Mental accounting and nonprofit giving

Back in March, we looked at how people have different mental buckets for their expenses.  Certain amounts are set aside for home expenses, car expenses, utilities, entertainment, education, etc.  And there’s a bucket for many for charitable giving.  We talked about this in the context that you can (sometimes) get someone to make a gift they wouldn’t normally make by framing it as an exceptional expense — something they wouldn’t normally budget for.

Since then, there’s been a more in-depth look at mental accounting in nonprofit giving.  Monica LaBarge and Jeffrey Stinson published an article called “The Role of Mental Budgeting in Philanthropic Decision-Making,” as well as doing a podcast about it that you can listen to here.

Some key highlights from how people mentally account for their donations:

  • Generally, people substitute one charitable act for another, not for a non-charitable act.  That is, people substitute sports for movies or church giving for alma mater giving, but they don’t generally substitute movies for church giving.
  • The amount allocated to charitable giving is usually at about 10%.  It’s interesting to hear this, as this is the amount often suggested by religious institutions as the amount to give to them; generally, however, it seems to be a rule of thumb for charitable giving.  Even non-religious givers centered around 10%.
  • Interestingly, tickets to galas and events can be considered charitable gifts or in other buckets.  One donor to whom the researchers spoke talked about how buying a table for a gala was a business expense because that was his goal in sponsoring.  In the next breath, he talked about giving to an organization through a ticket purchase because he knew the person being honored.  Thus, it’s important to understand how the giver classifies their giving to you.  You may be able to take multiple buckets to maximize your giving.
  • The happier people are with their giving to you, the more they are able to give.  This sounds obvious, but when someone enjoys giving to you, they are willing to dip into other buckets (like entertainment) that may not normally be open to you.
  • You may be able to work with business people who support your organization to sponsor in ways that help their business, giving you access to their business budgets.  Focusing just on philanthropic giving caps your upside with your donors.

Much of this comes back to the dictum “know thy donor” — the more you know about how your donors think of you and their experiences with you, the better off you are.

Mental accounting and nonprofit giving

Winning the battle against scope insensitivity, part 2

A reminder for those joining our program already in progress: scope insensitivity means that people are willing to give the same about to solve a program almost no matter how big it is.

Part of this is likely that humans don’t reckon big numbers well.  After all, in our salad days, we needed to figure out how many animals were nearby and how many people were in our group, but we didn’t need to count the stars or, God help us, remember how many zeros are in a petabyte (answer: a lot).

Which leads us to have troubles with numbers like this:

1000_times

Thanks to xkcd for the illustration.

So how do you make large numbers comprehensible to your target audience?  In a great piece on Gizmodo, mathematician Spencer Greenberg covered some important ways to anything over a thousand into perspective.  His tips include:

Breaking the number down.  When MADD talks about the cost of drunk driving, the amount talked about is usually not the billions of dollars; it’s $500 for every adult in the United States.  Everyone can picture $500 or what they could buy with it, whereas we don’t know where to start with a billion dollars.

Actually, we do — with a vintage battleship gray Aston Martin DB5 — but that’s only a start.

Change the unit of measurement. The example he gives in the article is when talking about the deepest point in the ocean, don’t say 36,000 feet; say almost seven miles.  I would argue that for nonprofits, you may want to change the type of unit of measurement.  When doing earthquake relief, 8.4 on the Richter scale may not mean much.  But “I saw a sign that talked about the building being earthquake-proof buried under a pile of rubble” gives someone an idea for the force we are talking about.  Or 8.4 can be “the same force as the largest nuclear weapon ever tested.”

Batching the numbers.  We can’t picture 2.3 million people.  But we can picture the football stadium we saw on TV last night.  So “every NFL stadium filled to capacity at once” gets the message across.

Incorporate time.  In the article, he mentions that during the Battle of Stalingrad, Russians broadcast the message that “every seven seconds, a German soldier dies in Russia.”  That gets the message across (that message being “RUN!!!”) in a way that 388,000 people dying each month does not.

These are some good tips.  I would add another — infographics.  For the modern nonprofit, an infographic can explain in a way that simple numbers can not.  There is a strong article in this month’s Bulletin of the Association for Information Sciences and Technology (get it on any quality newsstand today!) that highlights tips for creating a good infographic.

