A few years ago I was the chair of a nonprofit organization that was urgently raising money for a new building.
As part of that effort I called an affluent donor and close friend named Bill. I explained the need, and I noted that the building was to be named after a man we both deeply admired. Bill said that he of course would like to help. Then he added, “And what magnitude of gift, may I ask, would appropriately signify my affection for you, my respect for the honoree, and my support for the program?”
I told Bill that a number with five digits would suffice. And a check for $10,000 arrived two days later.
Bill was looking for what Nobel Prize Winner in Economics Daniel Kahneman calls an anchor. In his fascinating book, Thinking, Fast and Slow, Kahneman explains that an anchor is the critically important starting point for the buyer’s (or in this case, the donor’s) consideration.
One kind of anchor that nearly all of us are familiar with is the listing price of a house. If the listing price is $299,000, a frugal shopper might offer $279,000, while an aggressive I-want-this-home-now kind of buyer would offer the full $299,000 or, in a very hot market, even a bit more. Note that neither bid deviates significantly from the starting point: nobody would offer $120,000 or $500,000, both of which would be seen, for very different reasons, as foolish. Offers inevitably differ from the original number, but not by much.
Nonprofit organizations similarly create expectations by how they structure their requests for contributions, but they don’t always do it effectively. I know of one nonprofit whose leaders wondered why they never received gifts larger than $1,000. One reason became clear: in the organization’s materials and on its website the highest suggested gift level was – you guessed it! – $1,000. Their anchoring number had been set too low. The signal they were sending regarding donations was that this was a place where $50 or $500 makes a real difference, and a $1,000 gift puts you on the top of the donor list. It’s not surprising that supporters were not taking it upon themselves to write $10,000 checks.
Don’t take this to mean that nonprofits should always suggest a specific number to their donor. In fact, as I have written before, often it’s better not to ask for a specific dollar amount. I find it’s frequently more effective (and vastly less stressful) to show the donor a Table of Gifts – an enumeration of the gifts at each level that you need (for example one gift of $100,000, two gifts of $50,000, four gifts of $25,000, etc.), and a listing of how many pledges at those levels you’ve received to date. You ask the donor to make a commitment as high on the chart as he or she feels comfortable. Everyone feels good coming away from this conversation, because donors haven’t been put on the spot, and solicitors haven’t had to agonize about how much to ask for. And because some people will give more than you anticipated and some will give less, it all tends to average out.
So should you suggest a number, as I did with Bill, or should you leave it up to the donor? It depends on the circumstances. Keep in mind that Bill asked how large a gift I was seeking. He was looking for a specific anchor point. And a Table of Gifts pretty much provides that anchor to all potential donors by giving a context for the scale of your need and the sorts of gifts you’re seeking.
Those of us in the consulting world will sometimes imply that there’s a single, absolute right way to approach donors. But I’ve come to realize that building positive, respectful, and effective relationships is more art than science. Frankly, a lot of this is intuitive. You have to listen to your gut. And, most importantly, you have to listen to your donor.
Copyright Alan Cantor 2014. All rights reserved.