Charity Insights: The double-edged sword of reminders in fundraising

As fundraising professionals, we're always exploring effective strategies to encourage donations. Reminders are commonly used, but recent research by Mette Trier Damgaard and Christina Gravert offers a nuanced understanding of their impact​​.

This is the first article in our latest blog series, "Charity Insights: Bridging Academia and Action." This series is a fusion of academic wisdom and real-world fundraising experiences, designed to empower and inspire the non-profit sector.

The study's approach and design

The researchers partnered with Danish charity DanChurchAid to conduct field experiments targeting previous donors. They investigated how reminders influenced both donations and unsubscriptions from the charity's mailing list​​.

They conducted two different experiments:

• Experiment I: Participants were divided into two groups: one received a single donation request, while the other received this request plus a reminder a week later.
• Experiment II: Involved sending regular solicitation emails with varying messages about future communications.

The study tested the hypothesis that while reminders can increase donations, they may also result in higher unsubscription rates due to annoyance costs​​.

The authors then conducts a welfare analysis that sets a monetary values for the impact of reminders. 'Annoyance costs' were calculated based on how much a donor would pay to avoid a reminder, akin to purchasing an ad-blocker.

Interpreting the Results:

• For Donors: Each reminder's annoyance cost was estimated at about $2.35, indicating that reminders generally diminish a donor's willingness to engage.
• For Charities: The net benefit of sending a reminder was only $0.18 per potential donor, considering both immediate donation increases and long-term losses due to unsubscriptions.

Key findings  

These are what we would like to highlight as key concepts and lesson to take form this study.

• Increase in Donations but at a Cost: Reminders raised donations but also significantly increased unsubscriptions​​.
• The Annoyance Factor: Reminders come with 'annoyance costs' like guilt or perceived pressure. High annoyance leads to unsubscribing​​.
• Value of Subscribing: People weigh the future benefits of staying on the mailing list against these annoyance costs​​.
• Donation Amounts Unaffected: Adjusting reminder frequency or promising future donation matches did not significantly alter donation amounts​​.

Implications for Fundraisers

• Balance is crucial: Excessive reminders can alienate future donors.
• Understand donor preferences: Customize communications for different donor segments.
• Diversify communication Channels: Explore channels beyond email to mitigate annoyance.
• Value transparency: Clear communication about frequency and easy opt-out options builds trust.

Moving Forward

Each donor interaction is an opportunity to foster a lasting relationship. This study encourages us to reflect on our communication strategies and their long-term effects on donor relationships.

Our challenge is to not only seek immediate gains but to cultivate enduring connections with donors.

Read more

This blog post is based on the study "The hidden costs of nudging: Experimental evidence from reminders in fundraising" by Mette Trier Damgaard and Christina Gravert, originally published in the Journal of Public Economics, Volume 157, in September 2018. The  article can be found here.

For those interested in reading the full article,  a free working paper version is available here.