Nonprofits: New Study Reveals Fundraising Risk

A common marketing technique can backfire by reducing donation amounts


crowd - social proof
Social proof, showing what other people are doing, is a nearly certain way to boost your nonprofit donations. If you show that many others are donating, you will convert more new donors. But, a new study shows there’s a risk of lowering donation amounts if you use social proof the wrong way.

An article in this month’s Journal of Economic Psychology describes the results of analyzing nearly 10,000 contributions. The data was collected from a crowdfunding platform where visitors could see what other people had donated. In short, the study showed that new donors tend to give at the same level as most other donors. The effect was most visible at lower contribution levels.

As with many academic studies, this result isn’t all that surprising.countless studies and commercial tests show that social proof, one of Robert Cialdini’s original principles of influence, changes behavior.

Influencing Donation Amount

It follows that social proof works not just for the donation decision, but for the amount. If someone asks you to make a donation to a cause you consider worthy, the first question that pops into your head is likely, “How much should I give?” Often, you look to the solicitation itself for cues.

One technique often used in fundraising is “anchor pricing.” The solicitation will suggest amounts, starting with a number much higher than most donors will give. If you see that the suggested donations are $1000, $500, $200, $100, $50 and “Other,” if you were thinking about giving $10 you might bump it up to $25. Here’s how the Red Cross starts with a high anchor – note that (for all of us who read left to right) the biggest amount comes first.

Red Cross Donation Levels

In most fundraising conditions, you don’t know what other people have given before you make your own contribution. In this study, though, the fundraising took place on a crowdfunding platform where the donations made by others were visible. The effect of other donations was strongest at lower gift amounts.

Why is this a potential problem? In most fundraising efforts, the biggest number of donors is at the lowest levels. This is logical, since most people lack either the financial resources or the emotional attachment to a cause to donate a large amount. From a social proof standpoint, though, this reality might lower donations from donors who would have given more.

New study: a common marketing technique can backfire by reducing donation amounts. #nonprofit #fundraising Click To Tweet

Donations as a signal

An “econ” is what economists call a person making logical decisions in their self-interest. Econs, long the favorite of economists plotting supply/demand curves and proposing other quantitative explanations for behavior, act only in their self interest. (And, they are apparently really good at math.)

Giving to charity isn’t a fully rational choice, as there is usually no economic benefit to the donor. Of course, we know that real humans often offer money and time to benefit others. One of the explanations offered by evolutionary psychologists is that altruistic, charitable behavior is a signal of mating “fitness.” Visibly donating money or time shows that one has resources to spare, a desirable quality in a mate.

For example, perhaps a friend has asked you to donate to a cause that is worthy but not very important to you personally. As most often happens, you aren’t sure what level will seem appropriate. You want to donate a modest sum that will support the cause and your friend without seeming cheap. An amount that appears low would send the wrong signal about your friendship and/or the cause. At the same time, you’d prefer to use your limited donation budget on causes more important to you personally.

Perhaps, after looking at the donation suggestions, you think $50 would be about right. Then, scanning the donation amounts from others, you see that the vast majority of people gave only $25. Unless your intention is to signal, “I’m more generous than the rest of these cheapskates,” you might well adjust your donation down to $25. That effect is more or less what the study showed.

Best Fundraising Social Proof Strategies

There are a few ways to avoid a negative impact from social proof on your fundraising campaign. This advice assumes that you can control what potential donors see. On crowdfunding platforms, you may be at the mercy of their standard displays.

Social proof, one of @RobertCialdini's original #influence principles, works for #fundraising. Here's how to do it right. Click To Tweet
Don’t use social proof

Particularly at the start of a campaign, numbers will be low and, to the casual observer, might indicate lack of support. Avoid any numbers from the current campaign and focus on the important benefits from the effort. When I reviewed a range of nonprofit websites, I found surprisingly few examples of social proof. Even charities with massive participation, like the American Red Cross, didn’t have any obvious social proof.

Use broader social proof

If you have multiple fundraising streams or the current campaign isn’t your first one, find a more persuasive number from your history. For example, you could say, “In the last 12 months, 4,380 people like you have supported our cause.” The number should be appropriate for the scope of the effort. A couple of hundred donors might be great for a high school band support group. A national health-related cause might need tens of thousands or more. Pick a metric that will resonate.

Use qualitative social proof

We usually think of social proof in terms of numbers like “23,000 Subscribers” or “405,000 Satisfied Users.” But, if your numbers aren’t persuasive, consider using a more personal form of social proof. Post a few short testimonials from diverse donors, identifying them as such. Photos and real names increase the credibility of this kind of appeal.

Promote the desired donation level

Using influence psychology will only go so far. You aren’t going to convert $20 donors into $1,000 donors. But, you can borrow a strategy used by many digital service vendors. Imagine that $25 is your most common donation level. If the next level is $50, highlight that one with color or some other way of getting attention. Add some social proof by featuring some supporters as “$50 donors.” That could nudge some $25 people to step up to the next level. St. Jude Hospital doesn’t use any direct social proof, but their clever emphasis suggests that $100 is what most people do and is a “middle of the road” choice.
St Jude donation levels

Urgency and social proof

A social proof technique used by travel companies adds a hint of urgency. They will show a hotel listing and then tell you what others have done. For example, “23 people have booked this hotel since yesterday.” Even more extreme is, “7 travelers looking at this hotel right now!” This messaging works best when activity level is high enough to impress. A nonprofit might say, for example, “57 donors at the $50 level in the last week.” That provides a social proof metric and also emphasizes the recommended donation. I haven’t found a nonprofit using this technique, but here’s an example from social proof + urency

Test, Test, Test Your Social Proof

As with most recommendations, it’s important to test and not simply assume some new approach will work better. For example, what if promoting a $100 donation as the norm causes some $200 contributors to give less? Today, setting up A/B tests is easy and inexpensive. Testing lets you fine-tune your messaging with confidence. Here’s some social proof… tens of thousands of smart marketers use A/B testing to optimize their campaigns! 😉

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