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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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13 Comments

  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.

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