The Power of Nudging in Nonprofits: A Behavioral Economics Perspective

"Nudging" – a concept in behavioral economics – has been grabbing attention. The term, popularized by Richard Thaler and Cass Sunstein in their book 'Nudge: Improving Decisions about Health, Wealth, and Happiness', describes the subtle arrangement of choices or cues to help individuals make decisions aligned with their best interests. This concept, when applied to nonprofits, can potentially reshape donor behavior and heighten engagement. Let's further explore 'nudging' and its practical implications for your nonprofit.

Understanding Nudging

As per Thaler & Sunstein, “Nudges are ways of influencing choice without limiting the choice set or making alternatives appreciably more costly in terms of time, trouble, social sanctions, and so forth. They are called for because of flaws in individual decision-making, and they work by making use of those flaws.”

Nudges and Nonprofits

For nonprofits, implementing nudges can significantly impact areas like donor engagement and fundraising by subtly influencing donor behavior.

Nudging in Action

A compelling example of nudging can be found in Dr. Dan Ariely’s research involving organ donor registration. Ariely found that countries using an opt-out system (where individuals are presumed donors unless they say otherwise) had organ donation consent rates above 90%. In stark contrast, opt-in nations (where individuals explicitly consent to donate) rarely exceeded 15% consent. This instance provides a persuasive demonstration of nudging at work.

Incorporating Nudges in Nonprofits

Here are a few ways nonprofits can use nudges effectively:

  1. Encouraging Monthly Giving: By automatically selecting the monthly giving option on your donation form, you can nudge donors towards a more sustained contribution, while still offering the flexibility to choose otherwise.
  2. Increasing Gift Amounts: Suggestions of slightly higher donation amounts or presenting matching gift opportunities during donation can nudge donors to give more generously.
  3. Donations During Event Registration: Offering the option to add a donation while registering for an event can inspire impromptu giving.
  4. Promoting Multi-Year Pledges: Prominent displays or reminders of multi-year pledges can nudge committed supporters to make a long-term investment in your cause.

In conclusion, nudging provides an effective tool to subtly guide your supporters’ behavior in a way that is beneficial to both your organization and your cause. As the Nobel Laureate Daniel Kahneman astutely observes, people tend to “gravitate to the least demanding course of action.” By making giving to your organization an easy and appealing option, you are leveraging the power of nudging to drive greater impact.

As we continue to understand the intersection of behavioral economics and nonprofit strategy, the potential of nudging undoubtedly holds exciting possibilities for driving impact. So, let’s fully embrace this combination of science and strategy in our quests for a better world! #NudgeForGood #StrategyForImpact.

About the author

Lesley Cole

Campaign quarterback, thought leader, and former band geek.