Tuesday, 04 December 2012 18:00

My First Foray into the Science of Philanthropy

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Door to Door

When I was at the University of Central Florida, I was presented with a unique opportunity. The Dean approached me to help fundraise for a new Center for Environmental Policy Analysis (CEPA). As a researcher, I had some experience writing grants and thought the task would be a walk in the park. That was the first wrong assumption I made.

With $5,000 of seed money, I set to work. My first dilemma was to determine how to leverage the money while fundraising. After some research, I found that professional fundraisers take the role of seed money seriously; a manual for fundraisers recommends not starting the public phase of a fundraising campaign until  "40 to 50 percent of the goal is pledged" as seed money  (Fundraising School 1999). However, an informal poll I conducted among friends in the nonprofit field suggested percentages ranging from 20 to 80.

Where did these numbers come from, and why did they vary so much? There wasn’t really any answer. I was unable to find evidence of a single quantitative measurement of the role of seed money in successful fundraising. That surprised me. The annual worth of the charitable giving market is $300 billion[1] or roughly two percent of GDP. That’s a relatively large market to rely on “rules of thumb.”

And so, I found myself in a perplexing situation. I knew three facts:

  • I had $5,000 of seed money
  • I needed to raise money for a worthy cause
    and
  • I am a curious guy. (It’s why I got into research in the first place.)

Those three facts meant one thing to me: I needed to take matters into my own hands and conduct an experiment.

The experiment involved soliciting contributions from 3,000 central Florida residents, randomly assigned to six different groups of 500. Each group was asked to fund separate computers and that varying levels of seed money, ranging from 10 to 67 percent, had already been secured for the purchase of the computer.

The results were clear –increasing seed money sharply increases both the participation rate of donors and the average gift size received from participating donors.  Or in other words, more seed money meant more donors, larger donations and more money.

However, what was even more exciting than more money was the ability to apply science to philanthropy. Using science, data-driven research can fuel decisions regarding fundraising strategies.

Since my first foray into philanthropic sciences, I’ve realized we’ve only touched the tip of the iceberg. Research opportunities are endless and we are using scientific research to change the charitable giving sector. For example, while my first experiment supported the idea that increasing seed money results in a more successful fundraising pitch, other experiments have turned assumptions on their head. One such assumption is the commonly held belief that the higher the matching gift (3:1 or 2:1 matches) means more donations. However, one of our studies has proved that assumption to be incorrect! 1:1 matches are just as effective as 3:1 or 2:1 matches; larger matches do not provide additional incentives for larger or more donations. What does this mean for fundraising? What other incorrect assumptions are we operating under? How can research change the way we think about fundraising? Questions abound and this field just begs to be studied.

The need to apply science to the market of charitable giving is exactly why I am leading the new Science of Philanthropy Initiative (SPI). This transformational initiative will use nonprofit partnerships and science to explore motivations behind giving in order to increase philanthropy. We hope you join us as we go forward and develop the science of philanthropy.

 


[1] Giving USA 2012 Annual Report on Philanthropy for 2011, GivingUSA from the Center on Philanthropy at Indiana University. 

Last modified on Thursday, 23 May 2013 15:53
John List

John List is the Homer J. Livingston Professor and Chairman in the Department of Economics at the University of Chicago. He also holds a position as a National Bureau of Economic Research Associate. John has previously served as a Senior Economist on the President’s Council of Economic Advisers (2002-2004).

John has pioneered field experiments as a methodology for learning about behavioral principles that are shared across different domains. He has published over 150 peer-reviewed research publications, providing insights into charitable giving, public goods provision, and valuation of non-marketed goods and services. John received the 2010 Kenneth Galbraith Award and the 2008 Arrow Prize for Senior Economists for his research in behavioral economics in the field. Overall, data John has collected has provided insights into incentives for education, pricing behavior, discrimination in the marketplace, the valuation of non-marketed goods and services, public goods provision, and importantly, charitable giving.

As the PI of SPI, John plans to lead the team in generating knowledge in the field of philanthropy and bridging the gap between research and practice by forming collaborative partnerships. John’s research on philanthropy has been showcased in various media outlets such as the Wall Street Journal, Chronicle of Philanthropy, and the New York Times.

Website: spihub.org/jlist/

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