Incentive-based fundraising is less effective, shows NYU Stern study

Who is more sincere – a volunteer or a paid fundraiser?

Here’s what research shows.

A study conducted by NYU Stern Professor Alixandra Barasch along with Jonathan Berman of the London Business School and Wharton’s Deborah Small revealed that fundraisers paid to raise money for charity were less effective than volunteers.

This, in essence, was the study.  Paid and volunteer fundraisers were asked to videotape their pitches to donors. These videotaped pitches were then shown to target donors (who were not aware of whether the fundraiser was paid or a volunteer). Here’s the interesting bit. Donation levels in response to pitches by volunteers (of fundraisers who did not receive a personal incentive) were higher than those where fundraisers received a personal incentive for securing the donation. The donors felt that the pitches by the former were more ‘sincere’.

“We found that tainting intrinsically motivated persuaders with a personal incentive reduces their persuasiveness,” the authors write. “Observers detect reduced sincerity and contribute less as a result.”

What lessons does this hold for face to face fundraising or tele-calling? The practice of charging a flat fee to raise funds – compared to a percentage or success-based fee – might not just be more ethical, but now, as this study shows, more effective.

Thoughts?

 

 

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Fundraising is more than just getting donors in. It’s about retaining donors.

Plan for it now – or never.

Did you know? Research shows that the donors you worked so hard to get in through the door in the peak fundraising season – from Dussehra last year right up to 31^st March this year – are already leaving, or have left.

Consider these findings, from a study on Fundraising Effectiveness Survey conducted by the Association of Fundraising Professionals and The Urban Institute in the US.

1. A gain of every 100 donors in a year is offset by the loss of 105 donors who just stopped giving.
2. For every Rs 100 raised, not-for-profits lose Rs 96 because of a drop in other donations.

Let’s unpack these facts for you.

1. A gain of every 100 donors in a year is offset by the loss of 105 donors who just stopped giving.

Which means that you end up spending more money every year replacing the donor who just left.

And the sad part is: These donors didn’t need to, probably didn’t want to, leave.

Donors don’t just stop giving. They stop giving because we stop listening to them, or paying them attention. When we treat them like real people – rather than numbers on a database – they stay.

2. For every Rs 100 raised, not-for-profits lose Rs 96 because of a drop in other donations.

Which also means that you worked hard to raise money to replace the money you would otherwise lose.

And why do you lose that money? Because most not-for-profits pay more attention to donor acquisition, and not as much to what they call donor retention.

Acquisition is what’s in fashion. Acquisition is what consultants and agencies sell you. Acquisition is what the leadership wants to see to decide next year’s fundraising budget.

And that’s the trickiest chicken and egg problem we’ve seen. So here’s a word of advice.

This year, when you present your fundraising plan and budget, take a long-term view. Plan for donor nurturing, in addition to acquisition.

And this is the right time to do so. Most non-profits tend to look at post March giving, leading up to May and beyond, as a “dry” period. But in our experience, it’s anything but. Giving tends to continue over the summer months. But more importantly, it’s when donor nurturing can be at its peak.

As the ink dries on your fundraising plans, ask yourself this. Issues of long-term development and social justice require committed, regular and continued support.

How do we influence one-time supporters to become long-term investors in these issues?

How do we move them from being one-time charitable givers to committed donors and finally, investors in long-term development and social justice?

If you want to talk at length about this, feel free to email me.

We have news for you

Listen up. Barapani is a full service fundraising company now.

We’ve taken the past few months to think hard, work on the numbers, and get this together for you. Digital. Tele-calling. Events. Major donor fundraising. Media planning and buying. Full on fundraising, as we’d say in Bangalore. And a research lab to back this up. We’ve been around as Barapani for seven full years now. And there’s one thing we’ve been focused on: How to get you and your not-for-profit to raise more money year after year for your work. We have been around as the funding environment has evolved in the past couple of decades.  We have seen the rug being pulled from under the feet of some of us all too soon, as priorities of countries and donors have changed. We’ve walked along with those of you who’ve been truly visionary and recognised that the road to building a committed base of long-term support does not lie in a single viral campaign or a flash mob, but in the often mind-numbing task of filling out donor details on an Excel sheet (or its rich-cousin alternative). Not all of you have causes immediately attractive to an evolving public. Not all of you have something to offer that can be captured in a soundbite. We’ve walked alongside you as well. In short, we’ve been around long enough to know a couple of things. What works very well in fundraising. Even more important. What doesn’t work in fundraising. And so, today we’re announcing the start of a new Barapani. One that’s bigger, better and more focused on what you need. Thank you for walking with us. Bharati