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Behavior Economics: 11 Clever Strategies to Boost Gift-Giving in 2023 - Part 2


Hand drawing economics sketches on a dry erase board

Welcome back, friends! For those of you who read Part 1 and want more, you're in luck!

(For those of you who have not yet read Part 1 but plan to keep reading, I see you, you rebel you.)


White mug on table that reads "Happy Donor Tears"
Yes, this is available for sale in our DRG shop.

Here in Part 2, we’ll unveil 6 more behavior economics strategies that donor relations and fundraising professionals can use to increase donations and retention.

So sit back, grab a cup of your favorite beverage happy donor tears, and get ready to take your fundraising game to the next level. (Yes, that adorable mug is available in the DRG shop!)



Behavior Economics Cheat Sheet (cont’d)


6. Path of Least Resistance

On his podcast, Nudge, Phill Agnew describes the various persuasive strategies Steve Jobs used throughout his career. For example, when Jobs was previewing a prototype for an early iPod, he sent developers back to the drawing board almost immediately. Frustrated by the standard “up, down, left, right” controls, he told his team not to come back to him until he could get to his favorite song in three clicks or less.


The result? Innovation.


Developers created the scrolling click wheel, and the rest is history. This simple design element made the product easier to use and motivated consumers everywhere to make sure they had an iPod in their pocket.

4th generation iPod laying on orange cloth fabric
Apple’s 4th generation iPod.

On your giving page, consider how you can reduce the number of clicks or fields required to make a gift. How much info does your organization need to process the gift? Because if you don’t need it, then it is only making it harder for someone to give you money.


Which leads me to the next practice…


7. Default Effect

One way to lead your donor down the path of least resistance is by creating default options.If we look at your giving page again, offering suggested donation amounts will increase the likelihood that your donor will actually complete their transaction because it is one less obstacle standing between them and making their gift.


You can even stack this concept to make it extra powerful!


Increase your donations by offering default options (called a gift array) on your giving page or direct mail solicitation that are higher than the donor’s previous gift or higher than your average gift.


To dig further into this idea, look into the Anchoring Effect by Daniel Kahneman. Or consider the Decoy Effect, which is the concept that the addition of a third, less attractive option influences our perception of the original two.


8. Urgency or Scarcity Principle

Create urgency by emphasizing scarcity. Punching up scarcity language with emojis is a power combo.


Behavior scientist Nancy Harhut shared that World Data looked at billions of emails to determine the effectiveness of various trends. They found that these emojis - ⌛️⏰ - in an email subject line can give you a 22-24% increase in open rate!


Here is what this looks like in the wild: “Be among the first ⌛️,” “Time is running out ⏰,” “Limited spots available ⌛️” “⏰ Today Only.”


Keep this strategy in mind when drafting your email series for Giving Day.


9. Prospect Theory


Israeli economist Daniel Kahneman won the Nobel prize for this theory in 1979 when he discovered that people are 2-3 times more likely to make a change to avoid a loss than they are to achieve a gain.


In other words, people hate losing $100 more than they like winning $100.

Chart with two bar graphs showing "the pain associated with losing"

It is critical to outline what is at stake. If there are no stakes, there is no story. For us in the fundraising world, that means it is more effective to frame your asks by spelling out what may be lost if the donor does not give.


A note of caution: fear-mongering does not perform well in the marketplace long term. So please don’t turn this into trauma porn or some Sarah McLachlan commercial with dying kittens.


That level of discomfort can push potential donors to tune you out completely. Remember to be clear - but brief - in outlining the potential loss.

This excerpt below shows how we checked the Prospect Theory box (without fear-mongering) for an adoption and foster care organization:

Screenshot of a donor solicitation letter
Email madelyn@donorrelations.com for a copy of the complete solicitation.

You may be thinking, “Wait, the loss would be the child’s - not the reader’s - right?” You are correct in that the loss would be felt most by the beneficiary. However, recall that we all have an innate desire to be a part of something bigger than ourselves. This longing feeds altruism.


Not making a gift implies a partial loss of that aspirational identity. Therefore, the Prospect Theory is not just reserved for our friends in business. We too can leverage this principle to return a profit.


Look, I know we’re not supposed to play favorites, but this is mine. 🤫


Maybe because I’m a writer, and it is paramount to storytelling. Maybe because it transcends time, industry, and culture. Just know that if you want to talk some more about Prospect Theory, my email inbox is always open.


10. Cashless Effect

At a mom conference recently (yes - that’s a thing), someone from the nonprofit World Help showed a video of the work they are doing right now to help Ukrainian mothers and their children. At the end of the video, there was a QR code to give.

Do you know what I did after I wiped the ugly-cry off my face? I got out my phone, scanned that QR code, and made a gift.


They exceeded their goal within a matter of minutes! Do you know why?


Because I didn't have to dig in my purse for a checkbook, or a pen, or even filter through the dozens of grocery receipts in my wallet to find my actual credit card.


This Cashless Effect is one way to apply the Path of Least Resistance principle. The idea is that the less tangible money is, the less psychological pain we experience when relinquishing it.


This is why Vegas operates on chips. This is how Gen Z’ers have survived without ever having gone to an ATM. This is how my family spent $40 worth of tickets in less than 45 minutes at the State Fair last weekend (don’t judge, the deep-fried Oreos are worth it).


So bring your institution to the year 2023 by slapping QR codes on your paper communications and find out if/how you can use cash alternatives like Venmo or PayPal.


11. Peak-End Rule

As a Kahnefan (a term I just now coined to mean a fan of economist Daniel Kahneman), I would be remiss to not share with you the Peak-End Rule. The Peak-End Rule states that when forming impressions, we tend to remember two key moments: (1) the most emotionally intense or 'peak' moments of an experience and (2) the end.


Line graph showing "The Peak-End Rule"

By this logic, even if an experience is overall pretty negative, people can still walk away with a positive impression as long as there is a particularly memorable “peak” moment OR it ends on a high note.


Consider this when you craft your acknowledgment letter or a direct mail solicitation. The moment of the greatest emotional resonance will stick in the reader's mind.


Sometimes this is where we choose to use stylistic elements (bold, italicize, font color, font size, pull-quote) to make sure the most critical component is not overlooked by a skimmer.


Use your end to make a positive call-to-action (or CTA). In fact, I like to reiterate that call-to-action in a PS line.


Challenge


Remember that our job as donor relations professionals is to facilitate our donors’ generosity. Each nonprofit has a mission, but sometimes our message gets lost. So strip away the external noise using these 11 strategies.


Like a delicious but potent cocktail, these methods should be used responsibly. Skirt potentially ethical issues by keeping your donors’ interests at heart. Deploy strategies that work for both the donor and your organization.


My challenge for you: start by choosing 1 of these 11 principles to internally motivate your donors to realize their philanthropic potential.


Which one will it be? Let me know in the comments!


PS: If you haven’t already, take a look at last week’s post that covered the first five behavioral economics principles.




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