Study Shows Value of Using Competition to Revive Dormant Donors

It’s a problem familiar to most fundraisers: A donor expresses interest in the cause, makes a donation, and is never heard from again.

To see how competitive pressure might help charities invigorate inactive donors, a group of researchers led by the Yan Chen, a professor of information at the University of Michigan, conducted an experiment on a huge group of test subjects: the thousands of people who signed up to make microloans on Kiva, a website that connects people to entrepreneurs in the developing world.

In 2012, Kiva found that more than one-third of its members had never made a loan. To get them more involved, Kiva created teams. Donors could join a squad based on their employment, location, or common interests and give together.

But teamwork had limited upside. Joining a team caused an immediate spike in giving, but the momentum did not last.

“Beyond the first week, we don’t see any effect,” Ms. Chen says. “The key is to activate inactive teams.”

The Test

To try to get team members to sustain their giving, the researchers sent messages to Kiva users on the site’s online forums. One set of messages highlighted competition and exhorted teammates to give more to rise in Kiva’s team rankings. Other messages directed teammates to specific entrepreneurs who needed loans, making it easier for a Kiva member to decide where to give.

Results

Both active and inactive teams gave more when Ms. Chen sent messages with information and links to potential grantees.

But competitive messages were especially effective when sent to Kiva members on teams that had been inactive for more than a year: They gave $5 a head more per month when they got a forum message with a team goal. Each team, on average, made 11 more loans per month. And the giving was sustained for 30 days, showing greater engagement, Ms. Chen says.

Digging Deeper

It has long been suggested that team membership spurs gifts. Ms. Chen says her experiment is the first to show definitive results from competitive team messages in a real-world setting. If team members suggest grantees to each other, she says, fundraisers at both online and offline charities won’t have to work as hard connecting donors to their work.

“Competition gets people excited,” she says. “Once they’re in a team, the team will just take over and you don’t have to do those individual recommendations.”

Find It

“Does Team Competition Increase Pro-Social Lending? Evidence From Online Microfinance” was published in January in the journal Games and Economic Behavior.