How to Lower the ‘Cost’ of Philanthropy So Your Supporters Donate Major Gifts of Assets

Dr. Russell James

April 04, 2022

In fundraising, a gift results when motivation overcomes cost. Increasing motivation helps. So does lowering cost. These make the gift easier. But sometimes, these two processes conflict.

Number problems
In fundraising, numbers can be a problem. The problem is this. Giving motivation comes from the social emotion system. It comes from story. Introducing math, numbers, and finance can disrupt this process. It can trigger the deliberative, error-detecting, logic system. This system can block giving motivation. It can interfere with the social-emotion story processes that drive motivation.

Number solutions
But numbers can also be a solution. A donation is not just about motivation. It comes from the intersection of motivation and cost. Cost is critical for effective fundraising. Math can help with cost.

So, what are the solutions to this math and story problem? Here are some options.

1. Number sequencing: Story first, numbers second. (See below.)
2. Number socializing: Change cost into story. (See below.)
3. Number comparing: Gifts of wealth, not income. (See later articles in this series.)
4. Number subtracting: Lower the feeling of cost. (See later articles in this series.)
5. Number multiplying: Experience the gift again.  (See later articles in this series.)
6. Number dividing: Break cost into smaller pieces. (See later articles in this series)

Those are the concepts. Let’s look at some examples. But these are “math” solutions. So, let me put it a different way. Let’s work some practice problems!

Solution 1: Number sequencing – Story first, numbers second

Motivation first
A donation results from the intersection of motivation and cost. But the first step must be motivation. First, the donor must care. The donor must want some philanthropic victory. Only then does cost become important. (The cost of something doesn’t matter if we don’t want it in the first place.)

In a story, motivation is what a character wants. In fundraising, motivation is what the donor wants. When these two merge, a story becomes the donor’s story. This makes for a compelling fundraising story. This happens when

• The donor identifies with the story character, or
• The donor is the story character.

Motivation from a character, not a number 
Numbers make a weak story character. Thousands of people in need is important math. But it’s bad story. A donor can’t identify with this character. The solution? Don’t start with numbers.

Telling the story of one empathetic character is compelling. Trying to add in five, eight, or twelve main characters might be good math. But it’s bad story. The solution? Don’t start with numbers.

Motivation from a plot, not a number
An effective story needs a relatable character. But it also needs a motivational goal. It needs to promise a compelling victory. Fundraising story should answer

• What does the donor want?
• What does a meaningful “victory” look like for the donor?
• What impact is most compelling for the donor?

Talking finances too early restricts the story. It makes the donor careful, not imaginative. This limits the goal before the story even starts. The story stays small. It never becomes compelling. It never becomes epic.

How do we prevent this? The answer is the same. Don’t start with numbers.

Sequence matters
First, we must trigger motivation from the social-emotion “engine.” Without getting this first, nothing else matters. Only after we have this do we then need to worry about numbers. Only then does the “brake” from the math-logic system matter. Only then does overcoming the cost barrier become relevant.

The voice of experience
Laura Hansen Dean shares this advice. She calls it a “lesson learned.” She explains that early in her career,

“It was pretty standard to talk first about likely estate tax consequences and how that tax could be reduced by charitable giving. In the years since then, I find that asking first about the impact the donor wants to have during lifetime and/or after death, regardless of tax consequences, focuses the conversation on the good the donor wants to do with their assets … Then following up with gift options is more appropriate.” [1]

Byron Kennedy shares this story.[2]

“I was fresh out of law school. I could make every argument for and answer every objection against the most elaborate and tax efficient giving mechanisms. And that’s how I would start donor conversations. I learned very quickly that didn’t work. I needed to learn their story, their values. They are generous because they have a heart to serve the cause and make an impact. That was a big turning point for me. My financial planning background is invaluable to doing my job well. But generosity and finances are very different things and need to be treated that way to develop meaningful relationships.”

Gift planning can be useful. But it’s most effective when pushed to the end. A donor wants to make an impact. But the cost seems too high. That’s when financial options can help.

