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Behavior Economics in Fundraising: 11 Strategies to Boost Gift-Giving in 2023 - Part 1

In a world where attention is the #1 commodity, many nonprofits find themselves vying for our attention among for-profits, influencers, and meaningless entertainment platforms. However, even with the public's goldfish-like attention span, our donors are more sophisticated than ever. They have more philanthropic options and higher expectations, and nonprofits often have to stretch their existing resources as far as possible.

Enter Behavior Economics - an area of study with immense potential for application in the donor relations field.

What is Behavioral Economics?

This field of study is gaining popularity in mainstream professional education, while sectors like big tech have been using these strategies for over a decade to accelerate product engagement. Just a few scrolls through social media tells us that humans are irrational beings. Even those possessing Spock-like stoicism tend to make decisions based on emotions rather than logic. In fact, you may have even heard us say that giving is 90% an emotional decision. But just because we are irrational doesn’t mean that we are unpredictable.

Behavioral economics combines human psychology with the data-driven analytics of economics to predict how we will behave and why.

Credit: Stephen Shu, Ph.D. Behavioral Economics Advisor & Cornell Professor

This is looking at consumer behavior through the lens of decision-making science.

Applying these principles to the nonprofit world can compel a prospect to give, increase gift amounts, and decrease donor attrition. We can clarify our message simply by being intentional and strategic about the words we use, where they fall on the page, and the supporting imagery we show. It’s no secret that social media designers have used these concepts to achieve less than altruistic goals. That's why we believe we as nonprofits have the ability—no, the responsibility—to use this knowledge for good!

Behavior Economics Cheat Sheet

The effective application of behavioral economics principles could compel even your most left-brain donors. Here are a few concepts that are relevant to our field: ProTip: Tiny things = big results in this game (more on that in a later blog post), so pick a few that you can easily start implementing. Some of these small changes can have a large impact.

1. Celebration / Temporal Discounting

Behavioral scientist BJ Fogg, author of Tiny Habits, discusses using Celebration as a strategy to encourage specific behaviors. As Fogg states, “Good feelings spur the production of a neurotransmitter (a chemical messenger in the brain) called dopamine that controls the brain's reward system.” Essentially, celebration dopamine rush repeat behavior. Temporal Discounting refers to our preference for immediate gratification. The less temporal distance there is between the reward/celebration and the behavior, the more the donor associates that dopamine rush with performing the desired behavior. One of the more obvious places for nonprofits to apply this concept of celebration is on a giving confirmation page. Doing so will validate the donor's decision to give, create positive emotions, and reinforce the behavior of giving. I'm sure you already have language of gratitude on your confirmation page, but consider how you can step it up. Even tiny rewards hook us. The most important thing to remember is that the "celebration" must occur immediately after or during the desired behavior. When someone associates a positive feeling with giving, we are more likely to retain them as a donor.

2. Positive Labeling

Positive Labeling is a verbal observation of feelings that neutralizes negative emotions and/or reinforces positive ones. When you identify a trait that donors want to see in themselves, you have tapped into their aspirational identities and they'll try to fulfill it. To put it simply, calling someone generous makes them more likely to be generous. Think about how much more compelling your solicitation or acknowledgment letters would be if you wrote: “Stephanie, as a loyal supporter of the cancer research center for the last 7 years, you’ve witnessed how your generosity saves lives. You are a change-maker. Thank you for making a difference in this community.”

3. Social Proof

According to Hooked author Nir Ayal, facilitating the feeling of belonging to a community is one of the few ways to reinforce a behavior. We all have an innate desire to seek social acceptance. For example, shy do so many people choose to ‘attend’ the same exercise class every week? It’s not just for the instructor, but because of the community and accountability associated with the people in that specific class. When applied to our work, social proof includes highlighting the support of others, such as mentioning the number of donors or the amount raised. This can increase the perceived norm for giving and ultimately increase contributions.

4. Forced Empathy

Even the most generous people can have a tendency to “other” someone in need. However, that is harder to do when you begin to envision yourself in their shoes. As donor relations professionals, we can help strip away unconscious biases by providing an immersive experience for potential donors. Encouraging someone to see themselves as a part of the same group as someone in need can help combat "in-group bias—our tendency to give preferential treatment to those belonging to our same group. Urban Ministries of Durham gets 5 gold stars ️for their innovative demonstration of forced empathy. You can find their immersive video game experience here. Players are challenged to spend a month in the life of someone facing difficult financial decisions (via this game, of course).

In the end, players see that it is virtually impossible to live on such a low income. At any point in the game, you can select "I can't do this." If you do, the message that follows reads: “This is hard, isn’t it.”

They empathize with you, the player (who was only pretending to be someone in need) so that you will in turn empathize with people who really are in need.

5. Completion Bias

Calling all calendar and journal junkies! When you start making a to-do list, do you find yourself suddenly filled with a compulsion to check things off (almost) as quickly as you write them down? Once you start a process, completion bias is the wave of motivation that you feel to complete it. One great example of completion bias is when you create a LinkedIn account, there is a progress bar showing you how close you are to completing all the tasks necessary to have a robust profile. If you pay attention, you'll notice that you start off pretty far into the bar giving you the illusion that you are close to getting to the end—that's why most of us start completing additional steps we would have otherwise skipped. Why? Because we’re chasing that dopamine rush we get each time a task is completed. How can you implement this with something like your Giving Day?

But wait! There’s more!

You were promised 11 behavioral economics principles, and you've probably noticed that are only 5 listed above.

I know that those of you with a strong completion bias are probably pulling your hair out at the cognitive dissonance created by not yet knowing the end. Sorry about that—we chose to do this so your eyes don’t glaze over with a blog post the length of a PhD dissertation.

Of course, we’re not disappointed that this has piqued your interest and given us the chance to leverage these methods ourselves—how very meta of us!

BUT you don’t have to wait for Part 2 of this blog post to start making changes! What small changes can you start making today? Let us know which principles you're most intrigued by in the comments! Track your progress, and adjust as necessary.

Even small changes in areas like donor experience, communications, and efficiency can increase the world's supply of generosity.

Plus your boss will think you’re wicked smart. (Which you are.) Y’all, I love writing about this, so if you want to learn more about one of the concepts mentioned above, please let me know in the Comments!


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