The Psychology of Giving: Removing the Behavioral Mechanisms Preventing People from Donating

A Startup Idea Was Born

Nick Fritz was sitting with his good friends Ari Kagan and Ivan Dimitrov on a deck, drinking a few beers and kicking around business ideas. Nick and Ari had previously worked at Duke University’s Center for Advanced Hindsight under the direction of Dan Ariely, so they were well-versed in integrating behavioral economics into product design.

The Psychology of Giving

Much of their time at the lab was focused on the psychology of giving. They had heard of easy to use finance apps such as Acorns, and they wondered why something similar did not exist in the charity space. The beauty of these products is that they make investing simple, frictionless, and comprehensive. These products were more than just a sleek design, they directly countered the psychological mechanisms at play that prevent us from being more responsible with our money.

The surface-level problem facing Nick and his team seemed to be glaringly obvious–making a donation online was difficult. If you ask users why they do not donate as much as they intend, many will tell you that the process of donating is unnecessarily difficult. With this in mind, the solution seemed simple–make it as seamless as possible to complete an online donation.

“Part of the challenge of helping people give was just poor design on nonprofits’ websites; it is much harder to make a donation than it is to complete a purchase on Amazon,” noted Nick.

Why Aren’t People Giving More?

Various products exist that make online giving easy, yet rates are still extremely low. As of 2018, online donations only made up 8.5% of total nonprofit fundraising. There are numerous websites that allow donors to donate and manage giving similar to how one would manage a stock portfolio, but none of these platforms have caught on.

Given Nick’s background, he had a hunch that there were challenges beyond what users were telling him. Instead of taking the problem at face value, his team dug deep into the academic literature. If the problem was so glaringly obvious, why had so many other products failed to gain traction?

Addressing the Wrong Question

These startups were often addressing the wrong problem because they were asking the wrong question.

While making it easy for donors to give online is a problem that needs fixing, the real challenge is hidden in the intention-action gap. People want to give more, but often find themselves falling short of their goals.

“I think the biggest thing we have found is that people want to give about two and a half times more than they currently do. So, the question becomes, ‘How do you align the way people want to live and the way they actually live? Most people want to give more, but life gets in the way,” said Nick. “How do we make giving easy, not just in terms of user experience, but in terms of removing the behavioral mechanisms that are preventing people from giving time and again?”

The Peanuts Effect

His team decided to launch a company called Momentum to help everyday people close their intention-action gap. Momentum’s giving rules pair major events and everyday actions with automatic donations to any nonprofit in the country. For example, you can opt-into a “rule” such that every-time Trump tweets, you automatically donate $0.10 to the ACLU. Or, whenever a new #MeToo scandal is exposed, you donate $15 to a women’s empowerment organization. Or, whenever you purchase a cup of coffee, you donate $1 to an organization that helps people get access to clean water.

Momentum has created a brilliant system that leverages the true power of behavioral science. Users are able to set up automatic donation rules that allow them to keep giving on an on-going basis without requiring repeated active decisions to part with their money.

The Default Effect

Their product leverages the default bias in several ways. First, the default way to give is on a recurring basis, not one-time. Furthermore, even when selecting rules, there are recommended options that make it simple for the user to select one and get started. If you decide to donate every time you purchase a cup of coffee, the app defaults to a $1 donation. If you can’t think of a cause to donate to, you can check out the ‘popular’ section of easy, pre-selected rules.

Finally, Momentum makes donating as painless as possible by encouraging the user to make small, but frequent donations that are paired with actions that are already a part of your daily routine. Donate $.50 here, $1 there, and before you know it, you’ve made an enormous impact in just a few months.

Decoding the Why — How Behavioral Science is Driving the Next Generation of Product Design.

In this article I shared an excerpt from my book, Decoding the Why.

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Decoding the Why Book

Entrepreneur blending behavioral economics, data and technology to help changemakers inspire and move people to action. Co-founder @creativesci & member @yec.