Numbers come second
In the book Visual Planned Giving, I explained it this way. Charitable planning starts with the magic phrase. The magic phrase is when a donor says,

“I wish I could do more, but …”[3]

The donor is motivated. But cost is a barrier. The magic response is,

“What if there was a way you could do both?

If there was a way to make a gift and address this financial issue, would you like to hear more? Can I share what others like you have done in the past?”

With permission, the fundraiser can then share solutions. Ideally, this happens at a second meeting. This gives time to carefully build options.

These charitable options can overcome the cost barrier. They might provide income or tax benefits. The gift might change to an

• Asset gift
• Estate gift
• Multi-year pledge, or
• “Virtual” endowment.[4]

The calculations can get complex. But this math discussion happens only after establishing motivation. The story works better because we don’t start with numbers.

Numbers as story confirmation
If we begin with math and finance, the social-emotion engine won’t start. If the engine doesn’t start, the brake doesn’t matter. Numbers do matter. But they matter only as the second step.

Numbers in the second step are important. They can help to lower the cost barrier. They can also confirm a great story. Confirming a story is important. It keeps the donor’s foot off the brake.

Fundraising starts with social emotion and story. But if the later confirmation fails, the story can fail. For example,

• If the finances don’t make sense, confirmation fails. The gift won’t happen.
• If a proposal has errors or lacks credibility, confirmation fails. The gift won’t happen.
• If there’s no impact report, confirmation fails. The next gift won’t happen.

Confirming a story is important. Numbers can help. But their impact is limited. Adding another zero to an annual report is great. It makes the numbers ten times better. But it doesn’t make the story ten times better. It doesn’t change the story at all.

Numbers can help. They can confirm a compelling story. But they can’t create one. That’s why, once again, the answer is the same: Don’t start with numbers.

Solution 2: Number socializing – Change cost into story

Making math social
A donation results from the intersection of motivation and cost. It starts with social emotion. This drives gift motivation. Cost is also important. But cost creates math and finance reminders. These “wake up” the logical error-detection system. This can stop a donation.

But can we change this second result? Is it possible for cost to become social? Can we “storify” it? Can cost become a type of character? In both experiments and the real world, the answer, is “yes.”

Social experiments
Money is anti-social. Reminding people of money makes them more independent and competitive.[5] It makes them less helpful.[6] It makes them less compassionate.[7] It reduces donations.[8]

Can this be changed? Can money become social? Researchers have tested this in some weird ways. One experiment used a donation appeal with a cartoon currency symbol.[9] One version added eyes, feet, and arms to the symbol. Adding these human-like features more than doubled donations.[10]

Another experiment tested this a different way.[11] Some people were asked to describe the physical characteristics of money. Other people were instead asked to describe the personality traits of money. (They described money as if it were a person who had come to life.) Next, everyone was asked for a donation. Those asked to describe money in social terms donated more than twice as much.

Beyond this, the donations from those in this second group depended on their descriptions. The more they used social-emotion terms to describe money’s personality, the more they gave. Those who described money as “friendly, kind, and sociable,” gave the most.

Okay. So, that’s cute. And it’s a little weird. But how does that relate to actual fundraising. How can the cost of a donation become “friendly, kind, and sociable?”

Giving objects
Suppose you arrive at a friend’s house for a group dinner. Which of these two feels like a better greeting?

“Thank you so much for inviting me. It’s so nice of you to put this together! I brought a bottle of wine for you. I hope you like it.”

or

“Thank you so much for inviting me. It’s so nice of you to put this together! Here’s $50.”

The answer is obvious. You might very well bring a gift of an object for the host. But you would never bring a gift of cash.[12]

Money is anti-social. But gifts of objects are pro-social.[13] They are common in social relations. They emphasize community norms. This distinction arises in anthropology and sociology theories.[14] It also shows up in experiments.

Giving objects in experiments
Gifts of objects fit with the social-emotion system. They support social-emotional responses. Gifts of cash don’t.

