The Science of Effective Fundraising: Four Common Mistakes to Avoid
This article will be of interest primarily for Effective Altruists. It’s also cross-posted to the EA Forum.
Summary/TL;DR: 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. Drawing on academic research across different fields, this article highlights four common mistakes that fundraisers for effective charities should avoid and suggests potential solutions to these mistakes. 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.
Co-written by Gleb Tsipursky and Peter Slattery
Acknowledgments: Thanks to Stefan Schubert, Scott Weathers, Peter Hurford, David Moss, Alfredo Parra, Owen Shen, Gina Stuessy, Sheannal Anthony Obeyesekere and other readers who prefer to remain anonymous for providing feedback on this post. The authors take full responsibility for all opinions expressed here and any mistakes or oversights. Versions of this piece will be published on The Life You Can Save blog and the Intentional Insights blog.
Intro
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 optimise 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 recognise 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 overemphasise 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.
This might come in handy for a friends of mine that is seeking sponsoring for his advanced skating training. Upvoted.
(I know that there’s a stigma against the OP. I think that as self-appointed rational beings we should be able to separate wheat from chaff.)
Glad it will be helpful for him :-)
[Comment cross-posted to the Effective Altruism Forum]
[I will use “Effective Altruists” or “EAs” to refer to the people who self-identify as members of the community, and “effective altruists” (without capitalization) for people to whom effectiveness matters a lot in altruism, regardless of whether they self-identify as EAs.]
I think this post makes some important and valuable points. Even if not novel, the concise summary here could make for a good WikiHow article on how to be a more effective fundraiser. However, I believe that this post falls short by failing to mention, let alone wrestle with, the tradeoffs involved with these strategies.
I don’t believe there is a clear and obvious answer to the many tradeoffs involved with adopting various sales tactics that compromise epistemic value. I believe, however, that not even acknowledging these tradeoffs can lead to potentially worse decisions.
My points below overlap somewhat.
First, effective altruists in general, and EAs in particular, are a niche segment in the philanthropic community. The rules for selling to this niche can differ from the rules of selling to the general public. So much so that sales tactics that are considered good for the general public are actively considered bad when selling to this niche. Putting an identifiable victim may help with, say, 30% of potential donors in the general public, but alienate 80% of potential donors among effective altruists, because they have (implicitly or explicitly) learned to overcome the identifiable victim effect. In general, using messaging targeted at the public for a niche that is often based, implicitly or explicitly, on rejecting various aspects of such messaging, is a bad thing. A politician does not benefit from taking positions held by the majority of people all the time; rather, whereas some politicians are majoritarian moderates, others seek specific niches where their support is strong, often with the alienation of a majority as a clear consequence (for instance, a politician in one subregion of a country may adopt rhetoric and policies that make the politician unpopular countrywide but guarantee re-election in that subregion). Similarly, not every social network benefits from adopting Facebook’s approach to partial openness and diversity of forms of expression. Snapchat, Pinterest, and Twitter have each carved a niche based on special features they have.
Second, in addition to the effect in rhetorical terms, it’s also important to consider the effect in substantive terms on how the organizations involved spend their money and resources, and make decisions. Ideally, you can imagine a wall of separation: the organization focuses on being maximally effective, and a separate sales/fundraising group optimizes the message for the general public. However, many of the strategies suggested here actually affect the organization’s core functions. Pairing donors with individual recipients significantly affects the organization’s operations on the ground, raising costs. Could this in the long run lead to e.g. organizations selecting to operate in areas where recipients have characteristics that make them more interesting to donors to communicate with (e.g., they are more familiar with the language of the donor’s country?). I don’t see a way of making overall effectiveness, in the way that many EAs care about, still the dominant evaluation criterion if fundraising success is tied heavily to other outreach strategies.
Third (building somewhat on the first), insofar as there is a tradeoff between being able to sell more to effective altruists versus appealing more to the general public, the sign of the financial effect is actually ambiguous. The number of donors in the general public is much larger, but the amount that they donate per capita tends to be smaller. One of the ingredients to EA success is that its strength lies not so much in its numbers but in the depth of convictions of many self-identified EAs, plus other effective altruists (such as GiveWell donors). People who might have previously donated a few hundred dollars a year for an identifiable victim may now be putting in tens of thousands of dollars because the large-scale statistics have touched them in a deeper way. GiveWell moved $103 million to its top charities in 2015, of which $70 million was from Good Ventures (that’s giving away money from a Facebook co-founder) and another $20 million is from individual donors who are giving amounts in excess of $100,000 each. To borrow sales jargon, these deals are highly lucrative and took a long time to close. Closing them required the donor to have high confidence in the epistemic rigor from a number of donors, many of whom were probably jaded by psychologically pitch-perfect campaigns. I’m not even saying that GiveWell’s reviews are actually rigorous, but rather, that the perception of rigor surrounding them was a key aspect to many people donating to GiveWell-recommended charities.
Fourth, if the goal is to spread better, more rational giving habits, then caving in to sales tactics that exploit known forms of irrationality hampers that goal.
