Why waiting to donate harms charities


by Alexei Andreev Dec 15 2016 updated Dec 16 2016

A blog post explaining the potential reasons why someone would choose to wait to donate and how that leads to suboptimal outcomes for the charity.

(I don't work for CFAR, though I've attended several of their workshops and events. The opinions below are my own and don't necessarily represent the opinions of CFAR or CFAR staff.)

There is a thing I noticed that consistently happens with CFAR fundraisers. (It might also happen with other fundraisers, but I haven't looked.) Basically there is almost no money donated during the first 80% of the fundraiser and then most of the money comes in at the last week or so. This is likely to repeat this year. As of December 15th, CFAR's fundraiser is at \$2,523 out of \$250,000 (goal for first target) even though it's 30% through its duration. This is quite bad, and to spell out why:

Naively, you would expect people to give as soon as they heard about the fundraiser. "Oh, CFAR is raising money? I love CFAR! Here you go." And I think the naive strategy actually works better for the charity and the ecosystem as a whole. There are reasons why that doesn't happen, and I probably don't know all of them, but I have two that I'm going to discuss here.

Fundraiser might fall through

"Maybe the fundraiser will be a dud. I wouldn't want to donate \$1,000 only to later find out that CFAR only managed to raise a total of \$20,000, since in that case my money won't be very useful, but I won't get it back either." [claim([6wp]): ]

I think this is a reasonable worry, even though I haven't seen or heard of anything like that happen personally. This is one of the reasons Kickstarter has the all-or-nothing fundraising policy. The project owner calculates the minimum amount of money they would need to run the project, and then if they don't raise it, everyone who donated gets their money back.

I think CFAR and other non-profits should follow suit. When doing a fundraiser, they should declare the amount under which the would declare fundraiser a failure. [claim([6wm]): ] A failure would mean the organization wouldn't be able to do business as usual, but would instead need to seriously rethink their strategy.

Wait and see

"If I wait until the last minute, I'll have the most information. If CFAR still needs money, I'll happily donate, but if they already raised enough, then I won't have to donate and I can go spend the money on something else that's good."[claim([6wq]): ]

I often used this line of thinking myself until I realized the effects it has on the fundraiser when everyone else is using it too. The refined version of this argument is about the fear of crowding out other donors. GiveWell has explicitly stated that they don't want to fully fund charities because they are afraid it'll crowd out other donors. %%note:> We do not want to be in the habit of – or gain a reputation for – recommending that Good Ventures fill the entire funding gap of every strong giving opportunity we see. In the long run, we feel this would create incentives for other donors to avoid the causes and grants we’re interested in; this, in turn, could lead to a much lower-than-optimal amount of total donor interest in the things we find most promising.
http://blog.givewell.org/2015/11/25/good-ventures-and-giving-now-vs-later/ (under Coordination issues)%%

I think Ben Hoffman makes a good argument in his blog post about why GiveWell (and you) should be excited about crowding out other donors [claim([6y2]): ]. In CFAR's case, if your donation did in fact cause someone else not to donate, it's likely they are not going to take that money and spend it on a new Tesla. Instead they will quite likely donate it to their next best charity. It wouldn't even be that surprising if their next best charity was in your top five.

On the donor side, I hope that once the problem, the reasoning, and the consequence are understood, the behavior will stop. But there is something CFAR (and other nonprofits that experience this problem) could do. For example, CFAR could display the names, amounts, and the dates of the people who donated (and didn't opt from their name being publicly visible). The list would be sorted so that the people who donated earliest will have their name always at the top.[claim([6xw]): ] There used to be a trend where people would often say "first!" on new comment threads. I would like to see the same kind of behavior when it comes to donating to organizations you are excited about. "FIRST! Haha, I was the first to donate! High fives all around." %%note: Maybe displaying the donation amount is not a good idea. In that case I'd just display names of anyone who donated over some threshold, like \$500. And maybe make the person's name bold if they donated a significantly large amount, like \$10,000.%%

When I look at the CFAR fundraiser right now, there are 8 people who donated $2,523. Who are these beautiful people? Who are these champions who said: "Yes, I'll put my money on the line to fund the first percent. I'm not going to wait and see; I'm going to act on my beliefs." I would personally love to see their names, so I can give them a high five the next time I see them.

(Hat tip to Duncan Sabien for his FB post where he points out a very similar problem in hosting and RSVP'ing to events.)


Eric Rogstad

CFAR staff is stressed out the entire time, because they don't know if things will go as usual this year\. Will they raise the necessary amount at the last minute or will it go differently this time? This pattern makes it really hard for CFAR to adjust its fundraising strategy or try things during the fundraiser\. They basically have to sit there and wait until the last week or so, by which time it's usually too late to do anything\. It creates a bad signal for all other donors, especially if they haven't seen this pattern before\. "Hmm, the fudraiser has been going for three weeks, but basically no money has been raised\. May be there is a reason why everyone else is not donating that I just don't know about\." This causes the person to donate somewhere else or to wait and see, increasing the chance that others will adopt the same strategy\.

I would add an "I assume" here in parentheses, so you're not putting words in their mouth, or projecting feelings into their heads.

Eric Rogstad

Ben Hoffman does a reasonable job of explaining why that's actually not a good way to think about it in his blog post\. He makes the case that in fact you \(or GiveWell\) should be excited about crowding out other donors\. In CFAR's case, if your donation did in fact cause someone else not to donate, it's likely they are not going to take that money and spend it on a new Tesla\. Instead they will quite likely donate it to their next best charity\. It wouldn't even be that surprising if their next best charity was in your top five\.

I think this should be a claim.

Davis Kingsley

For what it's worth, I have a bit of experience with Kickstarter campaigns, where a similar pattern is often alleged. The sense there is that the "last minute push", while it does happen sometimes, is not guaranteed, and you shouldn't rely on it - instead, the conventional wisdom is that you shouldn't even start your campaign until you've built a bunch of hype with the relevant people and have a strong initial push all but locked in.

This allows you to begin the campaign with a strong signal of interest and buy-in; some Kickstarters are planned/calculated to fully fund on day one and immediately start going for stretch goals. I'm not sure if a similar pattern would be effective for nonprofit fundraising, but it seems perhaps worth trying.

Peter McIntyre

Agree this is a problem, but also part of a broader coordination problem in the community and which we should solve. Solutions proposed by 80K here.