Donations: balancing art and science
A note I wrote for a (name withheld) fund raising platform as part of my advisory role
The definition of donations is very broad [Wiki]. However, for the purposes of this post, I will focus on a simpler definition: a cash gift given by an individual to benefit a personal or community cause. The process of donating involves three key actors: the charity or donee, which raises funds; the donor, who donates funds; and the platform that enables efficient match-making between the two.
In the following sections, I will discuss how each of these actors behaves and succeeds in the donation process.
1. Donors
Donors seek emotional or visceral fulfillment through the act of donating. To create a positive donor experience, it is important to understand two key behavioral aspects of donors: why they donate and how they choose which charity or cause to support.
Donors donate for a variety of reasons, including:
Being emotionally moved by the cause
Wanting to make a difference in someone else's life
Wanting to be seen as a role model or associated with positive values
Following a family tradition
Fulfilling religious obligations
Seeking a tax deduction
Several factors influence which charity or cause a donor chooses to support. These include:
Social proof: if someone the donor knows or a celebrity they admire endorses or donates to the same cause (e.g., ALS fundraising)
Community affinity: being part of the same community or group (such as a school or city) can create a personal connection and foster trust
Personal history: if the donor has had a similar experience (such as a family member with cancer), they may be more likely to donate to a related cause (e.g., women's cancer research)
Feedback loop: donors are more likely to commit if they can easily see the impact they are creating, such as changing lives or tracking progress
Trust and transparency: the charity, donee, or cause must be trustworthy and transparent about their needs and how funds are used
Social recognition: some donors seek social recognition for their donations, so causes, charities, or platforms that offer this opportunity may resonate more
Donor fatigue: donors have low tolerance for spam or fraud in donations, and a bad experience may deter them from donating to similar causes in the future (e.g., donations to Africa decreased due to fraudulent charities)
To create a positive donor experience, charities and causes must align with the factors that influence donor behavior. This involves:
Knowing the donor: understanding their interests, affinities, motivations, past donations, and life history
Surfacing relevant campaigns: showing charities or causes the donor is likely to be passionate about or donate to, without overwhelming them with options
Helping them make a decision: providing verification, social proof, community affiliation, feedback mechanisms, and compelling stories, photos, videos, and testimonials
Offering social recognition: allowing donors to share their donation publicly and help spread the word
Building long-term relationships: converting donations into ongoing conversations, progress reports, and long-term connections with the charity or donee
2. Charity / Donee
To better understand the perspective of the charity or donee, we need to explore:
Why they want to raise funds
How they decide which channels to use
How the platform can help them achieve their goals
Why they want to raise funds
Charities focus on specific causes and work to raise funds to support them. For example, Water.org is dedicated to providing safe water and sanitation solutions. Individuals typically raise funds in two types of situations: (1) Planned events that require funding, such as weddings, educational expenses, home improvement projects, or community initiatives like park maintenance. (2) Unplanned events that require funding, such as medical emergencies, a death in the family, or community crises like floods or fires.
How they decide which channels to use
Most charities rely on multiple fundraising channels and tend to prioritize those that generate at least 10-15% of their total fundraising goals.
Individual donees, on the other hand, typically rely on a single fundraising channel that is user-friendly, quick to set up, and easy to share with others. The ideal channel should also be transparent, with no hidden fees or other "gotchas," and help the donee achieve their fundraising goals. Since most individuals won't take the time to research all available fundraising channels, it's important for the channel to have high visibility and be recommended by others.
How the platform can help them achieve their goals
Create high quality campaigns — Most charities and donees are not good storytellers, nor are they good photographers or video producers. The platform can help the campaign creators with services like (1) Manual reviews / editing, photos, videos creation, etc. to improve the campaigns. (2) Technical tools to auto-suggest ideas for good campaigns.
Set realistic goals — Help campaign creators set realistic goals. Based on their social reach, cause and donor density — the platform can predict with good confidence if the charity / donee can reach a specific goal.
Spread the word: Help the charity / donee spread the word using other channels (social, search, local, paid / organic). More reach increases chances of campaign success.
Provide timely and satisfactory support — Most importantly, donees raising funds are usually stressed out, and have lot of questions. Someone (hopefully a human) needs to answer the questions and address their concerns — around setup, performance, delays, legal requirements, etc. A human touch at this time can go a long way in building a long-term relationship.
3. Platform
The success of the platform is measured by the amount of money raised through the platform. Platforms can charge a fee for value-added services such as creating high-quality content for campaigns, or through a revenue share based on donations. If both the charities/donees and donors succeed on the platform, the platform itself will grow.
Other notes / ideas
Lending: If the donee is not able to raise all of their funds through donations, the platform can connect them to available lending solutions (credit card loans, banks, P2P lending, etc.).
Funds: Donors do not have to choose one or multiple charities/campaigns to donate to—they donate to a cause, e.g. child education. The platform manages a fund of all campaigns around child education and makes it easier for donors to spread their donations across multiple campaigns.
Businesses: Employees or corporations can sign up for a giving commitment, where a predetermined amount is committed to be donated to charities/donees aligned with their philanthropic goals. For example, John Doe sets aside 5% of his salary to be donated to causes around children with terminal illness."