Small changes to donation asks can make a big difference to the gifts received. Rob Pyne explores the practical application of ‘Nudge Theory’ for nonprofits.
Nudge Theory, the term coined by US economist Richard Thaler in his 2008 book Nudge, is essentially about “choice architecture” – how the way you present a range of choices can make a huge difference to which selection most people make. One key is attracting people towards an action. Another is making it so easy to take a step that it bypasses people’s resistance to changing the status quo. A great example was a project where people were asked to sign up to a plan to save more money – tomorrow.
The ‘Save More Tomorrow’ program was an early success of Nudge Theory. This savings project in which Thaler proved his ideas, involved asking people to join a savings plan that didn’t start until their next pay rise, some months away. The percentage of the salary they saved would then increase every year, the same date as their annual pay rise, so they never noticed lost income. Thaler showed that with this particular financial ‘nudge’, people increased their savings fourfold.
Investigations of Nudge Theory and its application for nonprofits have demonstrated that, surprisingly, small tweaks can substantially magnify donations. Just some of the tools in a charity’s kit are:
1. Automatic escalation: An example is a test by Zurich Community Trust (ZCT) partnering with the UK government’s Behavioural Insights Team (BIT). The trial explored the fact that people more readily sacrifice future than current income. In an e-mail to 702 donors as part of a ZCT annual appeal, supporters were asked to sign up to index their regular donations to ongoing, small, annual rises. This encouraged people to lift their future donations and boost their support by more than £1,000 or AUD $1,800 in the donor’s lifetime. Asking donors to choose from making annual rises of between £2, £4, £6, £8 and £10 also got higher donations than a choice of increases of £1, £2, £3, £5 or £10.
2. Anchoring: Charities can make an extra 36% net profit (or $72,000 more in a campaign that would otherwise have raised $200,000) using ask grids tailored to a donor’s last donation, according to Arnaud De Bruyn and Sonja Prokopec. The marketing academics measured the effect of this ‘anchoring’ method in their 2010 paper Optimizing Donations with Individually-Tailored Donation Grids. Interestingly, the best return was when the lowest suggested amount was just a little higher than the last donation, with three other donation alternatives increasing by 28% each time, plus an “other amount” box.
3. Social norms and personalisation: Nonprofits already know that people’s desire to follow their peers is a strong donation driver. But this phenomenon can be tapped into very easily by just adding a supporter photo and quote to a donation ask. An example is the use of a photo and a comment of a workplace giver from the UK government’s HM Revenue & Customs department, in a postcard requesting their colleagues also join the giving program.
At Deutsche Bank, in another experiment BIT helped to conduct, a personalised e-mail (addressing them by name) from the CEO asking employees to give away a day of their salary had a much higher uptake than generic e-mails. When this technique was combined with small gifts tapping into reciprocity – in this case, sweets people were given on arrival at work – it more than tripled charitable donation rates and helped raise a huge £500,000 (AUD $910,065) in just one day (see Figure A).
4. Framing: Whether your ask focuses on a group or individual can significantly affect giving. A 2005 study by George Loewenstein and others, for example, found an identifiable victim’s struggle was twice as effective ($2.38 compared to $1.14) as portraying the total number of people affected (see Figure B). Surprisingly, using both statistics and the story of an identifiable victim dampened fundraising compared to the story alone ($1.43).
The vast majority of people really want to give to charities. But other priorities sometimes get in the way. Setting your asks or ‘nudges’ with an awareness of your donors’ motivations and stumbling blocks can make it easier for them to make a choice which is a win for them and for you.
Rob Pyne is the founder of the training and coaching consultancy, X or Y Decisions, specialising in how people make decisions in the real world. Primarily working with leaders and leadership teams in their decision making, Rob also advises not-for-profits on marketing strategies using behavioural insights. Previously he was an advertising executive for 15 years and headed media strategy at News Digital Media.