December 11, 2016; Wall Street Journal
A recent study from the University of Chicago’s Booth School of Business looked into what effect “suggested amounts” have on levels of giving. What they found is excruciatingly commonsensical: If suggested amounts are set too high, one gets fewer but higher-dollar-amount gifts; if the amounts are set lower, the gifts are greater in number but less in value. Neither approach is certain to raise more in overall donations than might otherwise have been expected. Rather, you should use what seems to fit the campaign.
So, there you go.
The study’s authors were Oleg Urminsky, an associate professor of marketing, and Indranil Goswami, then a doctoral candidate at Booth and now an assistant professor at the University at Buffalo’s School of Management. They engaged more than 11,500 people, and the report that flowed from it was published in the October issue of the Journal of Marketing Research. Here is Dr. Urminsky, explaining it all:
There are two different psychological effects happening simultaneously. For instance, if a larger amount is suggested, people tend to donate more, even if they don’t donate the suggested amount. The default actually changes their frame of reference. So, if I am not donating the suggested amount of $200, then a $100 donation may seem like a better option than a $50 donation, because it is closer to the default.
Where it gets tricky is that not everyone donates. In many fundraising situations, actually fairly few people donate. And setting a higher suggested amount could actually discourage people—people who might have participated if a lower amount had been suggested—from donating at all.
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Setting a low default increases participation because it validates or gives permission to make a small contribution. We call this a “warm glow at a discount.” The problem here is people who could have given more, give less.
But, says Urminsky, maybe the suggested amount is just a lousy idea altogether.
Essentially people are given too many things to think about. Thoughts about the suggested amount distract from the positive information provided about the charity.
Different interventions can have positive effects separately, but cannibalize each other when competing for people’s attention.
Of course, this study seems to apply primarily to acquisition fundraising. Many who use suggested amounts do so in a tailored way and in renewals. Usually, there’s a formula behind it, such as “last gift value + 30 percent,” but there are many variations.—Ruth McCambridge