The Science of Fundraising

No better way to start a year off than talking about money!  In fact, the group of executive directors with whom I was just chatting were all very positive about how their work year ended, noting that they saw a nice uptick in individual giving.  Nice way to end and a great promise for the future.

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Here’s a tip to that could help you have success with fundraising.  According to a study released last month by The Science of Philanthropy Initiative at Chicago University (SPI), scientific research matters to your fundraising success.

Based on survey responses from 1180 nonprofits in both the U.S. and Canada about their development teams and development outcomes, the research showed that those organizations with at least one development team staff member who understood the “scientific method”[1] (where understanding meant that the staff member had been formally trained in it or had some knowledge of it) were significantly more likely (than those organizations that had no staff member who had any understanding of the scientific method) to have an increase in raised dollars from January to June 2014 compared to the same period in 2013.  (Here is a lesson in the statistical part of the scientific method:  when using the scientific method, saying that a result is “statistically significant,” as with the finding above, means that the result obtained did not happen by chance, but rather is a result of some patterned effect.)  Thus, this research is saying that the increase in raised dollars did not happen by chance, but rather is correlated, in some manner, with the presence of knowledge of scientific method by a staff member on the development team.  (Please not that saying two things correlate—in this case, knowledge of scientific method and increased dollars raised–is absolutely not the same as saying the former causes the latter.)

Other interesting results from this study.

• Organizations with a staff member who could assess the scientific rigor of a fundraising study were also significantly more likely to raise more money than those without such a staff member, which saw raised dollars either holding steady or decreasing;
• Organizations that “routinely” assessed the success (or lack thereof) of their fundraising efforts were more likely to raise more money than those that only occasionally or never evaluate their efforts;
• More than half of those surveyed who did not rely on scientific studies in designing fundraising campaigns did not raise more money in the six-month period in 2014 compared to 2013.

So, yes, there is some correlation between understanding and using scientific research in creating a more successful campaign.  Sadly, and no surprise, this study also showed that having a staff member with at least some understanding of the scientific method—how to do it, how to use and interpret the scientific research of others in designing their own work—correlates with the budget size of the nonprofit:  the larger the nonprofit, the more likely to have this expertize on the development team.

But the good news?  The body of scientific research on all aspects of philanthropy is growing and providing valuable and interesting insights, many of which are easy to implement, regardless of the circumstances of your organization.  For example, two researchers, one from SPI and the other from Yale University, used a real nonprofit to test the influence of a recognized name on individual giving.  They found that those donors who received a letter mentioning that a matching gift would be provided by the Gates Foundation increased their giving by 22% over those whose letter simply said there was a matching gift from anonymous source.  In addition, they found that folks who remembered that the Gates Foundation had once made a matching gift continued to gift more even after the match option expired.

In another study, researches at Yale and Harvard teamed up and found that recognition is an elixir that loosens lots of people’s wallets, regardless of the capacity of those wallets.  In a phone solicitation, almost 14% of those who were told the names of donors who gave a certain amount would be listed in the organization’s newsletter agreed to give, compared to only 11% of those who were not given the offer of such recognition.  A relatively small difference, but when raising dollars, every percentage counts!  But, here’s the better part:  the average gift from the slightly bigger group offered recognition was almost 14% greater ($66) than the $58 average gift from those not offered any public recognition.  And that’s how a small difference becomes a bigger one.

Three researchers from the University of California San Diego confirmed what we already know, and then some.  They affirmed that folks don’t like to pay for overhead; but what else they learned is helpful.  They drafted four different solicitations, sending each to 10,000 people.  One letter was a generic solicitation; the second added the fact that seed money for the organization had been received from one donor; the third noted that a matching gift was available for their donations; and the fourth letter said that sufficient donations had already been received to cover overhead costs so that all the dollars of their gifts would go to programs.  Not quite twice as many people who received the overhead letter gave (8.55%) compared to those who received the second letter (4.75%), while only 4.41% of people receiving the third letter gave.  But as with the study above, it gets better:  recipients told that their dollars were all going to program gave almost three times as much ($23,120) as those who received the first, plain, standard solicitation ($8,040), and almost twice as much as those who received the seed money letter ($13,220) and the matching gift letter ($12,210).  The researchers’ conclusion is somewhat questionable:  donors aren’t concerned about the amount of overhead (and this is the questionable part), so long as they aren’t being asked to pay for it.

A researcher at Georgia State University is doing research that could one day help us answer, once and for all, the value of those address labels—and such.  With a focus on altruism, he has worked with nonprofits locally and nationally to help understand the cost benefit equation of giving.  He concludes that there is just that in giving:  folks consider their price of giving and the resulting benefits.  He’s found that people are more generous when they get even small tokens of appreciation, such as those labels; they give more in order to be able to get something they want—a special edition coffee mug or a car, explaining the researcher says, why raffles are so successful.

The beauty of research done well—that is, according to scientific method—is what it can teach us and, in teaching us, how it can, in this instance, make our fundraising task more productive and less of a crap shoot.

[1] Scientific method, in lay terms, is the “correct” way to conduct research such that the process follows the principles of solid research and produces results that are deemed to be reliable, valid (which, along with reliability, has specific definitions within the scientific method), statistically analyzable, and, thus, something that you can use with confidence.   Like most specialties, practitioners of the scientific method must learn the process, which most often happens in graduate schools of various kinds.