In the world of direct response fundraising we test and measure almost everything –length of copy, offers, asking amounts, teasers and headlines, etc.   But in the non-direct response fundraising world there’s room for empirical improvement where myth, legend, hunch and intuition must give way to data.

That’s why the piece What Makes People Give? in last Sunday’s New York Times Magazine makes for fascinating reading. The article highlights the work of two economists, John List of the University of Chicago and Dean Karlan of Yale, who have set out to find some empirical evidence to support the strategies employed by many fundraisers.

The ‘economics of philanthropy’ is an emerging niche attempting to explain patterns and motivations behind the $295 billion Americans give to nonprofits. How? By answering questions such as “what effect does tax deductibility have?” … “do lotteries/sweepstakes make a difference?” … “are matching gift campaigns really effective, and if so is a 2 to one match better than a 1 to one match.”

Some brief, but fascinating, takeways from this article:

• Matches matter.  But a two for one or four for one match won’t do any better than a one for one challenge.
• “Seed money” appeals may work better than matching gift appeals
• Placing some ‘competition’ in the ask will improve returns. Donors who were told another donor had made a $300 gift gave 12% more on average.  BUT…when the example was raised to $1,000 they gave less.
• The more money people give to their church or synagogue, the less often they attend services–“Pay or Pray”
• Offering a lottery works in both the short and long term. People studied gave more money when they were told their contribution would make them eligible for a prize; and they gave more the next time they were asked too.
• A matching gift appeal to liberal donors in “Blue States” (those who voted for Kerry) increased giving by 5%. But in “Red States” (those who voted for Bush) it increased donations by 60%.  The authors conclude this kind of giving “is not about a calculation of what you are buying, it is about participating in a fight.”

Even if you’re not putting together fundraising appeals, this new wave of economic inquiry is an important manifesto for using behavioral research to help us all make better, more informed decisions.

Roger