Charities that publicise the names of donors who give more than a certain amount should set the financial threshold relatively low in order to maximise the overall amount raised, according to new research.
The paper, How Category Reporting can Improve Fundraising, appears in the Journal of Economic Behavior and Organization, written by the economists Edward Cartwright, from the University of Kent, and Amrish Patel, from the University of Gothenburg.
The ROH lists people on its supporter board under three categories – silver, gold and platinum patrons – with the minimum gift ranging from £5,200 to £22,500.
Cartwright and Patel based their paper on existing international research, which used data from charities and experimental studies.
They define a low threshold for publicising people’s gifts as an amount that many donors are willing to give. This increases donations by more than a high threshold, the researchers found.
The low threshold works by making the prestige and esteem that comes from public recognition more easily accessible, attracting many more donors, said Cartwright.
He said he and his co-researcher were surprised at first that setting a high threshold was not more effective. While it incentivised some donors, it also alienated donors only willing to give less, they found.
"It seemed much better to set a relatively low threshold that the majority of people would be happy giving," said Cartwright. "That slightly disenfranchises the most generous, but can ultimately increase the donations by bringing in a lot more people.
"There is that intuition to push people higher, but we’ve come to think it is not the best way. To spread around the prestige a bit more is ultimately maybe the better strategy."
Cartwright said the actual amount at which the threshold is set would relate to the type of donors the charity is aiming to recruit – in one context it could be £2, in another £200,000.
The researchers conclude that category reporting can increase donations, but only if the category thresholds are set appropriately.
"The more uncertain you are about how many donors there are out there, setting more categories as options makes sense," said Cartwright. "When you know how many donors and what they are willing to donate then one target works well."