Posted by Michael Mast, CPA, CFE
The power of suggestion is everywhere and studies have shown that our expectations of others affect how they perform. So the question arises, if a nonprofit sets monetary expectations of their donors by providing suggested donation amounts, as shown below, do those expectations affect the amount they contribute?
According to a published paper When Should the Ask be a Nudge? The Effect of Default Amounts on Charitable Donations (Indranil Goswami, State University of New York at Buffalo; Oleg Urminsky University of Chicago), the answer is yes.
The research paper found that providing a low suggested (default) amount of giving to potential donors increased the total number of donations. Conversely, providing a high default amount of giving to potential donors increased the average amount donors gave but resulted in fewer overall contributions.
Additionally, the research paper found that the inclusion of a default donation amount did not generate a negative perception of the organization. Goswami stated that “participants who had not previously donated responded positively to lower defaults, saying the recommended amount ‘came from a trustworthy source’ and ‘felt like helpful guidance.’”
Below are a few considerations a to how a nonprofit can utilize the results of this research to their advantage:
- Consider providing potential and regular donors with default amounts. The research paper found that 76% of Forbes 2013 50 largest U.S. Charities by Private Support did not use a default amount for online contributions.
- Set default amounts strategically. Set low default amounts when the goal is to attract new donors and set higher default amounts when the goal is to target frequent donors.
- Default amounts should be realistic and relevant to your organization and its goals in order to be effective. Consider listing somewhere between four and six values in total, with the increments being closer together at the low end and then farther apart as the amounts get higher, and adding an “Other Amount” option.
- Consider showing how each default amount will benefit the organization. For example, inform donors that a $25 contribution will provide groceries to a struggling family for a month or that a $200 donation will provide summer camp to a disadvantaged child. Many donors are unfamiliar with the costs of running your organization’s programs and this information will lead them to give to what they feel connected to.
Allowing donors to select from a prestrategized and prepopulated list of suggested giving levels can be an efficient and effective way of to attract new donors and increase donation amounts from current donors.