What does a donor want and need? This is an important question for nonprofits to consider. Another important question is: how can I satisfy the need of my donor(s)? People are becoming less pro social and charities note that their solicitation methods are less effective than before: generosity is declining. So lets start thinking about changing/updating the solicitation methods. Today we talk about one update: increasing the focus on impact and quality signals.
Hé! Each month I will upload a new blog series. Each series will have one central subject; the subject of this month is ‘A changing donor’. A series consists out of several separate blogs. This is the second blog of the ‘A changing donor’ series. For the first blog of the series click here.
Efficacy: I want to make a difference
When I ask people about their motive for giving they often reply by saying: “I want to help” or “I want to make a difference”. The need to make a difference through ones donation is described by the term impact. Impact is identified as one of the drivers for giving (Bekkers & Wiepking, 2011): the idea that your donation makes a difference to the cause you want to support increases the change that you will give.
How can I make a difference?
So how are we to determine if our donation will make a difference? This is an important question, since we just read that the feeling of making a difference increases giving. For nonprofits it is important to signal to a (potential) donor that their donation will make a difference and preferably how big the difference will be. One way to inform donors about the likelihood of making a difference is through a quality signal.
A quality signal is important because a qualitatively good nonprofit organization is more likely to effectively use the donation. However, donors often find it hard to judge the quality of projects and non profits. Possibly because there are so many different projects and charities. Also, a proper quality signal is often absent. So a clear quality signal could could push (nudge) a donor towards making a (higher) donation. How can nonprofits provide donors with a proper quality signal?
Signaling quality and efficacy
If you read all my blogs on this site you might have an idea of what I am suggesting. One way to signal quality is to use financial information of past donors: social information. Social information provides donors with the donation amounts of previous donors. This information can function as a quality signal: if others are giving to this charity, I can take this as a signal that others have confidence in the project/nonprofit.
Another important reason why nonprofits should provide a quality signal is the finding that while the trust in charities is improving, the Dutch population still shows a distrust towards charities. Social information could signal that a nonprofit is connected with a positive organization legitimacy.
Social information if often researched by behavioral economists, social psychologist or by researchers focused on philanthropy (like me). In general mentioning the average or past donation amount increases giving (van Teunenbroek, Bekkers & Beersma, 2018). However, not always. The literature is unclear about the exact working of social information: why is it (not) effective? It has however been suggested that social information functions as a quality signal: if potential donors are uncertain about the merits of a project, they use the suggested donation amount to determine a project’s quality (Vesterlund, 2003).
A donor wants to make a difference (efficacy). In order to do so thy first have to determine if donating to a specific charity will help them support their cause. A quality signal can help a donor determine this. However, donors find it hard to judge the quality of projects/non-profits. As a result, quality signals about the project/non-profit could greatly influence the donation, as they provide a donor with more certainty about the quality. One way to provide a quality signal is to use social information: the donation behavior of previous donors.
Bekkers, R. H. F. P., & Wiepking, P. (2011). A Literature Review of Empirical Studies of Philanthropy: Eight Mechanisms that Drive Charitable Giving. Voluntary Sector Quarterly, 40(5), 924–973.
Van Teunenbroek, P. S. C., Bekkers, R., & Beersma, B. (2018). Look to Others Before You Leap: A Systematic Literature Review of Social Information Effects on Charitable Giving. Retrieved from https://mfr.osf.io/render?url=https://osf.io/tz7sp/?action=download%26mode=render
Vesterlund, L. (2003). The informational value of sequential fundraising. Journal of Public Economics, 87(3), 627–657.