how nonprofits can use behavioural economics to increase fundraising revenue

How Nonprofits Can Use Behavioural Economics

to Increase Fundraising Revenue

2/4/16 1pm Eastern

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Our guest presenter »

Leah Eustace, M.Phil, CFRE, ACFREPrincipal, Good Works

Chair of the AFP Foundation for Philanthropy-Canada.

Co-Chair of AFP’s Inclusive Giving Project. In 2014, Leah became the 101st person in the world to receive the ACFRE accreditation. She was also honoured with the AFP Ottawa Chapter Outstanding Fundraising Executive Award for 2014.

@LeahEustaceBloomerang: Behavioural EconomicsFebruary 2016

HOW NONPROFITS CAN INCREASEFUNDRAISING REVENUE THROUGH

BEHAVIOURAL ECONOMICS


Say what?


Behavioural economicsbe·hav·ior·al ec·o·nom·icsnouna method of economic analysis that applies psychological insights into human behavior to explain economic decision-making. (wikipedia)


In other words …

What impact does your subconscious have on the decisions you make? And, how can we use that knowledge to increase our fundraising revenue?


How we think we make decisions

@LeahEustace#NPStoryConf


How we actually make decisions



Emotion versus logic

Artwork courtesy of Mark Phillips www.bluefroglondon.com


Emotion versus logic


Emotional Contagion


Relevance to Fundraising?


Scarcity theory

Simply put, humans place a higher value on an object that is scarce, and a lower value on those that are abundant.

Photo by Matt Wetzler / CC BY-SA 2.0

https://www.flickr.com/photos/thewmatt/1864823746/in/photolist-3QMH8y-7Xp2tE-amgXeH-9WaWEe-iw86s9-6TDV5Y-kJUzRz-9NwFEQ-oViXR-6FMmSR-5veoaV-6spYMS-oViXP-bVkGag-3kAZU-2geSdV-t8Rkn-6xWo2D-3jzP1A-7diHKF-oViXY-4KQXb-eE7eoK-kSgQZW-c7E7if-7kz3b4-5GnYBM-nvZZE-7vgRR3-9izZHg-4Deruo-d9MDme-6BUwLR-8XtAU9-MxK6t-4VmQg-5TMe5Y-4zYaCm-4t5Eg3-aUAYk-qA3VKQ-3eothv-v33yV-4vGdwm-49jSru-dvWs1D-71nw8z-e7UAuF-8z8zRB-qc58


I’d better act fast!


Limited sponsorships, naming opportunities, timelines


Mere exposure theory


Reciprocity theory

Give Receive


Social ProofSocial proof is a psychological phenomenon where people assume the actions of others in an attempt to reflect correct behavior for a given situation. (wikipedia)


Social proof


“Every day, people just like you … “


Authority

We feel a sense of duty or obligation to people in positions of authority.


Authority

The Milgramexperiments


Anchoring theoryThe anchoring rule of thumb describes the common human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions. Once the anchor is set, decisions are then made by adjusting around the initial anchor, regardless of the legitimacy of the actual anchor.

(source: http://disenthrall.co/)


Has this happened to you?

Photo by Ann Larie Valentine / CC BY-SA 2.0

https://www.flickr.com/photos/sanfranannie/3568776384


Campbell's soup sale


How much jail time?

Photo by Ken Teegardin/ CC BY-SA 2.0

https://www.flickr.com/photos/teegardin/6093810333/in/photolist-ahunvp-88utym-3UYptY-82GZh4-M1Ba-83s1bV-dbdhTR-9yVUfR-9FU4j3-AdG8Fx-e4r3yh-9b3n6W-pMUzq5-vPMVWL-5MQBX9-djkeZC-8xykJk-itC5VC-6np2Rg-5n5Mbx-ajUErv-9eW75v-2XMtVb-pe2fek-9vH2UR-b2G8BP-e4krhg-9hoT1p-dAoLDe-8J4SGU-756CAD-xT744-8ckmxP-zCgn4U-ajJ8sx-5aNppj-8QMAQP-aVkxbp-dw2FdQ-h8abZv-9ACWUP-5MLowg-7BFroB-fpW1k1-dMSnJA-cAGDbC-ccYHeL-ccYGzw-aoaieC-6sX7Vo


Save 50,000 sea birds

“Would you be willing to pay $5….”? $20

“Would you be willing to pay?” $64

“Would you be willing to pay $400…?” $143


Be thoughtful about what your first ask is


People look to an anchor to help them make a decision, but they make multiple decisions before making a gift, so there's an opportunity for multiple anchors: “Should I open the package?" "Should I read the letter?" "Should I agree to the meeting?"


What’s the anchor… in Toronto

What’s the anchor?



“I don’t want to ask for $1,000,000 and get thrown out of your office, but I don’t want to ask for $100,000 either if $500,000 is more your speed.”


• Impact• Break the cycle• You make the

difference• The time to act is now• Our programs work• There’s no better place

to ask for help than YSB

• Saving lives

… and look at the eyes


Extremism aversion


Leah Eustace, ACFREChief Idea Goddess, Good [email protected]


mailto:[email protected]

http://www.goodworksco.ca/

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how nonprofits can use behavioural economics to increase fundraising revenue

Government & Nonprofit