By Ben Paynter
Sep 18, 2016
Marketers have gotten pretty good at getting people to buy stuff they don’t need. When it comes to charitable giving that creates a problem: Some campaigns are slick enough to convince people to spend in ways that are wasteful.
That may be a harsh critique of the helping-people space—giving money to any cause is better than nothing, right?—but the point is that donating based on some late night infomercial, direct mail solicitation, or your neighbor’s next charity race is often a knee-jerk response. "The entire charitable giving space of everyday givers is set up for impulsive giving," says Piyush Tantia, co-executive director of Ideas42, a behavioral research firm, which just released a report on what’s really driving philanthropic exchanges.
As their research notes, individual donors vastly outspend foundations or corporations in the U.S., giving 70% of the $350 billion collected annually for humanitarian causes. But when most donors list out the societal problems they want to solve alongside where they’re giving money, those lists don’t match. Most people also say they want to understand how organizations are using their donations. In reality, only 3% do that research before they give.
The reason? There are 1.5 million nonprofits registered in the U.S. To stand out, many have co-opted classic marketing ploys that short-circuit our best intentions. Backed by a Gates Foundation grant, Ideas42 is pioneering research into how to encourage "thoughtful" giving—the equivalent of a money management class for the greater good.
The first step is figuring out how charities may be manipulating you in the first place. Here’s what generally works.
Guided By Groupthink
"Because we are all social creatures, one of the most powerful cues is the perceived social norm," the report notes. For instance, in one study, financial managers trying to convince clients to leave money to charity in their wills prefaced that ask with the statement, "Many of our customers like to leave money to charity in their will." Allocations magically jumped 43%.
Such herd-like behavior can also play out in how we approach things like a translucent donation box for a heartfelt cause sitting on some shop counter. In another study, researchers filled just such a box first with a pile of coins, and then with just few big bills later on. When people saw the coins, many emptied their pockets of loose change. When they saw the cash, there were fewer deposits but they matched the existing denomination.
This may explain how people get trapped pledging money toward an endless cycle of charity races. You know the participant, so there’s social pressure, notes Tantia. And there’s often a digital scoreboard for who is pledging. Per the report, in some cases all a solicitor has to do is mention that another donor recently contributed to their cause and successive donations rise. Mention that it was a similar person to the intended donor—or at least the same gender—the returns hike even more. It’s the charity equivalent of keeping up with the Joneses.
Because people don’t often research causes, they’re more likely to join groups that appear to be succeeding already. In one test, donors who were told that a group had substantial seed funding were twice as likely to give and dropped six times as much as those told they were giving to a place with a far smaller nest egg. In another, just being told that a major donor had bestowed a "challenge gift"— without sharing any real financial info—made 23% more people willing to kick in.
"These cues are especially powerful when people aren’t sure about whether an organization merits their support, since potential donors who don’t have enough information are more likely to do nothing than conduct their own research and due diligence," notes the report. This might explain the rise of the ubiquitous Progress Toward Goal meter. People like to be associated with winners, so they’re suckered in.
Numerous studies show that humanizing a cause is a great way to get people to rally around it. It turns out that people shown photos of orphans in Sudan will give more than those just shown their silhouettes. If there’s a photo of a group and the names are listed, people will give more than if those suffering are left anonymous. Per Ideas42’s research, it appears that naming and showing one an image of one single "identifiable victim" trumps everything in terms of generating donations and how much they’re worth.
What’s interesting is that this process works especially well if you withhold facts about the cause. An experiment in which people were asked to donate to Save The Children divvied potential donors up into three camps. One received just a picture and description about a little girl in need. The other two included the girl’s profile and more facts about the cause, or no picture and only a fact packet. In the absence of facts, the little-girl-only group still donated twice as much as anyone else. The takeaway: "Deliberative thought suppresses emotion-based giving." No one’s knocking Save The Children. This just supports the idea that people currently prefer to give on gut instinct, not objective analysis.
Not everyone is so easily duped. Such tactics have spawned a subculture of "avoiders" who, when confronted by, say, a direct pitch from the Salvation Army will avoid the bell ringer altogether. Perhaps in response, Ideas42 has found at least one charity testing the "Give More Tomorrow" approach. The group called monthly contributors, and asked them to increase donations even more, albeit with a delayed start of two-months or so. It worked far better than asking for more on the spot.
None of these tactics is outright bad. But Ideas42 hopes to find ways to ensure that donors are spending rationally—in a way that gives them the satisfaction of making the most change. "The question is how do these folks make the decisions about where they are giving and can we do anything to help make more informed decisions, more intentional decisions about giving," Tantia says. It’s not enough just to praise someone for being generous anymore—although that’s been shown to encourage even more future giving.
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