Does fundraising require 100% participation?

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Question: 

I've worked with, or had my kids, in many organizations that rely on (and demand) contributions. They claim that 100% participation (even a single dollar) is important because other donors look at the participation levels when making their decisions. It seems plausible, but is there any ACTUAL evidence that (a) that is a wide-spread practice, and (b) that such institutions actually raise more money?

Answer: 

This question is in two parts: 1) How prevalent is the requirement for 100% giving of any amount; and 2) Do organizations raise more money if there is a 100% giving expectation?

Let me begin by stating that I’m not aware of any research which directly addresses these questions. However, there is evidence which is highly suggestive.

First, I will speak from my own experience of serving on over 30 nonprofit boards over my career. If fundraising is an important role of the nonprofit organization, my experience has been that most such boards have a written expectation that each board member will make some gift every year. Some of them suggest a donation level, based on one’s means, while others say any amount is acceptable. The following website suggests why board members should give: www.thebalance.com/how-nonprofit-boards-make-a-difference-2502002

  • “It is a public declaration that the board member has invested in the charity.
  • It indicates that the board member has a commitment to the organization and its mission.
  • It encourages other donors to give and impresses institutions that provide grants or other support. Indeed, many major donors and foundations will not support a charity unless the board achieves 100 percent giving.”

The website http://npresearch.org/board-giving-and-engagement of the Nonprofit Research Corporation states:

  • 92% of nonprofit organizations use board giving as a measure of fundraising.
  • 60% of nonprofit organizations require board members to make gifts.
  • Board giving is typically 10% of total giving.

Regarding general philanthropy, I am most familiar with higher education. US News and World Report, for example, explicitly includes percentage of alumni who give as one of their indicators of graduates’ satisfaction with their degrees. It only counts for 5% of a college or university’s ranking, but it can make a small difference in an institution’s ranking.

The question of whether such policies make a difference in how much is actually collected is more difficult to answer. I am not aware of any research that directly addresses this question. Most of the research has used laboratory experiments with students as subjects. The basic experimental design is referred to as a voluntary contribution experiment, which can be viewed as mimicking charitable giving. The general design is to give each subject a certain number of tokens that can be invested in either a private good or a public good. Typically, one token invested in the private good returns $1, while one token invested in the public good returns less than $1 plus an amount that is a function of the total contributions to the public good. It is set up so that the private incentive is for each subject to contribute zero tokens to the public good. However, all subjects make the most money from the experiment if all subjects contribute all of their tokens to the public good. The experiments then use different strategies to increase contributions to the public good. While none of them explicitly considers board members, a number of strategies clearly increase contributions. For example, many local fund drives put up thermometers around town indicating how close they are to goal. It turns out that, in experiments, regularly displaying how much has been raised does increase contributions.

Possibly the most useful piece of research is by Rachel Croson, dean of social science at Michigan State University, and one of her former graduate students, Jen Shang. Their paper is “A Field Experiment in Charitable Contribution: The Impact of Social Information on the Voluntary Provision of Public Goods,” The Economic Journal, 119:1422-1439, 2009. They partnered with a public radio station during one of its fundraising drives. Members of the research team substituted for the regular fundraisers. They divided those who called into four groups:  the control group, which received no information; then three additional treatment groups, which were told that other donors had given $75, $180 or $300. There was no deception. There were actual donors who had made those gifts. This sort of additional information is referred to as a form of “nudge.” (For a more in depth treatment of the impact of various nudges, see the book Nudge: Improving Decisions About Health, Wealth, and Happiness, by Richard Thaler and Cass Sunstein, Yale University Press, 2008).

Shang and Croson measured how much the “nudged” donors gave that year and the next. The nudge had a lasting impact. A year later the control group gave an average of $10, while those nudged at $75 gave an average of $22 and those nudged at $180 and $300 gave an average of $30. The result was that the nudge generated at least a two-year increase in total donations. To the extent that contributions by board members and other leaders nudge others to give more, this result suggests the contributions of board members and leaders increases overall contributions.

 

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Last updated on November 8, 2017