How behavioral insights can be applied to increase charitable giving
Charitable giving benefits both the donors and the recipients. Yet people often don’t take the initiative to donate or don’t donate efficiently. The Behavioral Insights Team (BIT) conducted five experimental trials to test whether certain biases and heuristics can be used to increase charitable giving. The interventions focused on making the act of donating easier, more attractive, social, and timely. They found that defaults, social norms, and the reciprocity norm can be used to increase charitable giving.
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Rating = 5/5 (randomized controlled trials; significant results found in all studies)
|Behavioral insights to increase charitable giving|
Altered framing of donation requests to nudge people into increasing donations
|No framing effects were found
Set the default to increase donations automatically by 3% annually
|Proportion of new donors signing up to automatic increases in donations rose by 39%|
Used peer effects to encourage donations
|Increased signups to donate by 4%|
Used personalized appeals and the reciprocity norm to encourage donations
|Tripled donation rates to 17%|
Used social norms to prompt donations through last wills
|Increased donations by 10%|
Randomized control trial: a study that measures the effectiveness of a new intervention by carefully selecting an eligible population and then randomly assigning a sample from this population to be part of the intervention group and another sample to the control group.
Payroll Giving: a tax-effective donation scheme that takes donations from peoples’ gross income.
Inflation reduces the value of donations over time
Charities depend on regular donations to efficiently budget and plan future projects. Although payroll giving schemes provide a regular income stream, if these donations are not adjusted for inflation their value can depreciate by more than 15% over a typical donor’s lifetime.1 Unfortunately, most donors do not actively increase their donations over time.
Charities need a reliable way to attract donors
Due to the large number of charitable foundations there is fierce competition for donor resources.2 Although interventions using behavioral insights can be used to attract more donors, some can have unintended negative outcomes.3
For example, social signals from relatable people can have a powerful influence on our behavior. If our peers donate it's likely that we will use their donation amounts as an anchor to assess the appropriate amount to donate. But if a charity reveals donation amounts to encourage new donations, new donors may give less than if they hadn’t seen others’ donations. Thus, using behavioral insights to increase donations is not a straightforward process. Charities need a simple and reliable approach for attracting donors.
Trial one: Using framing to reduce effects of inflation on donations
This trial tested whether inviting people to increase their donations annually would be more effective than an invitation for a one-off increase, and if the framing of information mattered. The researchers targeted 702 existing donors at the Zurich Community Trust (ZCT) and randomly assigned them to three treatment groups. All donors received an email about increasing their donations, but the presentation of information differed between groups.
Group one (control group): donors were invited to make a one-off increase in their donations by either £1, £2, £3, £5 or £10. These were the options that ZCT usually presented.
Group two: donors were invited to increase donations annually by £1, £2, £3, £5 or £10.
Group three: donors were invited to increase donations annually by £2, £4, £6, £8 or £10.
By presenting different amounts in group two and three, they tested whether the framing of increases would impact donations.
Trial two: Using defaults to reduce effects of inflation on donations
The BIT worked with the Home Retail Group to increase the number of new employees who sign up for a payroll giving scheme that increased donations by 3% annually. They tested whether making this scheme the default option on payroll giving forms would increase enrollment.
Trial three: Using peer effects to increase donations
This intervention tested whether telling employees about the charitable behavior of their peers would increase donation sign up rates. The BIT conducted a trial with 1500 employees at HM Revenue and Customs. The employees were randomly assigned to receive one of two ‘winter-greeting e-cards’ from another employee. The message in the e-cards explained the employees’ motive for donating and invited more people to donate.
E-card one: contained a message and a photo of the donor.
E-card two: only contained a message.
Trial four: Using personalized appeals and the reciprocity norm to increase donations
This trial tested whether personalized messages and ‘thank you’ gifts encouraged charitable giving. All employees at the Deutsche Bank London offices were randomly allocated to receive an email from the CEO asking them to donate a day of their salary to charity. The email was either addressed to the employee by name (personalized appeal), or as ‘Dear colleague’. Each office was also randomly allocated to have volunteers gifting sweets to employees to encourage reciprocity.
Trial five: Using social norms to increase donations
This intervention tested whether messages that appealed to social norms could increase charitable giving through last wills. People who approached the Co-Operative Legal Services for assistance in writing their last will were randomly assigned to one of two groups. Both groups were asked whether they wanted to donate to charity, but the question was phrased differently for each group.
Plain ask group: “would you like to leave any money to charity in your will?”
Social norm group: “many of our customers like to leave money to charity in their will. Are there any causes you’re passionate about?”
The EAST framework
The five interventions demonstrate the effectiveness of using the EAST framework. This framework proposes that policies can be optimized by making them Easy, Attractive, Social, Timely.
