Time value of donations: I would gladly pay you Tuesday for a warm feeling today

Are you ready to increase your monthly donations?  Can you wait until two months from now?

It’s time for a week of studies of nonprofit direct marketing.  This has quickly become one of the favorite types of post on the blog, so if you don’t want to miss the entries later in the week on ask strings, matching gifts, when to ask to support awareness activities and more, please sign up for my free weekly newsletter.

Today’s study comes to us from Anna Breman of the Stockholm School of Economics (it’s not actually a great school of economics, but the longer they keep you there, the more you believe it is*).

In it, she tries a unique approach to increasing monthly donations that, since the title of the paper is Give More Tomorrow, you can probably guess worked.

 

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Wimpy, Patron Saint of the Time Value of Money

The experiment takes advantage of one of those cognitive biases or heuristics we are always yammering on about (explanation of heuristics here).  In this case, being human means that you prefer immediate benefits and delayed costs.  This is why diets start tomorrow, plasma TVs trump retirement savings, and dentists ask you to commit to a time to come back rather than trusting that one day you will feel like a dentist visit.  It’s also why, in a famous experiment with children, the pull of one marshmallow now is strong even when there is a promise of two marshmallows later.

So what if you could commit future-you to making a monthly donation, but present-you doesn’t have to feel the pain?  It makes a lot of sense, given Benartzi and Thaler’s experience with a Save More Tomorrow plan that successfully asked employees to commit a portion of their future pay raises to savings.

Breman worked with a Swedish charity Diakonia** and their existing bank of monthly donors.  In one group, they asked their sustainers to increase their monthly donation now.  In the other, they asked sustainers to increase their monthly donation in two months.

The increase in donations was 32% more in the group asked to increase their donations in two months.  Part of this was an increase in average donation (19%) and part was an increase in the frequency of donation rate (11%).

And, looking back, the treatment donors were no more likely to cancel or decrease their monthly donation than the control group.  In fact, the long-run effect was slightly higher than the short-run effect.

This seems like a tactic that is easily implemented on the phone.  It would be harder online if you are using an out-of-the-box online solution.  I won’t mention any names (*cough*cough*BlackbaudLuminate*cough*cough*), but some programs are so inflexible you can’t even schedule monthly donations to be processed on a specific date each month, as is common practice for monthly donations.

While the study did not ask this question, I would also wager than donors who increased their giving months down the road were also happier with their decision as a result.  It’s quite common to have stress reactions to charitable asks (even when one wants to give) and knowing that you don’t have to give now in order to have the impact that you want could be soothing.

The next test, I would argue, for academia is whether this technique also works for monthly donor acquisition/conversion.  It would seem that the same logic would apply, but I don’t know of anyone who has tested it.

So, if you are among the bold and fortunate few, can I prevail upon you to share your experience in the comments or to email me at nick@directtodonor.com so that I might illuminate your fellow readers (and myself)?  Thanks in advance and hope you enjoyed reading.


* I just couldn’t help myself for this joke.  I apologize for that joke to you the audience, Anna Breman, the Stockholm School of Economics, any former or current hostages, the people of Stockholm and Sweden, people of Scandinavian extraction, and people who drive Volvos or have Ikea furniture.  Also to Tom Hanks.  He knows why.

** I should also apologize to Diakonia, which does really good work on sustainable development around the world.

Time value of donations: I would gladly pay you Tuesday for a warm feeling today

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