They include:

  • Identify a meaningful comparison for your audience. It has to be something that resonates with your audience, not just you.
  • Tell your audience what you want them to do or think. Like all things, we want to begin with the desired action in mind.
  • Don’t crowd your message with less important numbers or statistics.

There are some good nonprofit examples in the article, so I recommend a read.  Hopefully, you can now get your millions and billions down to something that people feel like they can do something about.

Winning the battle against scope insensitivity, part 2

Winning the battle against scope insensitivity, part 1

Back in February, we talked about how humans have scope insensitivity; that is, they don’t look at the scope of a problem.  This manifests that we are more likely to give to an individual story than to a global problem; it also means that we are willing to give just as much to help save 2000, 20,000, or 200,000 birds.  Even though the problem is greater, we have the same mental bucket for the amount we are willing to allocate.

What if you could change this with your copy?

It turns out you may be able to.

Hsee et al experimented with a way to combat scope insensitivity called unit asking.  The method is deceptively simple: before asking how much a person would give to support a group of needy people, ask how much the person would be willing to give to support a needy person.

The psychology here is brilliant: by setting a mental anchor for an individual person, suddenly the scope of your program is working for you instead of being a spectator in your ask.

Their first experiment was with a survey: people were asked how much they would donate to help 20 children in need.  Half of the audience had a preceding question:

“Before you decide how much to donate to help these 20 children, please first think about one such child and answer a hypothetical question: How much would you donate to help this one child? Please indicate the amount here: $____.”

People who got this priming question expressed a willingness to donate more than twice as much as the control group ($49 versus $18).

Then, like good researchers, they wanted to see if this would actually have an impact in the real world.  They worked with a company in China that was raising money among its 800 employees to help 40 school children in the Sichuan province, which had just gone through an earthquake.

The company emailed its employees, half with a unit ask, half without.  Average gifts went up 65% among those asked to envision what they would give to support one children first.  Additionally, response rate was unaffected (actually, response rate was slightly higher with the unit ask, but not significantly so).

They then tested the wording in the mail, with even bigger results — those who received the unit ask first had gifts that were four to five times higher than those who received a plea for the 40 children alone.

So, if you have a large number of people affected, ask how people would treat one person first.  Here, we return to the wisdom of Mother Teresa again:

engaging-millennials-as-organ-donors-june-13-2011-35-728

That probably works for numbers that people can picture.  I can picture one child, multiplied by 40, to get 40 kids.  What do you do if you are working with numbers large enough that people can’t picture it?  We’ll talk about that tomorrow.

Winning the battle against scope insensitivity, part 1

The limits of urgency

Back in December, we talked about how scarcity and urgency can help build response and persuade people to give.  But in April, we reviewed a study that indicates that a deadline actually suppressed response rates and that that suppression is only lifted when there is a good reason for a deadline, like the end of a matching gift.  

So how does urgency affect an appeal?

Two researchers took a look at this with a large Danish charity.  

danish

A large Danish.  But not a large Danish charity.

In email, they had four test groups.  All received the same email with the subject line “Lokwang is grilling rats”.  This isn’t actually the first half of a Cold-War-era spy passphrase (where the other spy is supposed to say “But the oyster wears a fine green wristwatch”); it tells the story of a child named Lokwang who go weeks without food who eat rats in order to survive.

The only difference in the emails were that they had different deadlines:

  • Three days out
  • 10 days out
  • 10 days out + a reminder email
  • 34 days out

Similarly, they ran text campaigns with deadlines two days, three days, and 34 days out.  If a donation was made before the deadline, it would be matched.

The deadlines had no significant impact on the propensity to give.  None.  The researchers found a “now or never” effect that you probably have seen with every email you’ve sent — people generally act upon reading it or not at all.  Text messages, even more so.  

Additionally, the increase in urgency was linked to an increase in requests to be removed from the email/text list.  I usually don’t look too much at this as a metric, since often the things that are most effective have higher removal rates (after all, if you have double the open rate, for example, the more people are exposed to the “unsubscribe like.  The only email that would have no unsubscribes to a list of size is the one that was never opened.

What did increase giving was the reminder email/text message.  While this also increased the unsubscribe rate, it also increased giving rates by over 50%, a trade off you almost certainly are willing to take.

So perhaps urgency is not as powerful a force for online donations as perhaps I had thought.  While I’m thinking it still definitely has places in end-of-year fundraising, disaster fundraising, and a few other places where urgency is real, this would tend to indicate that manufactured urgency may be unnecessary and, in fact, counterproductive.

