Don’t Make Year-End Giving a Transaction
Year-end revenue is essential to the well-being of many nonprofits. According to Classy, 31% of annual giving occurs in December. It’s important to communicate with supporters in such a way to maximize not only short-term income but subsequent giving as well. A feature of most year-end campaigns emphasizes the tax benefits of charitable giving. But if messaging isn’t well constructed, it’s possible to trigger what psychologists call the “exchange fiction,” which can result in a loss of affinity for the organization down the road.
A 2002 study, titled "Committing Altruism Under the Clock of Self-Interest: The Exchange Fiction," examined people's willingness to help a charitable organization when the act is presented as an economic transaction instead of an act of charity. It involved giving people a small gift — a candle — in exchange for a donation. They found that participants donated more money to a charity when offered a candle, even though the item held little appeal for them.
The interesting thing was why the offer of a gift stimulated giving. Social psychologists have documented people’s reluctance to make long-term commitments in many settings. Instead, people want to keep their options open to make choices whenever possible. Researchers found that the product (the candle) provided psychological cover for the act of compassion. In other words, donors could frame the gift as an exchange of money for something tangible they received. In their heads, this allowed them to avoid making a long-term commitment to the organization. Instead, their support was a transaction to receive the candle. They walked away from the exchange without feeling an affinity for the mission. They didn’t feel a commitment to continue their support.
Herein lies the danger of promoting year-end giving as a good deal to get a tax break. The recipients of year-end messaging are people who have supported the nonprofit’s mission in the past. Positioning year-end giving as a transaction suggests to supporters that their motivation to stop hunger, protect animals, heal the sick, clean up the environment — whatever mission they are passionate about — is now on sale. So how do you make your pitch for year-end giving without triggering the exchange fiction?
I looked back at the many year-end messages I received from the organizations I supported last December. Most of the subject lines in the messages I received talk about when to give, not why. When you do that, you don’t raise new money — you cannibalize revenue you would have received later. The data tells us that 63% of revenues from an additional communication aren’t new revenues (think: Giving Tuesday). Don’t contribute to that by making your primary pitch about the time of year, rather than the good the supporter’s gift can do.
What do your donors care about? Make that the pitch. It's the same in December as any other time of the year.
As we get into year-end fundraising, let’s take a step back. Does it hurt to remind people that it’s a season of giving? That they can enjoy a tax break because of their generosity? Absolutely not. But don’t make that the primary message. Instead, use the same communication tools that are effective year-round.
Emphasize the three magic words: because of you. As in, “Because of you, all the great things will happen. Without you, they won’t.”
As important as year-end revenue may be to an organization’s bottom line, don’t play the short game. Instead, focus messaging on the mission, whatever brought your supporters to the table in the first place. The supporter’s lifetime value to your organization and your mission is most important. That’s the long game, and the focus of successful nonprofits that raise sustainable revenues.
Otis Fulton, Ph.D., spent most of his career in the education industry, working at the psychometric research and development firm MetaMetrics Inc., Pearson Education and others. Since 2013, he has focused on the nonprofit sector, applying psychology to fundraising and donor behavior at Turnkey. He is the co-author of the 2017 book, ”Dollar Dash: The Behavioral Economics of Peer-to-Peer Fundraising,” and the 2023 book, "Social Fundraising: Mining the New Peer-to-Peer Landscape," and is a frequent speaker at national nonprofit conferences. With Katrina VanHuss, he co-authors a blog at NonProfit PRO, “Peeling the Onion,” on the intersection of psychology and philanthropy.
Otis is a much sought-after copywriter for nonprofit fundraising messages. He has written campaigns for UNICEF, St. Jude’s Children’s Research Hospital, March of Dimes, Susan G. Komen, the USO and dozens of other organizations. He has a Ph.D. in social psychology from Virginia Commonwealth University and a Bachelor of Arts from the University of Virginia, where he also played on UVA’s first ACC champion basketball team.