Login with FacebookThe Public’s Low Confidence in Nonprofits
Trust is at the core of all human relationships and behaviors. To use a borrowed metaphor of the tree, trust is the root. Even though it's underground and not even visible most of the time, it is vital to the strength, stability and growth of the tree. Who have you ever helped that you don't trust? Now consider this question: What if people who are in a position to help your nonprofit don't trust it?
Public attitudes toward nonprofits are sharply negative and distrustful according to a 2005 NYU study:
15 percent said that they had a “great deal of confidence” in charitable organizations.
29 percent said charitable organizations do a very good job helping people.
19 percent said charitable organizations do a very good job running their programs and services.
16 percent said charitable organizations do a very good job at being fair in their decisions
66 percent of Americans said charitable organizations waste a great deal or fair amount of money
46 percent said the leaders of charitable organizations are paid too much.
The NYU study concluded, “these results place charitable organizations far down the list of civic and governmental institutions in overall public confidence.” Using the Gallup percentages as a marker, charitable organizations rank below the military, church, police, banks and public schools. Nonprofits rank just above television news in the public’s confidence.
This is what nonprofits are up against when they send out appeals for donors or volunteers:
Consumer Generated Ratings and Reviews are Trusted and Help Decision Making
Wow, I was stunned by how effective user generated reviews and ratings in influencing decisions. These stats are from the for-profit world, but gives us insights on behavior and expectations of the public:
71% of online shoppers read reviews, making it the most widely read consumer-generated content. (Forrester)
77% of online shoppers use reviews and ratings when purchasing (Jupiter Research, August 2006)
In a study of 2,000 shoppers - 92% deemed customer reviews as "extremely" or "very" helpful. (eTailing Group) 63% of consumers indicate they are more likely to purchase from a site if it has product ratings and reviews. (CompUSA & iPerceptions study)
Among first-time buyers on review-equipped sites, 42% said they were the primary factor. (Foresee Results Study, 2006)
86.9% of respondents said they would trust a friend's recommendation over a review by a critic, while 83.8% said they would trust user reviews over a critic. (MarketingSherpa)
When asked to note their most trusted information source, 60% of Canadian online buyers said consumer reviews compared to 31 per cent who said newspapers or magazines.(J.C. Williams Group for Visa and Yahoo Canada)
The Shop.org State of Retailing Online study, conducted by Forrester Research, found only 26% of the 137 top retailers surveyed offered customer ratings and reviews, but 96% of them ranked customer ratings and reviews as an effective or very effective tactic at driving conversion. (Forrester)
43% of retailers have reviews - double in one year (Marketing Sherpa, February 2007)
Ratings and Reviews is the second most important site feature behind search and online buyers who site ratings and reviews most useful site feature has more than doubled from '05 to '06. The report, entitled Retail Marketing: Driving Sales Through Consumer-Created Content, cites user-generated ratings and reviews as the second most important site feature behind search, and says that retailers who adopt ratings and reviews as a differentiator and retention strategy will gain market share. (Jupiter)
Deborah Small Interview
Latest research on giving behavior - Why vivid, storytelling appeals inspire giving
I had read of Wharton marketing professor Deborah Small's pathbreaking research on how statistics can suppresses giving. I followed up with her by phone with this interview about how nonprofits can use her research to more effectively fundraise…
Q: There are so many nonprofits trying to figure out how to fundraise better. Your research on appealing to emotion is path-breaking…Can you elaborate on how people can appeal to emotion? I know you use the example of one child and you say it should be a "vivid" story. Can you elaborate on that?
A: The more vivid the story – through narrative or through imagery – the more emotionally arousing. And emotions are what triggers the impetus to help. The more surprising finding is that showing statistics can actually blunt this emotional response by causing people to think in a more calculative, albeit uncaring manner.
Q: Are there some people – for whom augmenting these emotional appeals with statistics would be useful?
A: We typically look at averages. Certainly, if you have more intellectual and knowledgeable people, they will care more about the statistics, –but most people most of the time respond negatively so an advertisement is not the place for statistics. Put them somewhere on your website; if people want to find it, they will find it But don't put it in standard advertising. There's so much advertising clutter in the world so you need to focus on catching people's attention and moving them to act by triggering emotion.
Q: What are other things that you think would be fruitful for research to explore on whether it has an effect on people's giving?
A: Some of my research shows that sympathy is particularly responsive to changes to someone's condition. A lot of decision making research demonstrates that human beings are insensitive to absolute values and only respond to changes. For instance, when you put your foot in a cold pool on a hot day it feels cold because of the contrast with the outside temperature. However the water does not feel so cold when you have been in the water for a while. In other words, it is the change in temperatures, not the absolute temperature, which feels cold.
I argue that sympathy is also a function of changes, not states. This is why we respond more emotionally upon learning that someone has lost their home than upon learning that someone is homeless. This might help explain why certain conditions trigger greater sympathy than others. A natural disaster or war causes changes, losses actually, in others' welfare, whereas chronic conditions such as ongoing famine do not. . For non-profit fundraising, it is important to frame situations in terms of changes or losses, not states.
Another project of mine looks at how knowing a victim of a particular misfortune increases sympathy for people with that misfortune. Knowing someone with AIDS makes you more likely to give or volunteer to help others with AIDS. This works because people with firsthand experience are prone to sympathize with others who suffer similarly. Viral marketing and word of mouth can leverage such interpersonal relationships and networks connecting victims and their loved ones.
Q: So doesn't the same sad looking kid every year get old sometime?
A: Of course, you need to make it fresh and focus on different kid next year.
Q: How did you get interested in this subject?
A: My background is in decision-making. I study psychological biases that prevent people from making rational decisions. Therefore, I became interested in comparing socially-efficient, and utility-maximizing decisions to how people actually behave. As we discussed, many of the important biases here are driven by emotion, which can distort rationality.
Q: What do you think of social networking web 2.0 tools for giving?
A: Exciting. It is great that the non-profit world is keeping up with the innovations and keeping it fresh for consumers.
Q: Any other advice you have for nonprofits on what they should try to raise money?
A: In addition to leveraging emotion, creating urgency is also an effective strategy. Think about infomercials – "Hurry now! Only 3 left…." Or "Limited time only". Non-profits need to emphasize the urgency of social needs
