Summary: Understanding the psychology of why people donate, and applying this concept, nonprofits can increase their fundraising. Finding out the core of why somebody would consider donating to a nonprofit organization can be a large combination of reasons. However, being able to better understand what these reasons are and why people have them, may have the ability to scale your charitable donations. In today’s podcast episode, Stephen Halasnik and Tim Kackuriak discuss what drives donation decisions, and how you can use these ideas to strengthen your own fundraising campaign.

What to Avoid When It Comes to Fundraising Strategy

First and foremost, understanding philanthropic psychology will pay dividends if you can understand the basic fundamentals of why people donate. “People give to people,” as Tim K points out, and there is no better way of getting a donation than a face to face interaction. This might come at first like a no brainer, but many nonprofits focus all their energy into social media, email campaigns, websites direct mail, etc. If you look at most nonprofit email solicitations, typically there are many call to action buttons and big popups in order to prompt them. However, when your potential donors see these types of emails, they are likely to be pushed away. This can actually come across as a pushy marketing tactic, and doesn’t allow the individual to feel any human connection.

Having a more interactive approach may actually work more in your favor. For example, a phone call is going to allow a potential donor to hear a real human voice, and not just feel like they are another number on an email list. Phone calls, webinars, or in person events allow your potential donors and respondents to hear personal stories, which ultimately helps form personal connections.

That is not to say that you have to eliminate your emails, but instead eliminate the overwhelming marketing techniques. Instead, try sending emails that follow a very simple format, almost like sending and individual email opposed to a mass email. The simpler the better, and if you take away anything from this article, it is to reduce any strategies that make your donors feel like just another number. With that being said, let’s examine the reasons why your respondents might actually be interested in helping your organization fundraise.

Top Common Reasons for Small Nonprofit Donations

Altruism is one of the main reasons people consider giving a donation. This is when a person has a connection or wants to help a cause/ contribute because they know they will have a positive impact on a set of people etc. If you know there is a specific set of people that have altruistic values toward your mission or goal, brainstorm fundraising ideas that will get their attention.

But why do people want to have a positive impact? There is usually a psychological or personal connection that factor into their charitable giving. Commonly, people have reasons relating to family members, friends, children, or a personal experience they went through. From these experiences, donating makes individuals feel better about helping, and helps boost their ego. However, people do genuinely want to help make an impact on a cause. If they have a personal connection, they are more likely to participate in crowdfunding, or know people who want to help a similar cause.

There are other reasons too that aren’t as positive or direct. Sometimes, people donate out of hurt, anger, or frustration regarding an issue. For example, this is a very common for cancer research donations. If someone lost a family member or someone they cared about greatly, they may feel like donating helps make change in a cause they care about, or experienced first hand. Other individuals donate because of tax benefits. It can sometimes be hard to pinpoint what the exact reason was due to the fact that you can’t just ask why someone is making a donation, as you never want to invade one’s privacy.

Understand Your Own Mission or Fundraiser Goals

Understanding your own fundraising event or unique value proposition. There are four basic components that your missions or fundraiser should have. These are

1. Appeal: Make sure your organization is appealing, clear and to the point, while also being able to appeal to emotions and culture/demographic or your targeted audience.

2. Exclusivity: What you are providing and doing is exclusive to your organization. For example, if you have 800 other nonprofits trying to raise money for the same reason, what makes you different? Also, make sure your audience can see what makes you different from others too, not just your organization.

3. Credibility: Make sure your perspectives are able to trust what you are doing is actually helping achieve the mission effectively. Investing in a fundraising software that enables your donors to see where their money is going and see how it is making an impact is also incredibly important. This will also be able to track last year’s contributions, repeating donors, etc.

4. Clarity: Be able to communicate your point clearly when asked about your mission. Try to be able to do this in one to two sentences and be clear and concise. So many people are unable to do this step, and it is the most important out of all of them. If you can’t get across in a clear and concise way what your mission is and how you achieve it, how do you expect others to contribute?

How Can This Help Your Nonprofit?

At the end of the day, whether you are a nonprofit or a business, knowing your audience in and out is going to you tremendously. If you don’t know who your target audience is, why they want to help, and the psychology behind donations, you will never be able to maximize donations. These steps all take time, but with the right team and efforts, you can achieve your mission and satisfy donors.

About the Guest Tim Kackuriak, NextAfter

Tim Kackuriak from NextAfter:

Tim is the Founder and Chief Innovation and Optimization Officer for NextAfter, a fundraising research lab consultancy, and training institute that works with charities, nonprofits and NGOs. A nonprofit thought leader, Tim has also authored the book Optimize Your Fundraising, The Online Fundraising Scorecard, Why Should I Give to You? (The Nonprofit Value Proposition Index Study), and The Mid Level Donor Crisis. Tim has trained organizations in fundraising optimization around the world and is a frequent speaker at international nonprofit conferences.

Tim will dive into the question, what makes people give? It’s a question that he’s obsessed over for more than a decade, and it’s what has led him to develop the world’s largest digital fundraising research lab. Through the course of performing over 2,500 fundraising experiments, Tim has learned a few simple yet profound truths, the number one being: giving is an irrational decision — it doesn’t make sense.

About The Host Stephen Halasnik, Financing Solutions

Stephen Halasnik is the host of the popular, The Nonprofit MBA Podcast. The Nonprofit MBA podcast’s purpose is to help nonprofit leaders. Mr. Halasnik is the Co-founder and Managing Partner of Financing Solutions. Financing Solutions is a leading provider of Lines of Credit to nonprofits and small businesses.

Mr. Halasnik is a graduate of Rutgers University and has an Executive Masters from the MIT Birthing of Giants Entrepreneurship program. Mr. Halasnik is a best selling Amazon author and is considered a leading authority on building great, purpose-driven businesses. Mr. Halasnik lives in New Jersey with his best friend, his wife Gina. Mr. Halasnik’s number one purpose is raising his two boys, Michael and Maxwell, to be good men.

About Financing Solutions Nonprofit Line of Credit

Financing Solutions, an A+ and 5 stars rated BBB company since 2002, is a direct lender that provides lines of credit to nonprofits and small businesses.

Financing Solutions nonprofit financing product is a great alternative to a traditional bank line of credit because it costs nothing to set up, nothing until used, and when used, is inexpensive. The credit line requires no collateral and no personal guarantees.

Nonprofit Organizations use their line of credit to help with emergencies or opportunities when cash flow is temporarily down (i.e. Payroll funding)

Please feel free to fill out the no-obligation, 2-minute nonprofit line of credit application here. The time to set up a credit line is when you don’t need it so that it is ready to be used, just in case.

Note: Financing Solutions donates 10% of its profits to various nonprofit charities