Recently I was listening to the Freakonomics Podcast entitled "How to Raise Money Without Killing a Kitten”. They interviewed economist John List about fundraising. There were a fair bit of interesting tips about fundraising, so I took some notes in case anyone was interested. This is essentially a "brief summary of a brief summary" as List was already summarizing his research.
Why People Give
- Altruism is not as a big of a deal as people think when it comes to motivating donations -- instead people are frequently driven by self-interest. It’s important to play into this. Your fundraising should be somewhat about giving the donor the ability to brag about how good of a person they are at the Thanksgiving table, though it won’t work if you’re explicit about it. The point is to create a “warm glow”.
- A lot of giving is due to social pressure. For example, people will donate when confronted by a Brownie Scout, but will go out of their way to avoid a Brownie Scout in the first place so they don’t “have to” donate.
- A lot of giving is also due to herding. People give where their friends give.
How to Raise More Money
- There’s a culture of tradition when it comes to fundraising advice, and not many people fundraise based on statistics.
- List believes a typical response rate for a good campaign to cold call people to ask for money is 1%. Americans already give 2-2.5% of their income on average.
- People will give more if it’s convenient. If there were a button to donate during the podcast, a decent amount of people would do it, but virtually no-one will remember to go on their computer and donate after the podcast is over.
- Attractiveness of the fundraiser is important in door-to-door fundraising. Men give more to good-looking women, but women do not give more to good-looking men or women, nor do men give more to good-looking men (though I don’t know if this study looked into gay men). This effect is rather large —- a woman rated a “9” in attractiveness raises twice as much on average as a woman rated a “6”.
- The best way List found to motivate donations was to offer a lottery with a chance of winning something that is really desirable. Every dollar someone gives or raises for the cause should give them one more shot to win. This outperforms offering prizes for meeting certain donation levels, though it’s unclear what the effect is of doing both. Also, to offer a lottery one should check gambling laws. Typically, an exception of no donation being necessary to enter will be legally required.
- Matching funds are very useful at motivating donations. Though keep in mind a 3:1 match offers the same benefit as a 1:1 match, so use those extra matching funds for something else.
- If possible, emphasize what the donor will lose if fundraising isn’t met, as loss aversion is powerful. Though, this works better for local art museums than for donating to the third world. On the flip-side, though, donations to the third world can more easily create warm glows than art museums, so the advantage is pretty even. Also, keep in mind that loss aversion advertising can appear overly desparate if not done carefully.
...Now go out there and raise more money. :)