The limits of urgency

Make your donor fill in the blanks

What’s brown and sticky?

This is my wife’s favorite joke in the world.  And it puts me in mind of the power of either asking the person who gets your communication to fill in the blanks or evoking their curiosity, compelling them to read on.

Of course the answer is at the end.  How would I do a blog post about building interest through questions and not put the answer at the end?

While it may be fatal to our feline companions, curiosity is a basic human motivator.  Jerome Kagan, one of the forefathers of development psychology found in a 1972 paper that what he termed “uncertainty resolution” is a primary motivator of human behavior.  We are hardwired to want to know.

This can work to our advantage in direct marketing.  More and more research indicators that the donating decision isn’t a yes/no dyad; it’s a series of microconversions that lead up to the act of pulling out the credit card/checkbook/wallet/etc. and giving the gift of a life saved or changed.

Our goal, then, is to shepherd the potential donor through the little steps that lead to that big step.  One of these is often the decision to open, whether it’s a physical or virtual envelope.

A good question in a subject line or intriguing statement in teaser copy can help draw in a prospect.  One of my favorite subject lines of all time was one that was intended to show our gratitude, but could be read one of two ways:

Look what you’ve done

When you opened the email, it was telling the story of what the person’s support had meant: the small dent they put in the world that year.

But I’d be surprised if at least some of the people who opened it (and it had a 25%+ open rate) didn’t think we were saying:

jerk

Incidentally, you might think of this as a bait and switch, but not shockingly, no one complained about being tricked into being thanked profusely.

You can also create an information gap.  Think of the teaser of your local news: “Coming up after the break: what common household object could kill you today?”  Sometimes, asking the question that your email aims to answer can get people to read and read all the way through.  Just like brown and sticky things.

There’s a specific manifestation of completionism that is particularly interesting.  It started with Austrian waiters.

See?  “It started with Austrian waiters.”  You can’t help but read on to resolve the uncertainty that comes with a statement like that.

Psychologist Bluma Zeigarnik was watching waiters in Vienna.  She noticed that their memory was astoundingly good for orders that were in progress, but very bad for those that were already served.  She went back to the lab and found that our memories work well for unfinished or incomplete things (know as the Zeigarnik effect).  Subsequent testing has shown it works best for tasks that are very important to a person.

There are a good number of ways to deploy this:

  • Don’t put a period (or God help you, an exclamation point) on the end of your subject line.  Punctuation there (other than a question mark) signals that the thought is complete and you need not read on.
  • Test out two-step opt-ins.  This is the not only the perfect compromise by the people on your Web site that want to reduce form friction and the ones who think you need your participants middle initial and blood type (you don’t; the first people are right).  Simply have the person fill out the most basic information on the first screen (usually just email address).  Then ask for some of the important information on screen two, with a big friendly opt-in button (note: it should not say opt-in) right there for the taking.
  • Finally, you should end your content with an idea that the content will continue on in another letter, post, email, etc..  There’s a reason every Bond movie ends with “James Bond will return” — there’s always more to the story.  So tune in tomorrow for the end of story week when we talk about story arcs and hero’s journeys.


* What’s brown and sticky?  A stick.

Make your donor fill in the blanks

Ask string amounts: to round or not to round

 

Rounding can be controversial.  On the one hand, round numbers could potentially help with fluency, which is crucial in persuasion.  Rounding out ask strings can help you get out of weird numbers that consistent upgrading can create (e.g., if you donate $30, then upgrade by 50% each time, that’s $45, $67.50, $101.25, then $151.875.  And if you haven’t got a ha’penny, then God bless you).

On the other hand, there is a potential draw in using an odd amount specifically to stop someone short (e.g., your $17 will feed X people).  In fact, in face-to-face settings, panhandlers found that when they asked for change, 44% of people contributed.  When they asked for a quarter, 64% contributed.  When they asked for 17 cents or 37 cents, 75% of people made a contribution.  This is called the pique technique: the idea being that the odd request breaks people out of their normal mental structures, forcing them to think about what you are saying.

