The other day, I read something in the Chronicle of Philanthropy that, frankly, startled me.
The article stated that “very few” nonprofits utilize research on fundraising when planning their campaigns.
In fact, only half of nonprofits consider the available research when it comes to their fundraising strategies. A majority of nonprofit fundraisers say no one on their team has any formal training or coursework on their resume on even basic research methods, like the use of controls, sample sizes, or randomization.
And yet, it gets worse.
Much of the research into fundraising indicates that our conventional wisdom is wrong, and common techniques may be hurting fundraising efforts. In fact, fundraisers who do use scientific research perform better! That came courtesy of, you guessed it, a scientific research study.
Now of course, I understand the predicament fundraisers find themselves in. They’re tasked with raising money to keep an organization alive. Many times, they’re doing this despite being overworked and understaffed. Who has time to read through dull scientific research?
Making Research Accessible and Applicable
According to the Chronicle of Philanthropy article, the problem is that “(some) charity leaders maintain that research papers are impenetrable to lay readers and aren’t widely applicable in the apples-and-oranges world of charities.”
So let’s change that!
This will be the first in a recurring series of posts we’re calling Fundraising Science, in which we’ll break down a fundraising research article, translate it to plain English, and identify some actionable takeaways for fundraisers.
Do Matching Gifts Work?
Today’s research article explores matching gifts and seeks to answer the question “Does a bigger matching encourage individuals to give more?”
In their paper titled “Does Price Matter in Charitable Giving? Evidence From a Large-Scale Natural Field Experiment,” researchers Dean Karlan and John A. List explore whether a richer matching gift (i.e. - 2:1 vs. 1:1) actually encourages donors to give more.
Conventional wisdom would tell us that donors would be willing to give more if they knew their dollar would go further because of a richer matching gift. If I can give $100, which is matched by a $200 gift, I’m making a $300 impact for just $100! That sounds much more appealing than a $200 impact, right?
Sometimes, conventional wisdom is misleading. The authors point out that little effort has been spent actually studying the effects of this method.
The researchers ran their experiment on 50,083 individuals receiving a direct mail solicitation. Each of the participants had previously donated to the organization.
This large sample size is helpful for research; it helps minimize the chance that our findings will be the result of random chance. The more participants in the study, the less an outlier sticks out. Like being the only person wearing white after Labor Day in a crowd of 100,000 vs. 10. Who’s gonna notice in the big crowd?
Of the 50,083 participants, 67% were put into an experimental group. These individuals were randomly assigned various matching levels ($1:$1, $2:$1, and $3:$1).
Randomization is key in research! We don’t want any of our selection methods to contaminate the evidence, and randomly assigning participants ensures that we’re not having unintended influence over the experiment.
The remaining 33% of participants were assigned to a control group that received the same direct mailer, but without a matching gift offer.
Control groups give us something to compare to so we can see what effect the experiment had.
The theory behind a bigger matching gift is really plain old economics: supply and demand. If a bigger matching gift is offered, essentially the “price” of the social good is lowered. Prices go down, and demand goes up. Therefore, you should see more donations, right?
The study found that while the matching gift did increase donations (19% per solicitation), along with the probability that an individual will make a donation (by 22%), the amount of the match made little difference.
That’s right, whether it was $1:$1, $2:$1, or $3:$1, the donor essentially gave the same amount.
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So while these findings back up the effectiveness of a matching fund, they certainly downplay the effect of a larger matching fund.
$1:$1, $2:$1, or $3:$1, it really doesn’t matter. Matching gifts can and do increase gift sizes, but a larger matching gift does not significantly increase donations beyond that initial bump.
How to apply this lesson
Knowledge is worthless unless we know how to apply it. So how can this research lesson be utilized in your daily fundraising practice?
One takeaway we can make is that if you’re able to secure a matching gift, go for it! However, don’t spend an inordinate amount of time or effort in trying to secure a larger matching gift from an individual or corporation.
In fact, if you’re fortunate enough to have multiple corporations offering a matching gift, you might be better served splitting up those contributions across separate campaigns, in order to gain the initial matching gift bump for more than one campaign.
There you have it! Don’t you feel like a smarter, more data-driven fundraiser already? Now put that knowledge to work!
Dean Karlan & John A. List, 2007. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," American Economic Review, American Economic Association, vol. 97(5), pages 1774-1793, December.