Teen Talk Barbie famously stated, “Math is hard.”134 This may be particularly true in fundraising. Giving is motivated by social emotion. Triggering math, logic, error-detection thoughts can hurt. It can block social emotion.

But we can’t simply ignore math. Why not? Because giving doesn’t come just from motivation. It comes from the intersection of motivation and cost. Motivation must overcome the cost barrier. So, we can’t ignore cost. And cost is a number.

Or is it? In traditional economics, cost was just a number. It was part of a rational math equation. But then behavioral economics added experiments. It found that cost was not just a number. Cost was also a feeling. The same number could feel larger or smaller, depending on circumstances.

Making cost feel small

Giving results from the intersection of motivation and cost. If the cost feels smaller, a gift is more likely. How can we make cost feel small? One way is by subtraction.

Subtraction lowers the total cost. This can be objective. For example, tax benefits can do this. But it can also be subjective. Even with the same number, the feeling of cost can become lower. This can happen when the cost is compared with different reference points. It can happen when the cost comes from different sources.

Objective subtraction: Tax benefits

Lowering the real cost of a gift can help. Objective discounts like tax benefits make bigger gifts possible. They increase donations.

Even so, the power of math still depends on the story. In math, a rebate and a match are identical.

Match: The donor gives $1. It’s matched with $1.

Result: The gift makes a $2 impact but costs the donor only $1.

Rebate: The donor gives $2. The donor is paid $1 for making the gift.

Result: The gift makes a $2 impact but costs the donor only $1.

The math result is the same. But the feeling is different. The feeling is different because the story is different.135

In fundraising experiments, a match works better than an identical rebate.137 And we see this in fundraising practice. Everyone offers matches. No one offers rebates. Problem solved, right? Not exactly.

Unfortunately, the biggest money benefit that a donor gets is a rebate. A tax deduction is a rebate. The donor makes a gift and then gets a tax benefit.

We can’t change this. But rebates don’t work as well in a story. So, it makes sense to change the words we use to describe tax benefits. We want to use words that frame the tax benefit as if it were a match.

“You give and the government matches your gift with a tax benefit. Your dollars become more powerful because the government pays for part of the cost of the gift.”

“You give and you get a tax benefit back in return. Giving this way means that the charity benefits and so do you.”

The math is the same. But the language changes the story.

Objective subtraction: Charity benefits

In math, a charity could lower cost by giving something back. In story, this is tricky. Getting back cash from a charity can ruin the story. In experiments, cash payments can reduce helping or volunteering.138

It’s not that a charity can’t benefit a donor. It’s that the donor’s benefit must create little or no extra cost for the charity. The best story is a gift that helps the charity 100%. If the donor’s benefit doesn’t cost the charity anything extra, that story stays intact.

Charitable auctions are common. The bidder gets a benefit, the item. But the items are always donated to the charity. The benefit didn’t cost the charity anything. The story stays intact.

Charitable lotteries (raffles) are also common. A person buys a ticket for a chance to win a prize. The ticket can benefit the purchaser. But the extra ticket costs the charity nothing.

One experiment changed a raffle from a fixed to a variable cash prize. The prize grew by 50% of each extra ticket sale. What happened? Funding dropped by more than half.139 The prize wasn’t smaller. But the charitable story was damaged.

A donor’s benefit may be valuable. But it should add little extra cost for the charity. Thus, charities often provide,

These work because the extra cost for one more person is minimal. The donor’s story stays intact.

Emotional subtraction

Tax or charity benefits can help, but gifts still cost money. Often, we can’t change this number. But we can change the feeling from the number. In math, a number is a number. But in emotion, a number depends on the story of the number.

Reference points matter. Compared with routine disposable income purchases, a $1,000 gift can feel enormous. Compared with infrequent major purchases, it can feel reasonable. Compared with wealth, it can feel tiny. In all three cases, the cost is the same. But the feeling of the cost can change dramatically.

Losses hurt

In experiments, people spend differently using different payment types. Paying with currency creates a visceral loss experience. The person physically loses something valuable. People spend little with cash.140

Paying with a check is also a loss. But giving up a single check hurts less than giving up a stack of cash. People spend more with checks.

Paying with a credit card doesn’t feel like a loss. A person takes out a card but puts it right back. People spend a lot more with cards.141 The more painful the cost feels, the less people want to spend the money. This is also true in giving.

Windfall giving: Easy come, easy go

In experiments, if money is earned by effort, people are less likely to donate it.142 The more effortful the earning, the less likely the donation.143 People are most generous with money from a windfall gain.144

In western culture, tithing originated in windfall gains. In Archaic and Classical Greek, tithing refers to offering one-tenth of the spoils of battle to the gods.145 The first appearance of tithing in the Bible is similar. Abraham gives a tenth part to the priest Melchizedek following a victory in battle.146

In real life, windfall gains can come at different times. It might be a bonus at work, a stimulus check, or a tax refund. But for major gifts, this typically comes from the sale of an appreciated asset. This might be the sale of real estate, shares, or a business.

