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What Makes People Give?

One of the key issues in non-profit or religious media is donor development. Fergus Scarfe, head of that area for the God TV Network in Europe, sent this New York Times report on donor incentives highlighting recent research which suggests that seed money is a better investment for charities than matching gifts. The research found that match offers had a material impact on influencing donors to give.

In an experiment, 2.8% of people who received a match offer made a donation, compared with only 1.8% in a control group – an increase of 20%. However, the size of the match had no effect. A separate experiment looked at the effect of ‘seed money’ on donor behavior. Seed money refers to when charities raise a large portion of their target amount before officially launching a campaign.

The researchers found that the more upfront money the charity claimed to have on hand, the more additional money it raised. And when compared with the matching gift research, “the study suggests that seed money is a better investment for charities than generous matches”.

I would agree, from the perspective that donors want to know they’re not giving to a lost cause. There are many cases where an attitude of desperation in the ask gave the audience the heebie-jeebies (that’s a technical term) and as a result, the donors jumped ship. I believe people want to get behind a winning cause, and from that perspective, pleading poverty might actually hurt you. Read the article – I warn you, it’s heavy stuff – and let me know your thoughts…

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  1. Interesting. It made me think of the $25 million fund raising campaign at ORU with a matching gift from Mart Green. Last I saw they only raised about $2 million. It would be interesting to see what would have happened if Green put out a challenge for $25 million and plunked down the first couple million and see if they would have raised more.

  2. The New York Times article features excellent content but needs to be read carefully.  Just as Karlan and List found many flaws in conventional fundraising wisdom, one of the biggest flaws is universally applying some key learning about fundraising to every single fundraising event.  Every campaign, cause, and event are unique and need specific unique solutions.  In addition, certain behavior varies depending on the channel from which the donor recieves information and the channel through which the donor chooses to make a donation. The only universal truth I can apply to all giving opportunities is this: giving is an emotional experience.  No matter how much the match, the challenge, or the amount already raised, emotion always improves the effectiveness of the offer.

  3. Max, Jim, AMEN!

    Any fundraiser today that is doing his work by some "rules of thumb" is soon without work.

    Our craft is based on on-going testing of everything from matching gifts to size of fonts.  Every file is a little different from another.  Segments within a list are different.

    We do far more testing in a month than these guys did to write this article. If someone wants to know what works in fund raising they should invest in the right database and people who can establish the tests, read them, and help drive strategy.

    And by the way, tax rates under Bush are lower than they were in the 70s, and giving is at an all time high.

  4. Very interesting and sobering article.

    I've operated by a fairly simple, maybe too simple, maxim in my experience with Churches and non-profits.  I believe money follows vision.  Gimmicks may have some measurable impact in terms of enticing behavior.  When you're looking for regular contributors, not just hit and run type stuff, the key is to lay out a vision clearly that people can grasp, see as possible and desirable and then will get behind and want to be a part.

    People don't get excited about giving to meet a need if they don't see that need tied to a vision.

    Sitting in the pews for the past few years after having been involved on the inside has only helped reinforce this for me.  My own Church is having difficulty meeting the expenses of a recent expansion done after a major building project which itself was underfunded.

    Recently they published in the bulletin, a list showing the number of giving units in the church and the ranges they give in.  Guess what it showed?  Over half the giving units in the church give nothing or less than $1,000 per year.  Apparently the motive was to shame those not giving into giving more.  Maybe it will have some impact, but I doubt it.  The impact may even be negative if some of the larger givers see the reality of most of the others in the church not carrying their weight.  The reality is that this is true of all churches and pointing it out without reaffirming and telling the story to people as to what they're giving for, has little value.

    Media based ministries I understand are operating on a different model.  The goal is raise the funds necessary to keep the broadcast in place (assuming that's the model in place) and the vision is circular back to the show itself.  People either have to see the benefit of the program to themselves (teaching, encouragement, personal growth, a sense of being a part of something greater than themselves, etc.) or they have to raise to the level of seeing a gift accomplishing something they can't that they value, such as reaching others with the gospel, feeding the hungry, caring for the sick, etc.