In one experiment, people learned about a donation made by a hardware store.[15] The donation was either

• “$2,000 to a food bank” or
• “Boxes of canned food to a food bank. (The donation cost the company $2,000 and it would have cost the food bank the same amount to obtain those goods.)”

For the second gift, people rated the company as more

• Generous
• Helpful, and
• Charitable.

In another experiment, a large corporation gave to humanitarian aid efforts.[16] They gave either

• “$1,000,000” or
• “$1,000,000 worth of medical supplies.”

With the second gift, people rated the company as more

• Generous
• Helpful, and
• Charitable.

Other experiments find similar results. Object gifts reflect kindness more than cash gifts do.[17] Gifts of objects fit the social-emotion system. This system drives generosity.[18]

Real world
Gifts of objects are social. They reinforce norms of sharing. What does this have to do with real-world fundraising? Major gifts are often gifts of things. This can include

• Houses
• Land
• Artwork
• Businesses, and
• Shares or parts of these things.

These gifts might be direct – transferring the asset to a charity. They might be indirect – committing a share of sale proceeds to a charity. Such gifts can be powerful. This is true not just because of tax benefits. These gifts can change a donor’s mindset.

Real wealth is held in non-cash assets. Giving these things instead of cash changes the donor’s reference point. It moves the donor from gifts of disposable income to gifts of assets. It moves the donor to gifts of wealth. This is transformational. The next article looks at the power of these major gifts of assets.

Footnotes:
[1] Dean, L. H. (2019). Laura Hansen Dean in E. Thompson, J. Hays, & C. Slamar (Eds.), Message from the masters: Our best donor stories that made a difference (pp. 65-74). Createspace Independent Publishing. p. 71-72. Laura Hansen Dean is Senior Director – Gift Design and Documentation at the University of Texas at Austin.

[2] Adapted from conversations with Byron Kennedy, Vice President for University Advancement at Texas Tech University.

[3] James, R. N., III. (2018). Visual planned giving in color: An introduction to the law & taxation of charitable gift planning. Version 5.1. Createspace Independent Publishing. p. 9.

[4] See, e.g., https://www.supportuw.org/gift-planning/virtual-endowment/

[5] Roberts, J. A., & Roberts, C. R. (2012). Money matters: Does the symbolic presence of money affect charitable giving and attitudes among adolescents? Young Consumers, 13(4), 329-336; Vohs, K. D., Mead, N. L., & Goode, M. R. (2008). Merely activating the concept of money changes personal and interpersonal behavior. Current Directions in Psychological Science, 17(3), 208-212.

[6] Vohs, K. D., Mead, N. L., & Goode, M. R. (2006). The psychological consequences of money. Science, 314(5802), 1154-1156.

[7] Molinsky, A. L., Grant, A. M., & Margolis, J. D. (2012). The bedside manner of homo economicus: How and why priming an economic schema reduces compassion. Organizational Behavior and Human Decision Processes, 119, 27-37.

[8] Roberts, J. A., & Roberts, C. R. (2012). Money matters: Does the symbolic presence of money affect charitable giving and attitudes among adolescents? Young Consumers, 13(4), 329-336; Vohs, K. D., Mead, N. L., & Goode, M. R. (2008). Merely activating the concept of money changes personal and interpersonal behavior. Current Directions in Psychological Science, 17(3), 208–212.

[9] Zhou, X., Kim, S., Wang, L., & Aggarwal, P. (2019). Money helps when money feels: Money anthropomorphism increases charitable giving. Journal of Consumer Research. 45(5), 953-972.

[10] Another study found that replacing standard charts (not related to money) with anthropomorphized data graphics had no impact on empathy or donation intentions. See, Boy, J., Pandey, A. V., Emerson, J., Satterthwaite, M., Nov, O., & Bertini, E. (2017, May). Showing people behind data: Does anthropomorphizing visualizations elicit more empathy for human rights data? In Proceedings of the 2017 CHI Conference on Human Factors in Computing Systems (pp. 5462-5474). Thus, the results of the Zhou, et al. (2019) experiment may relate specifically to humanizing money and money-reminders, rather than to humanizing numbers in general.