- Easy: increasing donations over time to match inflation is made easier by setting a donation scheme that automatically increases donations over time as the default.
- Attractive: charitable giving is made more attractive by sending an e-card with a photo and message from a peer, or by sending a personal message from the CEO along with giving a gift.
- Social: the social aspect of donating through one’s will is emphasized by stating that several others like to leave money to charity in their will.
- Timely: the interventions made use of two touch points during which people are most receptive to change. First, by using default options in new employees’ contracts. Second, when people are making decisions about their will.
Results and Application
Effects of inflation can be mitigated using defaults but not framing
Trial one found no significant difference in sign up rates between the three groups. This suggests that framing donation amounts had no impact on behavior. However, since donations from group two and three will increase year-on-year, the overall value of these donations could potentially increase by more than £1000 over the course of a donor’s lifetime. On the other hand, trial two found that using defaults to automatically enroll employees into a payroll scheme that increases donations by 3% annually increased the proportion of new donors signing up by 39%.
Norms and personalized appeals can increase donations
Trial three found that sending employees messages from colleagues who are already donating along with a picture of the donor increased enrollment for the organization’s payroll giving scheme by 4%.
In trial four, combining a personalized message from the CEO with a gift tripled donation rates to 17%. Sending only a personalized message or only giving a gift along with a generic email both increased donations by the same amount. Suggesting that the two interventions executed separately are equally effective, but the best results are when they are combined.
Finally, trial five found that social norms can be used to increase charitable giving through wills. In the ‘social norm’ group, 15% left a gift to charity in their will whereas only 11% did so when a social norm was not included in the donation prompt, and only 5% donated before the intervention.
|Climate & Energy||Breaking habits that have adverse environmental effects is difficult. Social norms, personalized messaging and defaults can be used to change habitual behaviors to more environmentally friendly ones.|
|Public Policy||By the nature of the framework used in these interventions, the successful findings suggest that making policies easy, attractive, social and timely can improve their effectiveness.|
|Retail & Consumer||Norms, defaults and personalisation of marketing efforts can be used to increase demand and customer loyalty.⁴|
- Gives valuable insights on the effectiveness of behavioral interventions in a range of industries.
- The interventions improved on existing interventions that immediately benefitted the charities involved.
- The findings provide practical suggestions to help charities increase donations.
|Does the intervention demonstrably improve the lives of those affected by it?||
|Increasing charitable giving is beneficial for society, as it helps distribute resources in a beneficial way to marginalized groups.|
|Does the intervention respect the privacy (including the privacy of identity) of those it affects?||
|No personal information of the participants was identified.|
|Does the intervention have a plan to monitor the safety, effectiveness, and validity of the intervention?||
|The interventions were very effective.|
|Does the intervention abide by a reasonable degree of consent?||
Room for Improvement
|Participants were not asked for consent.|
|Does the intervention respect the ability of those it affects to make their own decisions?||
|Participants were free to make their own decisions.|
|Does the intervention increase the number of choices available to those it affects?||
|The intervention increases the number of strategies charities could implement to increase donations.|
|Does the intervention acknowledge the perspectives, interests, and preferences of everyone it affects, including traditionally marginalized groups?||
|It does not mention the perspectives of different groups.|
|Are the participants diverse?||
|They worked with five companies from different industries and countries. Thus, the participants were likely diverse. However, no exact information was given.|
|Does the intervention help ensure a just, equitable distribution of welfare?||
|Encouraging charitable giving is beneficial for both the donor and the charities.|
Related TDL Content
The commitment bias postulates that the more time and effort we invest in a certain idea the less likely we are to change our minds about it, even if the idea is no longer valid or beneficial. This article outlines how the commitment bias can be used to increase charitable giving.
When deciding where to donate, people often incorrectly assess the cost-effectiveness of charities. The availability of more information also does not necessarily result in donors making better decisions. This article explores how nudges can be leveraged to increase charitable donations.
- Sanders, M. (2013). Applying behavioural insights to charitable giving. The Behavioural Insights Team. https://www.bi.team/publications/applying-behavioural-insights-to-charitable-giving/
- Thornton, J. (2006). Nonprofit fund-raising in competitive donor markets. Nonprofit and Voluntary Sector Quarterly, 35(2), 204-224. https://doi.org/10.1177/0899764005285951
- Karlan, D., & List, J. (2006). Does price matter in charitable giving? Evidence from a large-scale natural Field experiment. American Economic Association, 97(5). https://doi.org/10.3386/w12338
- EAST framework: Helping you influence customer behavioral for the better. (2021, January 14). LinkedIn. https://www.linkedin.com/pulse/east-framework-helping-you-influence-customer-behavioral-yagesh-batra/