None of these imply that the ideas you suggest are inapplicable in the context of EA or for effective altruists in general. Nor am I suggesting that EAs (or effective altruists in general) are bias-free and rational demigods: I think many EAs have their own sets of biases that are more sophisticated than those of the general public but still real. I also think that many of the biases, such as the identifiable victim, can actually be epistemically justified somewhat, and you could make a good epistemic case for using individual case studies as not just a sales strategy but something that actually helps provide yet another sanity check (this is sort of what GiveWell tried to do by sponsoring field trips to the areas of operation of its top charities). You could also argue that the cost of alienating some people is a cost worth bearing in order to achieve a somewhat greater level of popularity, or that a wall of separation is not that hard to achieve.
But acknowledging these tradeoffs openly is a first step to letting others (including the orgs and fundraisers you are targeting) make a careful, informed decision. It can also help people figure out new, creative compromises. Perhaps, for instance, showing an identifiable victim and, after people are sort-of-sold, then pivoting to the statistics, provides the advantages of mass appeal and epistemic rigor. Perhaps there are ways to use charities’ own survey data to create composite profiles of typical beneficiaries that can help inform potential donors as well as appeal to their desire for an identifiable victim. Perhaps, at the end of the day, raising money matters more than spreading ideas, and getting ten million people to donate a few hundred dollars a year is better than the current EA donor profile or the current GiveWell donor profile.
[Comment cross-posted to the Effective Altruism Forum]
Excellent points, upvoted. Thanks for constructive criticism of the points made here, it’s really helpful! This is exactly the kind of dialogue we were hoping for :-)
Peter and I wrestled with a number of issues you brought up, and ended up deciding to write an essay that went against the grain in the EA movement itself of focusing only on statistics, since there is so much literature on this topic already. We didn’t want to deal with the ground that was previously covered, but I recognize it would have been helpful to make more of an effort to describe the tradeoffs involved.
Several of the things discussed in this comment were touched on in the essay. For instance, the difference between communicating to people more oriented toward effectiveness, the small minority of EA participants, versus those more oriented toward emotions, the large majority of those who give, was covered in these sections: “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” and also “experiments and other forms of prospect research to better understand their donors’ reasons for giving.” I acknowledge this could have been made more explicit.
Regarding messaging to different groups, we intended this essay to show folks fundraising for effective charities how to speak to non-EA participants. At the same time, this essay has the meta-function of helping EA participants not be put off by emotionally engaging messages conveyed by effective charities. As EA members, we believe we should optimize for money flowing to effective causes, and be happy about effective charities using such strategies in their fundraising, while ourselves relying on GiveWell and other well-reputed charity evaluators. In general, charities should use segmented messaging, with different messages for different audiences.
To Peter and I, this is a matter of the inference gap. If we can encourage people to give to effective charities and use GiveWell and similar EA-themed charity evaluators such as Animal Charity Evaluators, folks will likely grow in their epistemic rigor in assessing charities, slowly crossing the inference gap. However, this is something that deserves a much larger treatment to uncover similar issues.
Good point about the challenges involved in optimizing for individual victims! Notice that Peter and I did not suggest that charities should change their programming in any way, but simply adjust their messaging. I do see the danger you point to, and it’s something to watch out for.
Thanks again for your helpful comments, and Peter, please jump in if you have further thoughts.
Putting a human face on things does seem to be terribly important to get smaller donors to donate long term.
My own mother has been donating for years to a particular charity which puts young girls in a particular country who did very well in end-of-primary school exams but live in absolute poverty through secondary school in a third world country. Donors are explicitly paired with a child and exchange letters twice a year. (donors are asked to write something or other even if it’s just a postcard because it scares the girls if their donor goes silent even though the charity doesn’t kick kids out if their donor dies but rather pairs them with a new donor) Donors also cannot “overfund” one individual to avoid jealousy and unequal treatment based on funder.
I doubt the scheme is the absolute best bang for your buck though it probably does pretty well if you value education highly.
It amounts to a couple of hundred euro per year but they have exceptionally good donor retention with some donors explicitly putting aside enough in their Will to put their girl through the rest of her education.
They’re not sending money into a generic money-hole, they’re taking care of an individual who they’ve talked with and who dots her ’i’s with a squiggly line and draws faces in her margins in purple pencil.
Perhaps ubiquitous cheap tech will allow some big problems to be handled in such a manner as to give feedback to donors. Tell them about the million people in the refugee camp but put a ring around a half dozen families who are getting the malaria nets you funded and the vaccines you paid for.
Right now coordination in those situations is such a nightmare as to make that impossible but I could imagine cheap electronics solving communication long before solving refugee camps.
While the scheme you described sounds like it’s not the best bank for the buck, there are efforts within the Effective Altruism movement to try to replicate some aspects of this model. GiveDirectly is currently working with corporations to have each corporation “adopt” a village it can then lift out of poverty, for example.
I think the idea is that extraordinary claims require extraordinary evidence is the main factor is the “less funded” charities. Appeals to emotion are seen as either manipulative or not extraordinary enough. Appeals to intellect (a million is a statistic?) are looked upon as more favorable because you can tell what actually happens.
Many people might disagree with you but I think you have the right idea here. Some people might just disagree with selectivity in the way you interact with others. Does LessWrongers believe that selective interaction is morally or ethically unjust?
Alternate summary: many potential donors are not very rational, so appeals to emotion are more effective than appeals to numerical analysis. In order to be “effective” in extracting their money, you should feel free to manipulate your presentation to appeal in this way.
tl;dr: Here is how you can extract money of donors effectively.