Michael Sanders is a PhD Student at the Centre for Market and Public Organisation at the University of Bristol. His research focuses on the implications of behavioural economics (also known as economics & psychology) for charitable giving. In 2012, he served as a Research Fellow on secondment to the Cabinet Office’s Behavioural Insights Team. Michael is now a member of the team, and designed and implemented the randomised controlled trials described in the recent paper, Applying Behavioural Insights to Charitable Giving.
NPC argues that charities should do more to measure their impact, and that donors should pay more attention to the good that can be done by their money. Their recent segmentation of the donor market as part of the Money for Good UK research shows, however, that very few donors make the decision to donate based on rigorous impact evaluation.
This is unfortunate for more than one reason. First, as Sarah Smith explains, giving has been fairly flat as a share of consumption spending in the UK over the last 30 years – making it all the more important that money spent goes to the right causes. Second, donors do believe that charities’ impact is important, another key finding from the Money for Good UK report. This suggests that donor satisfaction could be increased, and more money raised, if more and better impact information was available.
One heuristic commonly used for a charity’s quality (albeit largely incorrectly), is the proportion of spending that goes on fundraising, instead of to beneficiaries. The objection of charities to this metric is a well-trodden path, and I will not discuss it here. It does shine a light, however, on another important area for impact—fundraising. In straitened times for both charities and donors, it is important that fundraisers have as wide a toolbox for fundraising available to them as possible, and that this toolbox, as with any other part of their operation, is evidence-based.
Our recent report, Applying behavioural insights to charitable giving, aims to make a small contribution to this goal. Working with a number of corporate partners, as well as the Charities Trust (a payroll giving agency), the Charities Aid Foundation, and Remember a Charity, we have conducted a series of robust, randomised controlled trials in charitable fundraising. Some of these results are surprisingly powerful. For example, the finding that giving employees of an investment bank a small packet of sweets made them more than twice as likely to make a donation, with a return on investment of around 30 to 1.
These results are about more than just increasing charities revenues—though that is the main output. A wealth of excellent research from Michael Norton at Harvard Business School, and Elizabeth Dunn from the University of British Columbia, as well as others, shows that giving money to others can make you both happier and more productive, and giving time (volunteering) can even make you feel time richer. If this work is of interest to you, please do get in touch at firstname.lastname@example.org.