[11] Zhou, X., Kim, S., Wang, L., & Aggarwal, P. (2019). Money helps when money feels: Money anthropomorphism increases charitable giving. Journal of Consumer Research, 45(5), 953-972. Study 2.

[12] Webley, P., & Wilson, R. (1989). Social relationships and the unacceptability of money as a gift. The Journal of Social Psychology, 129(1), 85-91.

[13] Cheal, D. (1987). Showing them you love them: Gift giving and the dialectic of intimacy. The Sociological Review, 35(1), 150–169.

[14] In anthropology and sociology this distinction originates in the work of Mauss (1923). Mauss differentiated gift-giving indigenous societies from market-based Western societies. This contrasts with Malinowski’s (1923) unitary view that both types of exchange are the same. Later researchers following Mauss applied the two types of transfers as co-existing within the same societies, rather than as exclusive alternatives. Carrier (1991) explains the difference between the two types of transactions this way: “In gift transactions, objects are inalienably associated with the giver, the recipient, and the relationship that defines and binds them.” In monetary or commodity exchanges, “transactors are self-interested, independent individuals who exchange with people with whom they have no enduring links or obligations. In [these] transactions, objects are alienable private property defined primarily in terms of use value and exchange value rather than the identity of the transactors.” Fundraising success is easier with the communal norms of gift exchange based in the donor’s identity. Matching themes of social language, social framing, and identity-based fundraising are repeated throughout this series.

Carrier, J. (1991). Gifts, commodities, and social relations: A Maussian view of exchange. Sociological Forum, 6(1), 119-136. p. 121.

Malinowski, B. (1922). Argonauts of the Western Pacific. Routledge & Kegan Paul.

Mauss, M. (1923). Essai sur le don forme et raison de l’échange dans les sociétés archaïques. L’Année Sociologique, 30-186. [A recent English translation is Mauss, M. (2002). The fift: The form and reason for exchange in archaic societies. Routledge.]

[15] Gershon, R., & Cryder, C. (2018). Goods donations increase charitable credit for low-warmth donors. Journal of Consumer Research, 45, 451-469.

[16] Id.

[17] Kube, S., Maréchal, M. A., & Puppe, C. (2012). The currency of reciprocity: Gift exchange in the workplace. American Economic Review, 102(4), 1644-62; See also, Kube, S., Maréchal, M.A., Puppe, C., 2010. The currency of reciprocity – Gift exchange in the workplace. IEW Working paper 377. University of Zurich. http://conference.iza.org/conference_files/BLE2008/4534.pdf

[18] This is illustrated in a type of giving that charities actually receive too much of: Holiday gifting of toys to children’s hospitals. One ethnography study reports, “large pediatric hospitals across America are buried under an avalanche of toys each year.” (p. 608). The researcher explains her personal struggle with this practice, “On many levels – socially, economically, medically, environmentally – holiday gifting practices appear wasteful, hyperconsumptive, hedonistic, unnecessary, inefficient, and damaging. I struggled to make sense of the practice until I reframed holiday gifting as a sacred ritual. Sacred rituals do not subscribe to the rules of logic, efficiency, rationality, and pragmatism, but are characterized by traditionalism, symbolism, performance, devotion, and commitment to shared moral beliefs (Bell 2009). Importantly, sacred rituals have redemptive potential and value.” (p. 609). This description parallels the two system approach of “story world” and “math world” described here. Barnes, L. (2019). Holiday gifting at a children’s hospital: Sacred ritual, sacred space. Journal of Contemporary Ethnography, 48(5), 591-618, 609.

Related Resources:

• Donor Story: Epic Fundraising eCourse
• The Fundraising Myth & Science Series, by Dr. Russell James
• How To Use Numbers To Inspire More Giving (and How You Should NOT Use Them)
• Why most of your marketing should appeal to donors in the WHY stage of the consideration continuum

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