The science of effective fundraising

The Science of Effective Fundraising: Four Common Mistakes to Avoid

Charities that use their funds effectively to make a social impact frequently struggle to fundraise effectively. Indeed, while these charities receive plaudits from those committed to measuring and comparing the impact of donations across sectors, many effective charities have not successfully fundraised large sums outside of donors focused highly on impact.

In many cases, this situation results from the beliefs of key stakeholders at effective charities. Some think that persuasive fundraising tactics are “not for them” and instead assume that presenting hard data and statistics will be optimal as they believe that their nonprofit’s effectiveness can speak for itself.

The belief that a nonprofit’s effectiveness can speak for itself can be very harmful to fundraising efforts as it overlooks the fact that donors do not always optimize their giving for social impact. Instead, studies suggest that donors’ choices are influenced by many other considerations, such as a desire for a warm glow, social prestige, or being captured by engrossing stories. Indeed, charities that have the biggest social impact often get significantly less financial support than rivals that tell better stories but have a smaller social impact. For example, while one fundraiser collected over $700,000 to remove a young girl from a well and save a single life, most charities struggle to raise anything proportionate for causes that could save many more lives or lift thousands out of poverty.

Given these issues, the aim of this article is to use available science on fundraising and social impact to address some of the common misconceptions that charities may have about fundraising and, hopefully, make it easier for effective charities to also become more effective at fundraising. To do this it draws on academic research across different fields to highlight four common mistakes that those who raise funds for effective charities should avoid and suggest potential solutions to these mistakes.

Don’t forget individual victims Many fundraisers focus on using statistics and facts to convey the severity of the social issues they tackle. However, while fact and statistics are often an effective way to convince potential donors, it is important to recognize that different people are persuaded by different things. While some individuals are best persuaded to do good deeds through statistics and facts, others are most influenced by the closeness and vividness of the suffering. Indeed, it has been found that people often prefer to help a single identifiable victim, rather than many faceless victims; the so-called identifiable victim effect.

One way in which charities can cover all bases is to complement their statistics by telling stories about one or more of the most compelling victims. Stories have been shown to be excellent ways of tapping emotions, and stories told using video and audio are likely to be particularly good at creating vivid depictions of victims that compel others to want to help them.

Don’t overemphasize the problem Focusing on the size of the problem has been shown to be ineffective for at least two reasons. First, most people prefer to give to causes where they can save the greatest portion of people. This means that rather than save 100 out of 1,000 victims of malaria, the majority of people would rather use the same or even more resources to save all five out of five people stranded on a boat or one girl stranded in a well with the same amount of resources, even if saving 100 people is clearly the more rational choice. People being reluctant to help where they feel their impact is not going to be significant is often called the drop in the bucket effect.

Second, humans have a tendency to neglect the scope of the problem when dealing with social issues. This is called scope insensitivity: people do not scale up their efforts in proportion to a problem’s true size. For example, a donor willing to give $100 to help one person might only be willing to give $200 to help 100 people, instead of the proportional amount of $10,000.

Of course charities often need to deal with big problems. In such cases one solution is to break these big problems into smaller pieces (e.g., individuals, families or villages) and present situations on a scale that the donor can relate to and realistically address through their donation.

Don’t assume that matching donations is always a good way to spend funds

Charitable fundraisers frequently put a lot of emphasis on arranging for big donors to offer to match any contributions from smaller donors. Intuitively, donation matching seems to be a good incentive for givers as they will generate twice (sometimes three times) the social impact for donating the same amount. However, research provides insufficient evidence to support or discourage donation matching: after reviewing the evidence, Ben Kuhn argues that its positive effects on donations are relatively small (and highly uncertain), and that sometimes the effects can be negative.

Given the lack of strong supporting research, charities should make sure to check that donation matching works for them and should also consider other ways to use their funding from large donors. One option is to use some of this money to cover experiments and other forms of prospect research to better understand their donors’ reasons for giving. Another is to pay various non-program costs so that a charity may claim that more of the smaller donors’ donations will go to program costs, or to use big donations as seed money for a fundraising campaign.

Don't forget to empower donors and help them feel good Charities frequently focus on showing tragic situations to motivate donors to help.

However, charities can sometimes go too far in focusing on the negatives as too much negative communication can overwhelm and upset potential donors, which can deter them from giving. Additionally, while people often help due to feeling sadness for others, they also give for the warm glow and feeling of accomplishment that they expect to get from helping.

Overall, charities need to remember that most donors want to feel good for doing good and ensure that they achieve this. One reason why the ALS Ice Bucket Challenge was such an incredibly effective approach to fundraising was that it gave donors the opportunity to have a good time, while also doing good. Even when it isn’t possible to think of a clever new way to make donors feel good while donating, it is possible to make donors look good by publicly thanking and praising them for their donations. Likewise it is possible to make them feel important and satisfied by explaining how their donations have been key to resolving tragic situations and helping address suffering.

Conclusion Remember four key strategies suggested by the research: 1) Focus on individual victims as well as statistics 2) Present problems that are solvable by individual donors 3) Avoid relying excessively on matching donations and focus on learning about your donors 4) Empower your donors and help them feel good.

By following these strategies and avoiding the mistakes outlined above, you will not only provide high-impact services, but will also be effective at raising funds