Episode 25: How to raise more funds using a commit now, pay later model

Buy now, pay later is perhaps the best thing to happen to consumerism, but can nonprofits leverage this idea to our benefit? Research into intertemporal choices and charitable giving suggests that nonprofits can (and do) take advantage of this model.

The idea of intertemporal choices stems from behavioral economics, and it studies how behavior changes when costs and rewards occur at different times. For instance, with credit cards, we get the reward now but pay later. Another classic example of an intertemporal choice is contributing to a retirement savings plan. The money leaves our account now, but we won’t get to experience the rewards of that cost until way down the road when we retire.

How intertemporal choices affect behavior has been well documented, but how they affect donation behavior, specifically, is less understood. The article, Give more tomorrow: Two field experiments on altruism and intertemporal choice by Anna Breman is one of the first papers to explore how intertemporal choices influence charitable giving.

Here’s what you can expect to take away from this episode…

⦿ An understanding of what intertemporal choices are

⦿ Which donors respond favorably to intertemporal choices

⦿ How to design experiments that test whether intertemporal choices can help you raise more funds for your unique nonprofit


⦿ [3:35] She hypothesizes that if donors are given the opportunity to postpone their first payment, then they will give larger donations.
⦿ [6:04] Between all three groups, the donors were similar in age and average monthly contributions, but there were some differences that allowed for some interesting insights.
⦿ [7:24] So that means when donors were given the option to postpone their first increased payment by two months, not only did more donors increase the size of their monthly donation, they also increased their donation by more money.
⦿ [8:41] It’s possible that the data from this research suggests that there are gender differences in giving and in intertemporal choices such that female donors don’t really respond to the time lag in the same way that male donors do.     
⦿ [9:54] Finally the last thing I want to touch on before getting into my key takeaways is that the increased donations weren’t just a temporary thing. It’s not like the donors committed to increasing their gifts and then canceled or reneged or anything like that.
⦿ [11:35] But intertemporal choices also come up when organizations ask for pledges or for planned giving. Donors get the warm glow when they commit to these larger gifts, but they may not actually give your nonprofit the money until a later date.
⦿ [12:58] Test it out for yourself- perhaps split your monthly donors into two groups- one of which is pitched to give more now and the other is pitched to give more in two months and see how your donors respond.

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⦿ Article: Give more tomorrow: Two field experiments on altruism and intertemporal choice
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