Charity Insights: Exploring the Dynamics of P2P Fundraising - the perfect fundraising channel?

In the realm of peer-to-peer (P2P) fundraising, especially within the UK, the article "Online fundraising – the perfect ask?" by Abigail Payne, Kimberley Scharf, and Sarah Smith, stands out not only for its pioneering exploration in the early days of this fundraising method but also for its profound influence.

Authored during the nascent stages of P2P fundraising in the UK, this insightful piece has been a cornerstone in shaping the platform design of BetterNow, guiding us through the complexities and nuances of online giving.

Despite being over a decade old, its depth of analysis and wealth of knowledge surpass any other document on European P2P fundraising to date. As we delve into this comprehensive study, we aim to uncover the timeless strategies and insights that continue to define successful online fundraising campaigns.

The paper explores several aspects of P2P fundraising

• Fundraiser motivations
• The relationsship between the fundraiser and the donor
• Individual vs charity lead fundraising
• Goal setting
• Impact of the fundraisers household income and age
• The anchoring effect of donations

This blog post will be longer than usual as this article packs so much relevant knowledge.

Fundraisers' Motivations

‍The study's analysis reveals the main motivation for fundraisers is to support charities, either through raising money and/or awareness (Table 2). A notable percentage (about a quarter) of fundraisers are also driven by the desire to participate in events, often linked with fundraising. Interestingly, the initiative to fundraise predominantly originates from the individuals themselves, rather than being externally solicited.

Table 2 Insights

• A significant 50.4% of individuals reported that their primary motivation was to raise as much money for charity as possible.
• Raising awareness of a particular charity or cause was important for 40.2% of respondents.
• 37.9% wanted to do more for charity than just give their own money, showing a commitment to active involvement.
• 35.0% were motivated by a cause related to a personal event or tragedy.
• Participating in an event that required fundraising was a key factor for 25.6% of respondents.

The Personal Element in Fundraising

‍The study highlights the personal nature of fundraising. Most individuals engage in fundraising out of a personal commitment to a cause or due to the impact of a personal event. This personal connection not only drives the fundraiser but also resonates with potential donors, making the fundraising efforts more effective and meaningful.

The relationsship between the fundraiser and the donor‍

‍Table 4 in the study provides a striking insight into the dynamics of personal networks in fundraising. The survey reveals that a large majority of donations to individual fundraising pages are likely to come from the fundraiser's existing social network - friends, family, and colleagues.

For instance, 72.6% of family members and 64.0% of friends always give when asked. This highlights the crucial role of personal connections and the likelihood of a positive response from these networks.

Table 4 Insights:

• Family members: 72.6% always give when asked.
• Friends: 64.0% always give when asked.
• Colleagues: 42.5% always give when asked.

Donor Decisions and Relational Warm Glow

‍Table 5 delves into the factors that determine how much people give. It reveals that a "relational warm glow" - the positive feelings associated with supporting someone known personally - is a significant driver in donation decisions. This factor is ranked higher than other considerations like tax relief or the reputation of the charity, emphasizing the importance of personal connections in fundraising.

Table 5 Insights:

• Personal connection to the fundraiser: 41.5% reported it as a very important factor in deciding how much to give.
• The fundraiser’s reason for fundraising: 38.0% found it very important.

Individual vs Charity-led Fundraising: Strategies and Outcomes

According to Payne, Scharf, and Smith's analysis, fundraising can be broadly categorized into two types: charity-organised mass events and individual-led initiatives. Their study found that 38% of fundraising pages on JustGiving were for charity-organised mass events like Race for Life, while 45% pertained to other-organised mass events such as the London Marathon. The remaining 17% consisted of lone fundraisers who chose their own events and charities​​.

Fundraising Outcomes: A Comparative View

Table 6 of the study presents a striking difference in the outcomes of these two types of fundraising. Lone fundraisers, those who independently choose their event and cause, tend to attract more donations and raise more money compared to those participating in mass events. This suggests significant distinctions in fundraising behavior between individual and mass participation fundraising.

Key Differences and Implications between the two types

Motivation and Commitment: Lone fundraisers may be more driven by a strong commitment to a specific charity or cause, as opposed to participants in mass events, who might be equally attracted by the event itself. This higher level of commitment could be a reason why lone fundraisers often raise more funds.

Competition for Donations: Those participating in mass events might face competition for donations, especially in local events drawing from similar social networks. While the publicity of mass events can raise awareness and encourage donations, lone fundraisers have to manage their promotion, which can be more challenging and effort-intensive.

Costs and Rewards of Fundraising: Organizing a fundraising activity independently can be more time-consuming and demanding for lone fundraisers, who can't rely on the structure and support of a mass event. While this might lead to a more significant fundraising outcome, it can also affect the fundraiser's experience and their likelihood of repeating the effort. The study notes that lone fundraisers, despite raising more funds, are less likely to engage in fundraising again within the next 12 months​​.

