John Taylor, Professor of Economics at Stanford University and developer of the "Taylor Rule" for setting interest rates | Stanford University
John Taylor, Professor of Economics at Stanford University and developer of the "Taylor Rule" for setting interest rates | Stanford University
Researchers at the Golub Capital Social Impact Lab, part of Stanford Graduate School of Business, have conducted a series of experiments that could significantly aid nonprofits in attracting online donors. These studies involved over two million PayPal users and explored how minor changes to donation requests can influence donor behavior.
The research highlights the impact of "microgiving" requests presented during online transactions. Susan Athey, PhD ’95, a professor at Stanford GSB and faculty director of the lab, noted that small adjustments in how donation information is presented can reduce barriers to giving. “Charitable giving is a really important source of fundraising for organizations,” Athey stated. “Our work shows that there are low-cost ways to potentially reduce friction and raise more money for good causes.”
One experiment tested a feature allowing shoppers to donate $1 when checking out with PayPal. Participants were shown various descriptions about an unknown nonprofit's impact or none at all. Quantifying outcomes like "$1 provides 2 people with free and reliable access to safe water for a year" nearly quadrupled donation rates compared to no information provided.
“It was surprising in a good way that quantified information about what the charity was doing was most effective,” said Athey. She emphasized the importance of concrete statements in visualizing where donations go.
Another study examined whether small donations made at checkout might discourage future generosity. The results showed no significant change in future donations among any demographic group.
Further research focused on different default donation amounts on PayPal’s Giving Fund website. Modifying these options influenced donor behavior positively; introducing lower or higher default amounts increased overall donations and repeat giving.
“In addition to making things easier, these amounts can serve as a communication device setting norms of what’s acceptable,” Athey explained.
The findings suggest nonprofits should consider past popular donation amounts when designing their ask strings. Kristine Koutout, research director at the Golub Capital Social Impact Lab, indicated that tailoring ask strings could enhance user experience and long-term outcomes.
While some tradeoffs remain between attracting more donors and raising larger sums, personalized approaches based on factors like income brackets could yield better results across both areas.
Athey expressed confidence in the generalizability of these findings due to the scale and real-world context of the experiments: “We’re just scratching the surface.”
This story originally appeared from Stanford Graduate School of Business.
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