Fundraising By Default
by Tzvi Raviv
Summertime at Rutgers Hillel is a good time to plan for the next year and read. Over this past summer I read two books that helped me to articulate a plan to improve Rutgers Hillel’s online fundraising efforts, this plan was created under the guidance of Amy Winn-Dworkin, Rutgers Hillel Development Director. The books are The Long Tail by Chris Anderson and Nudge by Richard Thaler and Cass Sunstein.
In his book, Anderson presents his interpretation to how businesses can take advantage of the long tail theory. A great example of the Long Tail is the dueling business models of Netflix and blockbuster video. Netflix is able to provide a large number of rare, obscure, and overlooked films and TV shows that are in low demand in an online marketplace. This business model allows Netflix to compete successfully with Blockbuster that is only able to provide a limited number of hit films and TV shows available for rent at a brick-and-mortar store (recently Blockbuster started a streaming video service of its own). Netflix’s business model as provider of streaming video is dependent on the quality and speed of the Internet. Also for nonprofits, developments in technology make it easier and cheaper to keep in touch with beneficiaries and potential supporters. The mass email costs a fraction of sending of a mass direct (snail) mail campaign. Social media tools provide the opportunity to communicate with stakeholders on a daily basis for little or no money. For example, participants on a Taglit-Birthright Israel trip can in real time upload photos from their trip, write blog posts, and create YouTube videos that share their experience with their parents, friends, and potential donors, from across the ocean.
Thaler and Sunstein present the idea of choice architecture. Choice architecture is a method to influence the outcome of choices by the designing the way those choices are introduced. For example, organ donation presents an opportunity for choice architecture. According to Thaler 38% of Americans agree to be organ donors. In Illinois a driver has to answer the question if he is willing to serve as an organ donor in order to renew their driver license. This small change raised the donor signup rate in Illinois to 60%. In Austria the organ donation system is based on opt-out system, reaching a consent rate of above 99%.
It is well established that online giving will only grow and it was time for us at Rutgers Hillel to join the wave. Rutgers Hillel was able to do so thanks to a modest capacity building grant to promote Rutgers Hillel’s online fundraising efforts. Rutgers Hillel’s plan for online fundraising was based on a combination between the long tail theory and choice architecture.
Rutgers Hillel can create a long tail of support because of the large number of students that take part in Hillel’s programs and because every 4 years there is a new generation of students, positioning Rutgers Hillel as a benefactor of a large amount of relatively small gifts. Choice architecture for fundraising means that we need to create a system that introduces choices beneficial for Rutgers Hillel. In practice, this translates into providing supporters with options of giving instead of leaving an empty space on the online giving page. To take it a step further, there should be default sum options for giving with an easy opt-out option for people that want to choose the amount that they will give.
In practice, Rutgers Hillel took the following steps to promote online giving:
- Created an account with razoo. Razoo is a website that allows nonprofits to accept online donations. Razoo also provides the option to set a few default sums for the donations, allowing a basic option for choice architecture.
- We used social media websites to promote donations, including the services of the website hootsuite to schedule status updates on twitter and facebook in advance.
- Rutgers students wrote about their experience with Hillel, and these writings were posted on Rutgers Hillel’s blog. These blog posts were promoted with facebook ads. Facebook ads allows targeting of potential donors based on demographics and areas of interest.
- We sent mass emails to people on Hillel’s contact list. The email included a close up photo of Hillel’s veteran staff and student leaders, creating a personal connection with the email recipients.
The hypothesis about the usage of choice architecture was proven right when the most common gifts on Rutgers Hillel’s razoo page were the defaults sums, $54 and $180. Rutgers Hillel more than tripled the number of online gifts from last year. As of now Rutgers Hillel online campaign is about 0.5% of the organization total revenues, but we hope that the online campaign will grow by 20% each year by improving our methods. In conclusion, every nonprofit organization can benefit from choice architecture, but a combination between the long tail theory and choice architecture will work especially well for organizations with a large target audience and a fast growing alumni base (such as schools, camps, and universities). Thereby this approach of nudging the long tail provides nonprofits the opportunity to venture successfully into the world of online fundraising.
Tzvi Raviv is Director of Rutgers Hillel Center for Israel Engagement.