher the ‘matched’ donation, the more effective
it is at getting people to donate.

For example, when a $100 donation is matched by a $200 or even $300 sum from the
charity itself (a 2:1 or 3:1 ratio, rather than a 1:1 ratio). Fundraising experts
preach that you should ‘never underestimate the power of a challenge gift…and a 
richer challenge (2:1) greatly adds to the match’s attractiveness’.[^(5)](https://fundraising.co.uk/2014/01/30/five-philanthropic-nudges-behavioural-science-insights-can-steer-donations/#footnote)

Behavioural economists Dean Karlan and John List, finding that advice on matching
was based largely on anecdotal evidence, decided to test this rule of thumb in a
set of field experiments. What they found countered some of the conventional wisdom
on ‘matching’.

Testing different letters on 50,000 prior donors to a liberal political organisation
in the US, they found that although matching did indeed have a significant impact
on both response rate and amount donated, larger matching ratios had no additional
impact. For 1:1 ratios, the probability that an individual might donate increased
by 22% and the amount donated rose by 19%, but 2:1 or 3:1 had no further effect.
[^(6)](https://fundraising.co.uk/2014/01/30/five-philanthropic-nudges-behavioural-science-insights-can-steer-donations/#footnote)

So, using matching gifts to incentivise potential donors is a useful tool, but there
is no need to go overboard.

## 5. Seeing the end in sight

Online funding/sponsorship websites such as Kiva in the US and JustGiving in the
UK make a point of displaying not only the amount of money raised so far, but also
how this equates to the desired target in percentage terms.

**_This allows donors to see themselves in the powerful position of tipping the 
balance_**

This allows donors to see themselves in the powerful position of tipping the balance–
rounding up a current total to a heftier sum – and there’s no denying the satisfaction
to be had from taking someone’s total raised so far from say, £455, to a mighty 
£500 and in so doing pushing the percentage ever closer to the 100% mark. Kiva add
to the motivating narrative by featuring details about projects and loans which 
are close to meeting their target eg. showing that Josefina Del Carmen (see below)
has already raised 75% of the money she needs to buy farming goods.

[⌊Josefina del Carmen on kiva.org⌉⌊Josefina del Carmen on kiva.org⌉[

Josefina del Carmen on kiva.org

This technique of focusing on percentages is based on more research conducted by
Karlan and List. They analysed what difference already having raised a percentage
of the fundraising target made to the final sum raised, testing the theory that 
it would positively impact on the final sum, as part of a fundraising campaign at
the University of Central Florida.

Their results were impressive – **increasing the percentage already raised from 
10% to 67% led to improved response rates**: 3.7% vs 8.2% of the solicited individuals.
And not only do more individuals respond, but the size of donations increases as
well.

 * at 10% of target achieved, the average donation was around $15;
 * at 33% of target achieved, the average donation was $26; and
 * at 67% of target achieved, the average donation was almost $40.

They also found that people gave fewer small donations when a large percentage had
already been achieved, and large gifts (defined as over $20) were more frequent.

**Why might posting the percentage of target achieved be effective in raising funds
though?** Looking at this using insights from behavioural science can help to cast
light on some possible hypotheses.

Karlan and List speculated for example, that it was used by donors as a signal or
rule of thumb for the deserving nature or quality of the aim. This may be due to
two different reasons; in the case of the kind of fundraising operated by Kiva, 
it could be perceived as signalling a commitment to cause from the charity – in 
that they were willing to devote some of their own scarce resources to it; another
reason might be that because private individuals had already made donations this
could lead to herding and social norm effects which other potential donors might
interpret as a shortcut indicator of the fundraiser’s credibility.

(Interestingly, JustGiving further prompt the social norm effect by including details
of the most generous donor to date in their breakdown of individual sponsorship 
progression, and this can be a compelling message. It’s not donor matching, but 
it sends a subtle hint about levels of donation nonetheless.)

There may be other things at work though too – reaching goals is initially hard 
work and donor motivation can be low near the beginning as the prospect of reaching
the end goal seems very distant. When we are closer to the end, motivation picks
up, so donating to a cause close to its target can be more appealing. If donors 
can see how their contribution is helping to chunk the progress of the target total
it encourages strategic and, perhaps therefore, more generous giving. So our warm
feelings of generosity are rewarded more when we can add £10 to £480 of a £500 target
for example, than an initial £10 to kickstart the entire £500 target.

We also tend to prefer gains today rather than having to wait for future gains (
something behavioural economists call **time inconsistency**), and knowing that 
a donation today could result in meeting the target very soon is more motivating.
So if you need to raise some money, think about communicating how much has already
been raised and how close you are to the desired target, before you go out asking
for donations.

## Conclusion

Many of us want to give (or want to give more) to charity, but we often fail to 
deliver on our intentions. As with so many of our plans, there can be a gap between
what we intend to do and what we actually end up doing and charitable giving is 
one of the plans that we can easily let slip; it needs some trigger action.

These simple behavioural tools such as motivating people to give by telling them
that others are giving and how much, or manipulating the anchors and reference points
for donations, or giving donors the satisfaction of feeling as if their donation
has made a real difference, or playing to the way we discount the future are all
powerful ways to increase charitable giving and goal attainment very easily, with
few additional costs to bear.

These insights are also relevant to nearly all forms of fundraising – from attaining
venture capital funding or departmental budgets or maybe even The Behavioural Architects’
fundraising for social projects!

## Footnotes

1. UK Giving 2012, National Council for Voluntary Organisations and Charities Aid
Foundation

2. Doing Well and Doing Good ‘The Economist’ July 29th 2004

3. Behavioural Insights Team ‘[Applying behavioural insights to charitable giving](https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/203286/BIT_Charitable_Giving_Paper.pdf)’,
2013

4. Cialdini, R., Schroeder, D., ‘Increasing compliance by legitimizing paltry contributions:
When even a penny helps’ Journal of Personality and Social Psychology, 1976, Vol.
34, No. 4, 599-604

5. Dove, K.E., ‘Conducting a Successful Capital Campaign’, 2000 Second edition, 
San Francisco Jossey-Bass, 510pp

6. Karlan, D., List, J. ‘”Does Price Matter in Charitable Giving? Evidence from 
a Large-Scale Natural Field Experiment,” American Economic Review, American Economic
Association, vol. 97(5), pages 1774-1793, December 2007

 

**Crawford Hollingworth is co-Founder of [The Behavioural Architects](http://WWW.thebearchitects.com),
a global insight and research consultancy with behavioural science at its core. **

_Photo:_ _[dominoes nudged](http://www.shutterstock.com/pic-65268643/stock-photo-finger-pushing-dominoes-in-a-row-causing-a-chain-reaction.html)
by Mazzzur on Shutterstock.com_

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