Thus, gifts of appreciated assets are powerful both objectively and emotionally. Such gifts are cheaper. Donating before the sale avoids capital gains tax. But this math advantage may be even more powerful as pretext. It triggers giving contemplation on the eve of a large windfall.

Avoiding money losses

Avoiding the feeling of loss is powerful in financial decisions. A long history of research shows this.147 That’s why donating from a windfall gain feels easier. The cost doesn’t change, but it doesn’t feel like a loss. It feels like a slightly smaller gain.

Instead of being a loss, a donation can also be described as avoiding a loss. A temporary financial match can mean “lost money” if no gift is made. Jay Steenhuysen promotes asset gifts this way:

“Describe not giving assets as losing a 25% tax benefit.”148

The interest rate for complex gift deductions changes monthly.149 This can mean losing valuable deductions if the deadline is missed. Or gift annuity rates may be about to drop. Either way, the message is

“Act now or lose money!”

Or maybe the donor is age 72 or older. Then this message can be

“Donate from your IRA or lose money when they force you to take it out!”

End-of-year tax deadlines can also help. This message can be

“Give now or lose the deduction for a year!”

Avoiding loss is money magic, not story magic

Loss avoidance is powerful in money decisions. So, does this mean fundraising story should be all about avoiding loss? Actually, no.

Many experiments have compared gain and loss framing in fundraising story. Taking them all together, the answer is, “meh.”150 This being academia, the conclusion is a bit more formal. Researchers describe it this way:

“A meta‐analysis of 27 studies finds that gain‐framed and loss‐framed appeals do not differ significantly on persuasiveness in charity advertising.”

One approach did no better than the other. So, what’s going on? Loss framing does work. It works with finances.151 It works with numbers. The math, logic, numbers system in the brain focuses on error detection. It focuses on avoiding mistakes and losses.

One experiment tested gain and loss framing for different fundraising messages.152 What worked was

“when the message combined abstract, statistical evidence with a negative [loss] frame, or anecdotal, vivid evidence with a positive [gain] frame.”

Story magic

Loss framing works with numbers. But good story presents both loss and gain. A compelling challenge forces a decision,

  1. In response to a threat or opportunity for the donor’s people or values, and

  2. With the promise of a victory for the donor’s people or values.

A good challenge presents a risk of serious loss (or at least a lost opportunity). But it also offers the hope of a gain. It promises a victory. A good story doesn’t end with, “Nothing changed.” That’s not a meaningful victory. That’s not a compelling story.

Wealth is a number and a feeling

Major gifts come from people who can make them. They come from people with wealth. Wealth is a number, but it’s also a feeling.

It’s important not to confuse your feelings about a number with a donor’s feelings. Consider this. If you had $50 million, would you feel “extremely financially secure?” Probably so. But only one in five households with an actual net worth over $50 million reported feeling “extremely financially secure.”153 One in ten felt “somewhat insecure.”

Substituting your feelings about a number for a donor’s feelings is a mistake. It leads to misunderstandings. It’s easy to think that wealthy people don’t worry about money. Or that they don’t care about cost. Neither is true.154 These feelings are important. They impact giving.

In national data, feelings about one’s wealth predict donations better than actual wealth.155 Regardless of actual wealth, if people

donations fall.

Wealth is a feeling. Settings that increase the feeling of abundance encourage giving. It’s no accident that fundraising events are held in more opulent surroundings. They have abundant food and drink. These environments create the right feeling.

Cost is important for wealthy people

Wealthy people have more money. But there is a reason for this. Wealthy people like to hold wealth, rather than spend it. Otherwise, they wouldn’t become, or stay, wealthy.

This simple reality is important. It provides insight into the wealthy donor’s mindset. The importance of cost doesn’t disappear for the wealthy. If anything, it’s stronger.

The framing of cost is important for older wealthy people

The very wealthy tend to be older. The average age of those with $500 million or more in the U.S. is well over 65.156 Most charitable bequest dollars come from wills signed in the 80s and 90s.157

In experiments, verbal framing of financial numbers is powerful. But it’s even more powerful among older adults.158 Verbal framing is also more powerful among those with lower cognitive scores.159 As people age, cognitive scores tend to decline.160 Verbal ability actually stays higher in older age, whereas math does not.161 Math fades, but story remains.

Conclusion

Cost is a number. So is wealth. And numbers are important. But for fundraising, the feeling about these numbers can be just as important. When cost feels less painful, giving increases. When resources feel more abundant, giving increases. Changing the story of money can change fundraising results.