lloyd-300x300Over the last year I’ve started to pay more attention to the fundraising side of the nonprofit equation. While those of use who live and breath the social sector hope donors will become less persuaded by financial overhead ratios and more focused on data driven giving, the evidence suggests donors aren’t especially interested in deeply researching their charitable gifts.

A recent report on donor behaviors adds more fuel to the fire, as researchers found evidence to suggest that donors don’t simply not care for data driven giving, it might actually turn them off completely. Paul Slovic, a psychologist at the University of Oregon conducted an experiment where he “told volunteers about a young girl suffering from starvation and then measured how much the volunteers were willing to donate to help her. He presented another group of volunteers with the same story of the starving little girl — but this time, also told them about the millions of others suffering from starvation.”

The volunteers who were simply told the story about the young girl suffering from starvation were more inclined to give than those told both the story of the young girl suffering and given the metric of the millions more suffering.

On face, this finding seems to suggest that fundraising teams should stick to stories and keep the data to themselves. I think the finding is more nuanced than that, and doesn’t necessarily suggest donors don’t care about the numbers. Instead, Slovic tells NPR:

“It’s really about the sense of efficacy,” Slovic says. “If our brain … creates an illusion of non-efficacy, people could be demotivated by thinking, ‘Well, this is such a big problem. Is my donation going to be effective in any way?’”

Slovic’s research suggests that the way to combat this hopelessness is to give people a sense that their intervention can, in fact, make a difference.

The big harm

Our impulse as story tellers is to tell a big story, with a “big harm”. We want to prove that we’re tackling a big problem, and we end up weaving a grandiose narrative for donors to try to communicate the enormity of the issues we care so deeply about. The intent of course is to convince other folks they should care about these issues as much as we do.

The evidence suggests this approach doesn’t work.

It doesn’t work in part because we tell too big of a story, especially relative to the donor ask. Donors want to convert their money into happiness (utility). Once a donor figures out that the marginal value of a dollar given to [insert your cause here] is zero, the rational thing to do is to not give money away, as donors derive zero utility from zero impact.

Outcomes ownership

About a year ago I started playing with a concept I call outcomes ownership. The idea is to calculate a donor’s percentage “ownership” of an organization’s outcomes. Calculating outcomes ownership is rather trivial, as a donor simply “owns” an organization’s total outcomes (over a period of time) multiplied by a donor’s contribution over total revenue.

For example, if an organization counts people placed into full-time jobs as an outcome, and an organization placed 10 people into jobs with $1,000, then a donor who gave $200 would own 200/1000 = 20% of revenue, and therefore 10*20% = 2 job placements.

What I like about this approach is that it reframes what one gets from giving in familiar terms. People who invest are generally comfortable with the idea of owning infinitesimally small percentages of public traded companies, and therefore claiming an equally small portion of profits.

Selling people on a big harm then asking for a small donation masks the fact that a small donation is part of a larger pot. Explaining to donors what their $10 buys is a fool’s errand because the fact is that $10 doesn’t buy much. Period.

An investment analogy might help balance leveling with donors by acknowledging the donation is a small part of a larger whole, while keeping hope alive that the cumulation of multiple small investments pools to a significant sum capable of creating impact.