What does behavioural economics bring to fundraising? | UK Fundraising
Channel: Howard Lake
Date: 2014-07-13

Paul Vanags, Head of Public Fundraising at Oxfam, looks at how an understanding of behavioural economics can benefit fundraisers.

He was speaking at the Institute of Fundraising's National Convention in London on 8 July 2014.

He presents three elements of behavioural economics that can add to what we know about fundraising.

1. You get what you pay for (literally)

Can fundraisers put a higher price on a fundraising product that persuades people that they will have a greater impact and give them a warmer glow? Vanags said he would love to see this hypothesis tested by charities.

2. Mental accounting

Money kept in a PayPal account is, for many people, 'soft money' or 'pin money'. It doesn't feel the same as money in a bank account. So, in the wake of the Haiti earthquake, Oxfam worked with PayPal to send a message within 48 hours to all PayPal account holders with a positive balance, asking them to donate.

It helped PayPal reactivate dormant accounts, and it raised £1 million over four days.

He thinks the same issue is at work for SMS donations - money that you pay for your phone account is in a different 'pot of money', so it might be easier to donate it, if asked.

3. Anchoring

Using research based on donations to JustGiving, Vanags points out how donors can be influenced by a particularly high or particularly low donation. We check to see what others are giving, and that helps us choose how much to give.

Throughout his presentation, Vanags uses the same approach of hypothesis, example, and application to fundraising. In this way, he offers practical examples for the fundraisers present.

At the end of the session Vanags told us, jokingly, that we too could now talk about Behavioural Economics as 'BE'.

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