Future of Charitable Giving

Posted in Projects

Optimizing Philanthropic Behavior

Americans donated over $350 billion to charities in 2014. What’s interesting is that the bulk of this money didn’t come from what are often thought of as the usual suspects in giving—large checks from major foundations or wealthy corporations. Rather, 72% of philanthropic dollars came directly from individuals. Contrary to the conception of individual donors as affluent philanthropists, the vast majority of donors are everyday Americans supporting a diverse universe of charitable organizations across the globe.

With more than 1.5 million nonprofits headquartered in the US alone, how do individual donors decide where to give? It isn’t surprising that they may find it complicated to choose thoughtfully, given the sheer number of options. One large survey revealed that while 85% of donors say they care about nonprofit performance, less than 10% actually give based on the relative performance of nonprofits. The enormous mismatch between donors’ intentions and behaviors suggests that there are features of the giving context that inhibit donors from being purposeful and strategic with their dollars.

In order to identify specific behavioral barriers and biases preventing thoughtful charitable giving behavior, ideas42 is exploring how people in the US approach, consider, and follow-through on giving.

With generous support from the Bill and Melinda Gates Foundation, we are partnering with leaders in philanthropy to develop and pilot behavioral solutions to improve the giving process. By measuring the effects of these pilots through randomized controlled trials, our work will enable the charitable sector to continue building evidence-based approaches to better giving. These solutions have the potential to help American donors better direct their dollars at the organizations they care about, ultimately benefiting nonprofits and beneficiaries around the world.