However, this may or may not be as applicable in non-face-to-face environments.  Burger et al took a look at the mechanism by which this worked.  They found that contributions only increased among people who came over to ask a question; there was no difference in giving between people who were given a specific answer (e.g., “I need to buy a stamp”) versus those who were given a generic answer (e.g., “I need to buy some stuff”).  Since there isn’t a mechanism for someone to stop and ask you a question in the mail or online (yet!), this technique may not work on asynchronous platforms.  And, in fact, a study of the pique technique when applied to causes, rather than donating directly to the person face-to-face, found no significant difference with this technique.

There is, however, evidence that rounded numbers can increase giving.  One study of donations found that rounded values increase giving by seven percent.  Specifically, they found that people were more likely to choose things that were on the ask string (what they called an appeal scale) than rounded numbers not on the ask string, but that a good number of people wrote rounded numbers in as the other when not on the ask string.  Additionally, they found when a round number was on the ask string, there was a particularly strong pull of that number on donations.

In addition to articulating that round numbers have a pull that is independent of the pull of a person’s internal reference point and the ask string itself, they also helped define a conundrum.  To wit: what is a round number?  As the authors put it:

“While the notion of a round quantity is seemingly intuitive, it is nonetheless difficult to make precise. Round numbers are operationalized in the present paper as the face values of commonly used French currency notes or small integral multiples thereof. Based on the data used here, this functional definition accounts for all but a negligible proportion of off-scale donation amounts, in the sense that adding or removing additional rounded values does not substantially alter any aspect of the analysis.”

As we noted in the all about the Benjamins piece, these banknote values are especially strong — $100 in particular. 

 

In summary, fluency seems to trump creativity in the case for round numbers, especially at higher levels.  If you are looking to increase average gift, it should be to something that is highly fluent like $20, $50, or $100; if you have to be creative, do it with lower ask amounts so that they don’t have as much draw.

However, there is some evidence that having one oddball, very high donation amount can be helpful, as we noted with the Make-a-Wish Canada example here.

The idea of providing an outlier as a potential anchor and/or moneymaker is an interesting one.  While I could find no data on this from the nonprofit world, there are studies from the for-profit world that indicate that the existence of one very high product can increase what someone is willing to spend on a medium-priced product.  This explains the existence of those news stories you hear from time to time about how someone has created an even more expensive hamburger, made with wagyu beef, caviar, gold leaf, and unicorn tears.  

ht_burger_kb_120530_wmain

Medium rare, unicorn tears on the side, please.

Having this burger on a menu, in addition to the free publicity, could also increase average spending.


 

This post is a section of my upcoming, not-quite-a-book, not-quite-a-white-paper about ask strings.  It will be free to all subscribers to my free weekly newsletter, so please sign up here.

Ask string amounts: to round or not to round

Cognitive fluency, your brain, and direct marketing

“Cognitive fluency” means brains like things easy.  Easy things make brains happy.  Happy brains make people do things we want them to do (proof is here). 

Options of three things are easy.  Brains Goldlocks it and pick the one in the middle – not too much, not too little.  There’s a study that shows this

Repeating things makes them easier.  Seeing something once makes you more likely to like it a second time.  Thrice is even better.  Even if it is nonsense, you like it because you’ve seen it.  

The easier something is, the more it convinces.  That’s also been shown.

art1__1264872682_4038

Image credit: The Boston Globe.

For example, reading Arial makes us think doing something will be easy.  Reading a script font makes us think it will be hard.  The study is here.  

Simply named stocks do better than tough ones.  Simply named people become president.  More info here.

Also, repeating things makes them easier.

So make it easy for your donors.

Have people looking at your donate button.

Repeat things.  Because repeating things makes them easier.

Build up to your ask.  Small steps like email petitions increase donations.  

Tell people what other people are doing.  That’s social proof.  Brains like social proof because it makes things easy.

Just like repetition does.

Make your text a very different color from the background.  Because this stinks.  If it’s too close, it blends in.  Blending is bad.  Reading easily is good.  

Bigger fonts are also better.

Write at the lowest grade level you can without sounding Dick and Jane.  Jeff Brooks, in his very good book, recommends 4th to 6th grade level.

Some may call this stupid.  But it’s not dumbing down.  It speeds your donor up.  It makes it easy for their brain.  And that makes you more persuasive.

So, small words.  Short sentences.  Fragments of sentences, even.

Your high school English teacher might disagree.  If s/he wants a say, s/he needs to donate.

Please make your donors’ brains happy.  Make it easy for them.  Then they will make it easy for you.

Cognitive fluency, your brain, and direct marketing