Perspective, Charities

Behavioral economics and donor nudges: Impulse or deliberation?

People donate to charity for many reasons. Hardly an objectionable claim. Generosity, self-satisfaction, guilt. reciprocity, duty, prestige. People also do not donate to charity for many reasons – again, hardly an objectionable claim. Inattention. Insufficient income, over-spending, fear of charity failure.

But whether people are giving or not, it seems that two factors remain steady: donors rarely give as much as they would like, and they are rarely able to articulate consistent, evidence-based approaches to choosing the recipients of their aid.

Charities struggling with these donor barriers can turn to behavioral economics for insight. The sciences, psychology, economics, and other fields can help facilitate donations, whether impulsive – quick gifts involving little analysis but rapid and positive emotional feedback, or deliberate, thoughtful contributions that resist the temptation of fast, feel-good donor experiences and more deeply account for the recipient of the aid and its results.

Using these two categories for giving guides us toward impulsive and deliberative marketing techniques – “nudges” rooted in behavioral economics – that can profoundly influence the amount that people donate and the choices they make about which organizations to support.

These techniques should not be viewed as an ethical quandary or a form of manipulation. One could just as easily argue that failure to use these techniques is akin to a manipulation to spend more money on jewelry, vacations, or meals out. These simple approaches to nudging toward more and smarter donations can help people become aware of the dynamics governing their decision-making and then harness those drivers for good. Behavioral nudges can thus help reduce some of the impediments to giving and giving effectively while still protecting potential donors’ freedom to make choices about their giving.

But these insights raise other questions. What if the best marketing is done by the least effective charities, leaving the better performing charities behind? Do these techniques lead people to give more or just shift their giving from one charity to another?

Read the full story at Stanford Social Innovation Review.
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