Since there have been stats on such things, Americans have given two percent of GDP (plus or minus a tiny amount). And we are likely to be in that box, because of mental accounting, until we do something about it. Fortunately, there’s a solution.

What is mental accounting? You can spend money on anything. Economists call this fungibility, which has nothing to do with mushrooms and everything to do with the dollar bill in your pocket can we used for rent or food or entertainment or whatever.

But one of the many areas where classical economic assumptions don’t square with reality is in this idea of fungibility. People have sophisticated mental jars of money earmarked for different purposes – that’s mental accounting. And we experience mental pain every time we take from one jar to compensate another.

Given this, how do we get our donors to reappraise what giving is worth and what our organization is worth? Researchers found a way.

Researchers put up two sets of ads for the Alzheimer’s Association’s Walk to End Alzheimer’s. As you can see, they don’t look that different. The difference is one reminds people that the walk happens every year; the other frames this as “only once a year.”

This latter framing is called an exceptional expense. The idea is that in our mental accounting, there’s usually a contingency fund for if the alternator goes out on the car or the U-bend comes off the sink again (yes, I have some experience with these particular maladies). The hypothesis was that by framing the gift as “only once a year,” you could get people to break into that piggy bank.

And break they did.

People were more likely to donate to the exceptional expense (46% versus 35%). They were also willing to give more ($7.13 versus $4.82). When they tested this live, the exceptional expense ad had an 11% greater click-through rate.

They also tested this in the mail, where:

“This mailing is part of a special charity drive that happens only once a year. Alex’s Lemonade Stand is requesting only one donation a year going forward.”

Beat:

“This mailing is part of a regular charity drive that happens annually. The charity is requesting a donation every year going forward.”

This is a technique you can’t deploy all the time, or you would be the nonprofit that cried exceptional expense. However, there are some implications of this:
• You may want to shy away from branding your events as the “10th annual” (or whatever). Rather, you probably want to stress the uniqueness of this particular event.
• Member campaigns are historically strong performers for membership organizations. Part of their success may be that they are budgeted for. For some, though, a framing of “this is the only time this year we ask all members to make their membership gift” may persuade more people.
• This can also give you the other end of the spectrum from the “pennies-a-day” strategy, which is also effective. This daily breakdown works well when the total can be divided into small amounts that people round to near zero. But framing the donation as a one-off occurrence may be more productive for larger sums of money.

Hope this technique works for you!

PS. If you would like to walk to end Alzheimer’s, you can find a walk in your area here.