    It's not hard to see what the models in some ministries are.  Proffer a theology that giving to God (who apparently is personally associated with that ministry) will plant a seed to release blessings in your life (financial apparently) and you have God as the formulaic coke machine.  Put a dollar in and get $100 back.  Not hard to see the motivation there as to what makes people give in that context.

    Guilt and Shame can make people give, for a while anyway, but that doesn't seem to match the Biblical appeal for a cheerful giver.

    I still believe it ties to vision and how effectively that vision is communicated, assuming that it is a worthwhile vision that people get excited about.  How well that measurea against the methods in this article is another matter.

  5. Bart,  In our church, 4% of the congrgation gives 50% of the income.  For a year, income has been dropping so we started a teaching segment before the offering to teach those who are new to faith (a large part of our church).  Guess what?  It pissed EVERYONE off!

    Today an email went out that we are $33K in the red, and almost three months behind in our rent.  The church will fold before summer if God does move a lot of hearts and money.

    Everyone wants what they want, but they don't want to pay for it.

  6. Great challenge…  I teach a Faith and Money class at Biola to teach stewardship, budgeting, debt reduction to College Kids.  Biggest challenge is overcoming the "world's media message" that bigger is better, more is good and we deserve everything we can get!  Bottom line is, it all belongs to God and we are just stewards of what He has entrusted to us and blessed us with. 

     You can do all the gimics you want in fund raising with premiums and recognition, motivate with guilt, panic and fear, the real problem is we aren't teaching Biblical Stewardship and our responsibilities to give!  Check out Deuteronomy 10:14!  Great ownership passage.  Or Philippians 3:20 for where our focus should be!  I hope your church makes it and the people step up!

  7. In one field experiment cited the donors gave more when the amounts already given were greater. But I’m wondering if the motivation is different that what they hypothesize. Since the total project was only $3000, then the larger the amount previously raised and the smaller the amount to be raised, the more important a donor’s gift seems.
    For example, if $100,000 remained to meet the goal, my $500 gift seems like a drop in the ocean. But if only $1000 is still needed, my $500 gift seems much more significant.
    If this is the case, perhaps large projects should be subdivided into smaller ones so that the amount of money a donor might give is a significant part of that aspect of the project.

    Just a thought. Tom

  8. Great posts all,

    During this time of economic difficulty, what does the NT say about giving?  First off, John the Baptist said give to one another if you've got an extra coat or meal.  Hm… One another.  Then Jesus said to love God and each other, sort of with co-equal emphasis.  Yet NEVER, NEVER, NEVER have I heard this simple concept preached about giving.  It's always…. give to the preaching machine!  Not much is said about giving to each other.  So… wouldn't the earth be more heavenly if we regularly gave (and received) from plain old each other?  If we did this, we might be led of the Spirit to directly give to some neighbor who prayed to the same Great Spirit for help.  Works for me!  But the Big Preaching Machine, how is it going to give that coat, meal, car, job or love to my neighbor?  And when I need something like that, how is that Big Preaching Machine going to give me the same?  Answer:  We can actually help each other, perhaps, a lot more than the Big Preaching Machines can, but they are so consumed in self-interest, they might never tell you this fact.  There's a lot of facts based on common sense and on scripture that the Big Preaching Machine ignores due to self-interest.  So the biggest revival wake up call is not the unwashed masses, it's the unwashed, self-interested Big Preaching Machines.  For example, the Big Preaching Machines disavow the OT when it conflicts with self-interest concepts they promote from the NT.  But they reverse gears and bring out Malachi 3:10 to bolster tithing as a FIXED rule.  But the Big Preaching Machine seldom if ever quotes Christ in his three red-letter denouncements of people who tithed wrongly, showing that tithing is not a FIXED blessing.  So a good place to start in analyzing fund raising in Christianity is to review what Christ was modeling in maturity for us moderns.

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