The Power of Donor Choice for Nonprofits

What Drives Donor Thinking

John Costello, an assistant professor of marketing at the University of Notre Dame’s Mendoza College of Business and one of the study’s authors, says this phenomenon reflects a less benevolent way of thinking about donations.

“We often focus on the altruistic motives that donors have for giving their time or their money, and that certainly plays a large role. There is an aspect of just trying to do the most good in the world,” Costello says. “But I think it’s really important for organizations to think about more self-interested motives.”

Many donors are looking for clear signs of the impact of their support — and that can feel more obvious when it involves a volunteer activity. Costello cites soup kitchens, where people donating their time can actually see the work they’ve done.

“We know from psychology that being involved in an action increases people’s perceptions of control,” he says. “So ultimately, it’s a feature of time — it’s something that can’t be separated from the person who’s giving it, and that leads to that greater sense of control.”

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Financial donations have a more pronounced effect than volunteering because the money can be used across many areas of an organization. But they may not have the same visceral effect, which can create challenges for nonprofits in reaching their audience. According to a study by Fidelity Charitable, nearly 40 percent of donors are more likely to donate time before they offer a financial donation to a group. The solution to this problem, the study says, is to make the benefits of financial donations clearer to donors, which requires a more complex messaging strategy.

“It’s based on the fundamental features of time versus money,” Costello says.

The Role of Donor Perception

Donors often don’t have a direct influence on how nonprofits operate — that’s up to a board to decide, and it’s tied to the nonprofit’s overall mission.

However, giving donors a choice in how their financial gifts are distributed — for example, to a certain department or geographic area, or in support of specific relief efforts — can help donors feel they have some control over the final outcome, which might persuade them to give.

“All that really matters is that people perceive that they have control. That’s what really drives behavior,” Costello says.

Lessons for Nonprofit Technology Pros

From a technology standpoint, there are a few considerations worth keeping in mind, specifically with regard to your nonprofit’s digital fundraising and marketing strategies. Among them:

• Tie data to outcomes. While not an explicit connection made by the researchers, the study suggests that there may be a disconnect between a nonprofit’s work and the money used to support that work. Business intelligence tools such as Microsoft Power BI and Tableau can help organizations uncover opportunities to tell better stories that can connect contributions with their impact.
• Build around targeted messaging. Having a powerful customer relationship management tool such as Zendesk can help effectively reach the audiences that are most likely to be receptive to your message. Costello warns that trying to target based on perceived donor preferences can be difficult because it involves a psychographic variable. However, he says, there may be room to target potential or existing donors based on location, perhaps by suggesting that donations stay in a specific state, or by targeting recurring volunteers with choice-based messaging on how financial donations could be used. (As Fidelity Charitable notes, many nonprofit donors often give both time and money.)
• Consider the role of psychology in your applications. Often, donors are motivated by the information that’s in front of them, and quite often, that information is not clear. “Non-profits would collect much more from their websites if only they’d clearly state what they are about and how they use donations,” usability expert Jakob Nielsen writes. Building mobile applications and websites with user interface considerations in mind can help make clear the benefits of different kinds of donations. And bringing in an outside party, such as CDW Amplified^TM services, can help make sense of which approaches have the most impact. If creating more options for donor choice is your goal, the user experience is a key part of that discussion.

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Despite the study’s findings, Costello advises being careful not to downplay the impact of volunteer work in your messaging. “You wouldn’t want to discourage somebody from giving their time if they aren’t actively considering giving their money,” he says. 

Ultimately, the goal should be to clearly show the value of both types of donations so donors have all the information they need to make the right choice.