Impact of moving the goal line

I nthe study they laso analyse the impact of goals on fundraising outcomes.

While donors don't always perceive targets as critical in deciding their donation amount, pages with targets raise significantly more, suggesting that targets motivate both fundraisers and donors.

Also, interestingly, donor behavior changes once targets are met, with donations decreasing by an average of £2 - £3, indicating that continuously updating targets could be an effective strategy to maintain or increase donations. This insight underscores the importance of target setting as a strategic tool in fundraising, influencing not only the amount raised but also sustaining donor engagement​​.

This is why BeterNow have always recommended starting out with a low goal and then later raising the goal.

The fundraisers household income and age

The study provides a detailed analysis of how a fundraiser's household income and age influence their fundraising success, as illustrated in Table 7. This data offers crucial insights into the demographic factors that impact the effectiveness of fundraising efforts.

The study reveals a correlation between the fundraiser's income and the total amount raised. For instance, fundraisers with a household income of less than £10K raised an average of £215.5, while those with an income of over £75K raised significantly more, averaging £526.8. This trend suggests that higher-income fundraisers might have access to more affluent networks or may be perceived as more credible by potential donors.

Age also plays a critical role in fundraising outcomes. Younger fundraisers (aged 18-25) raised an average of £231.6, while the amount increases with age, peaking in the 51-55 age group, who raised an average of £313.5. Interestingly, fundraisers over the age of 76 also showed relatively high fundraising success, with an average of £296.9 raised. This pattern could be attributed to older individuals having more established networks and potentially more experience in fundraising.

These findings underscore the influence of socio-economic factors on fundraising effectiveness. Fundraisers' success is not only determined by their enthusiasm and commitment but also significantly influenced by their age and income, which shape their social networks and the potential generosity of their donors​​.

The anchoring effect of large donations

This effect was the main take way for us when we reda this study initially. the study highlights how donor behavior is influenced by the visibility of other donations on then platform. Despite donors reporting that the amounts others have given are a relatively unimportant factor in determining their own contributions, the study found this to be a key driver of donor behavior.

Key influences on donor decisions include:

1. "Shining Knights" or Large Donations: The presence of large donations on a fundraising page often prompts subsequent donors to give more generously. This phenomenon, known as competitive altruism, implies that people may compete in generosity, especially in a public setting where donations are visible to others. Such behavior is often motivated by a desire to signal wealth or generosity.
2. "Widows’ Mites" or Small Donations: Conversely, small donations can lead to a decrease in the amount of subsequent donations. This effect arises from donors’ desire to avoid appearing as the least generous contributors on a page.
3. Herd Behaviour and Benchmarking: Donors also exhibit herd behavior, where they conform to the prevailing donation amounts. Additionally, donors use the existing donations as a benchmark to decide how much they should give.

Figure 3 in the study illustrates these effects vividly. Following a large donation (defined as more than twice the page mean and at least £50), subsequent donations are significantly larger than those that preceded it.

This trend holds for donations of varying sizes. On the other hand, after a small donation (less than half the page mean), the following donations tend to be smaller. The study also notes that changes in the modal donation amount lead to adjustments in the average donation size, either increasing or decreasing it.

Conclusion

The study "Online fundraising – the perfect ask?" by Payne, Scharf, and Smith offers invaluable insights into the dynamics of peer-to-peer (P2P) fundraising. This  work has not only influenced the design of BetterNow but also continues to be a rich source of knowledge for understanding the complexities of online fundraising.

Key Takeaways:

1. Fundraiser Motivations: The primary motivations for fundraisers are to support charities either through raising money or awareness, with a significant number motivated by the desire to participate in events.
2. The Power of Personal Connections: A substantial majority of donations come from the fundraiser’s existing social networks, emphasizing the importance of personal connections in fundraising.
3. Impact of Demographics: Fundraiser characteristics, such as household income and age, significantly influence the success of fundraising campaigns, with higher income and older age groups generally raising more funds.
4. Strategies in Fundraising: Individual-led fundraising efforts often outperform charity-organized mass events in terms of total amounts raised, highlighting the effectiveness of personal initiatives over collective efforts.
5. The Role of Targets: Setting fundraising targets is a crucial strategy, with pages having targets generally raising more funds. The data suggests that continuously updating targets could maintain or increase donation levels.
6. Anchoring Effect of Donations: Donor behavior is significantly influenced by visible donations on fundraising platforms. Large donations tend to increase subsequent donation amounts, while smaller ones have the opposite effect.

In conclusion, this study provides a comprehensive understanding of online fundraising, emphasizing the importance of personal motivation, the role of social dynamics, and strategic planning.

As online fundraising continues to evolve, the insights from this study remain relevant, offering valuable guidance for individuals and charities looking to maximize their fundraising potential in the digital age.

The intersection of personal stories, strategic target setting, and understanding donor behavior forms the cornerstone of successful online fundraising campaigns.