October 31, 2018
With Giving Tuesday around the corner, we are taking a closer look at both how and why you should consider using a tiered donation list in your donation appeals.
Tiered donation lists and suggested donations are based on the social influence effect, which coerces an individual’s decision-making based on social norms or social information provided to them. In a study on the Impact of Social Influence on the Voluntary Provision of Public Goods, researchers Jen Shang and Rachel Croson found that suggesting donation levels increased average contributions by 12% for all donors by telling donors what is an ‘appropriate’ level to give. Furthermore, these increased donation levels were sustained with higher donor renewal rates in subsequent years!
Tiered donation lists take suggested donations a step further by providing context and impact for each donation level. This allows potential donors to understand how their money is making a difference. In their study on what they coined as the “identified intervention effect,” researchers found that highlighting details about the charity’s impact significantly increased a donor’s generosity.
By combining details about a nonprofit’s impact with suggested donation levels, tiered donation lists use a multiplier effect to increase the generosity and giving probability of potential donors.
When creating fundraising or impact goals for your organization, a good way to make sure you are providing a compelling fundraising appeal is to use the SMART Approach. This approach was originally conceived for project management by George Doran in a 1981 article titled, There’s a S.M.A.R.T. Way to Write Management’s Goals and Objectives.
To put simply, your impact should be:
One way to structure your appeal is to list your SMART fundraising goal, followed by SMART tiered donation options that relate to your fundraising goal. For example:
Goal: Organization ABC aims to raise $50,000 by December 31, 2018 to help provide an education for 2,000 children in Cambodia’s most hard-to-reach communities in 2019.
$100 will buy an all-terrain bicycle that will help a Cambodian child attend their nearest school that is 10 miles away
$250 will pay for a full-year of middle school tuition for a Cambodian child to continue their education
$500 will provide 100 Cambodian children with school uniforms and supplies they need to be successful in school
There are a variety of ways to structure your tiered donation lists. The benefit of using different measurable impacts, as in the example above, is that it allows for donors to get a better idea of the different activities an organization is doing to make an impact.
Notice that in the example above, each donation option speaks to something that every person can identify with in pursuing an education – paying school tuition, having school uniform/supplies, and transportation to go to school. It is very important that the impacts you choose to highlight are relatable to your target audience. Additionally, setting a timeline is crucial to convince donors as to why donating now is necessary. In some cases, organizations provide matching donation incentives for donors to donate within a specific time frame. For #GivingTuesday, you should decide if you want to combine your giving campaign with the end of year holiday giving period.
Some organizations choose to use a specific measured impact goal and have all the options refer to the specific impact metric. The World Bicycle Relief is a great example of this where they use donation tiers to show that $150 would be the cost for one bicycle and countdown to their goal of providing 1,400 bicycles. The more specific your impact goal is, the easier it is to make a clear call to action for your potential donors.
For some ideas of other ways you could be structuring your donation tiers, check out CauseVox’s summary of the top five donation tier structures.
Now that you have some ideas of how to convey the impact in donation tiers, you’re probably thinking about what donation tiers work best to inspire giving. The short answer to this is that it depends.
While you can use the impact targets you feature to guide the amounts you choose for each tier, a more scientific approach would be to look at your past giving and giving within your sector to make your tiers. According to Nonprofit Source, the average online gift amount for #GivingTuesday in 2017 exceeded $134. Additionally, Blackbaud analyzed $1.9 billion in online gifts in 2016 from more than 4,000 nonprofit organizations in the United States to create a median gift amount for each sector. These figures can be combined with your organization’s past giving to come up with a good benchmark and giving tiers.
To take things a step further, you could try adding a default option to your tiered donation list to leverage a marketing technique called anchoring. This technique relies on the brain’s tendency to heavily rely on the first piece of information (such as price) offered when making decisions. In the case of donations, it will cause people to tend to give closer to the anchored value than they otherwise might have.
Marketing researchers Indranil Goswami and Oleg Urminsky suggest that fundraisers might be overly apprehensive about using defaults in their donation campaigns. In their 2016 study, they found that setting donation defaults increased donation revenue in two ways: (1) by setting a lower default, it increased the number of smaller donors that gave to an organization; and (2) by setting higher defaults, it increased the average giving of each donor but reduced the total number of donors who gave.
The anchoring strategy you choose should be dependent on your priorities. If you want to enlarge your pool of donors to help increase your organization’s visibility and donor engagement, then going for a lower anchor or default may serve you better but may come at the expense of a reduced average giving amount across donors. A higher anchor may increase your average giving amongst current donors, but make it harder for you to attract newer donors.
Regardless of the approach you choose, keep in mind that this is an iterative process that requires experimentation to find the best strategy for your organization. Coming up with the best list takes practice, so try showing these lists to current donors and volunteers to get feedback as you find what works for you.
This is the second of three posts in our Giving Tuesday blog series. Check back next soon for our final post.