When It Comes To Fundraising, Less (Choice) Is More (Money)

Eliminating frictions to maximize donations

Eliminating frictions to maximize donations

When taxis here in New York City started accepting credit cards, riders in backseats across the five boroughs noticed something they hadn’t seen before — once their ride was over, default tip options would appear on the taxi’s screen: 10%, 15%, 20%. One touch and they could add a tip to their fare total.

Before that, a rider might have rounded up her fare to the nearest dollar or thrown an extra dollar or two into her payment. These new defaults were higher, but they were also easier. Tipping went up — much to the delight of cabbies who’d been opposed to taking credit cards in the first place given the processing fees.

Nonprofit fundraising professionals have long known about the power of defaults — it’s why the best mail campaigns have clear options for donation and why sophisticated cause marketers offer single-price donations in their campaigns.

Setting defaults help get rid of the factor that behavioral psychologists and behavioral economists identify as the biggest barrier to generosity: decision-making friction.

Americans love being generous, but they’re anxious about giving too much or too little. Is the giving experience too complicated? They’ll opt out and walk away.

Defaults are enormously powerful. One recent Columbia University study of tipping levels in taxis found that even when defaults are set higher, levels of generosity don’t go down — total tips go up. Given our essential generosity, we are relatively insensitive to price when it comes to a tip or donation.

A study in the Journal of Economic Literature found this effect for charitable giving more broadly when donors were asked to choose amongst causes to donate to — the fewer choices they had, the more likely they were to give. Offering a list of default charities doubled the rates of donation and the total donation amounts collected.

We’ve seen the power of eliminating decision-making friction here at DipJar: causes using our product to solicit donations on-site, at events, or with retail and corporate partners find that donors are just as likely to give $5 as $2 — all that matters is that you ask clearly for a specific amount.

Indeed, when the New York Public Library set up a DipJar soliciting a $5 donation for visitors taking the audio tour, they found that the average cash donation also went up from $1-2 to $5. Givers love a clear norm.

But even with defaults donation amounts to minimize decision-making friction, there are still two big frictions that remain for fundraisers: opt-out friction and the speed-of-service friction. Identifying and addressing these will help even the most sophisticated fundraisers make donors happier and more likely to give.

(1) Opt-Out Friction

Studies about tipping in taxis have found that if you set the ask too high, people won’t tip at all.

We’ve all been to a café, bought a cup of coffee, then had the iPad point of sale system present us with tip options of $3, $4, and $5 — you want me to tip $5 on a $2 cup of coffee? No way!

Generosity becomes awkward and less likely if donors have to opt out of the donation experience rather than opting in. To get past the tip at the coffee shop or in the taxi, you have to press “$0” or “No tip” — a discomfort that removes joy from the process.

The same is true for charitable causes’ “Add $1” button in the checkout process of an in-store campaign. As generous as we are, we like to feel like we’re choosing to be generous intentionally — not being pressured into it.

It's a tough nut to crack — limiting decision-making friction while also creating an opt-in donation. If you can achieve the combination, it's the recipe for a smooth and happy donor experience.

The audio tour donation at the New York Public Library, for example, is always $5 — but it’s also always an affirmative choice being made by the visitor to support the library. That’s why donors and the organization have seen such success with the experience.

(2) Speed-of-Service Friction

Even a default donation that’s an opt-in experience can be frustratingly slow.

A customer might choose to give $5 to a cause at a store’s register in response to sign on the counter, but then he’ll have to wait for the associate to print and scan a barcode to add the donation to his purchase. As the clock ticks, his excitement to give declines.

Similarly, a student on campus might happily approach a campus representative collecting $15 donations for the senior class gift — but then find that entering her credit card information on an iPad takes her five minutes when she’s already running late for class.

Making donations fast is essential — not only to collect from folks who might otherwise move on, but to make donors feel good about their generosity.

Recent studies show that fast donations aren’t just more likely — they’re perceived as more authentic.

As reported in Nautilus magazine, “encouraging people to make decisions quickly can bring out their better angels. Extensions of this research reveal that we see quick or unthinking acts of generosity as particularly revealing of kindness…" It's amazing: the faster our donations, the more generous we perceive each other as being.

Want to make more money and make your donors happier about giving? Use smart defaults and make giving as fast as possible while still being opt-in.

This is the kind of experience we’ve tried to design at DipJar, to enable as much generosity as we can while also promoting the “quick and unthinking acts of generosity” that feel most authentic to donors. And it's a set of insights that even the most seasoned fundraising professionals can use to make donors more likely to give and more satisfied about their giving.