How We Give

The psychology of giving

Erika Soderstrom, Candace Manriquez Wrenn, and Daniel Shin Dec 26, 2019
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How We Give

The psychology of giving

Erika Soderstrom, Candace Manriquez Wrenn, and Daniel Shin Dec 26, 2019
iStockPhoto
Share Now on:
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The holiday season if often a time of giving back through volunteer work or philanthropy. But for nonprofit organizations, understanding donor behavior can help increase donations and create more sustainable giving relationships. To better understand the psychology behind giving, we spoke to Jen Shang, a philanthropic psychologist and co-founder of the Institute for Sustainable Philanthropy. She broke down giving motivations into three categories: situation-based giving, relationship-based giving and identity-based giving.  

Situation-based motivations are often triggered by sudden changes in the environment and individuals respond by giving. Relationship-based motivations are when donors give based on their connection to an organization. Finally, identity-based motivations focus on giving as a way for the donor to express who they are.

“The little difference there is, where is your eye? Is your eye on the money? Or is your eye on the person?”

JEN SHANG

Shang explained that if nonprofit organizations have a deeper understanding of the relationship between the donor and why they’re giving, they may be able to foster a stronger relationship between the donor and the organization.

The difference between what the organization is already doing and what they could be doing to improve their relationship with donors may appear subtle at first. For example, Shang focused on utilizing an identity-based appeal in a thank you letter to a donor.

“Very often, we get thank you letters from charities and the first sentence that you read from the thank you letter is, ‘Thank you for your generous gift.’ Instead of saying that, you could have said, ‘Thank you for your generosity,’ or ‘Thank you for being a generous person.’ The little difference there is, where is your eye? Is your eye on the money? Or is your eye on the person?” Shang said.

Courtesy of Jen Shang

Shang explained that donors expect to be thanked after giving. In part, because it’s just good manners. But there’s another, more economically, driven side to the practice.

In an experiment with Goodwill Washington D.C., the purchasing behavior of Goodwill rewards members that participated in round up donations — when transactions are “rounded up” to the next dollar, — was tracked for four months. In the weeks following shoppers’ donations, they were sent three thank you emails. Of the three thank you emails sent, there were three subcategories which contained different types of thank you letters. After four months shoppers received a survey.

The results of the survey found that before receiving thank you letters, the relationship between the number of items purchased and how the shoppers felt was negative. After receiving the thank you emails, regardless of which type of letter the donors received, they felt better about shopping, and shopped more.

The theory is that thank you letters slightly changed the reason why the donors shopped. It was no longer a relationship that only benefited them, but others as well. If Goodwill consistently utilized the experiment and sent thank you letters to 91,691 shoppers, they would increase purchases by $19,155.78, according to the report.

“I mean, if thank-yous can make people feel better about shopping, thank-yous can do anything. And that includes to make people feel better about giving,” Shang concluded.

Click the audio player above to hear the interview.  

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