Analyzing Charity Donations Using Behavioral Economics Models

This essay delves into the behavioral economics of charity donations, addressing the decision-making models individuals use when choosing to donate. It defends the use of the 'information and choice in giving' model from a personal perspective, emphasizing the importance of donors assessing information about organizations before allocating funds. The essay further explores the tools and strategies charity brands employ to attract donors, including identifying prospects, cultivating relationships, and deeper engagement. It highlights the significance of understanding donor motivations and the critical role of building lasting relationships to foster increased support. The essay concludes that successful fundraising relies on consistent engagement and recognizing donors' contributions.

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Question 1: What behavioral economics model would you use bearing in mind the 6 decision
making models in Figure 1? Please defend your response from a personal approach
The models of behavioral economics look at the psychological effects of making economic
decisions (Drummond, and Hodgson 133). In addition to this, Drummond, and Hodgson (2016)
argue that behavioral economic model looks at the emotions that we have as well as our thoughts
in regard to our decisions about finance. The behavioral economies investigate the reasons
behind the illogical decisions and more so in our case when giving charity donations. In addition,
it investigates about how, why and what we do that may fail to follow the forecasts that
economists make using economic models. Behavioral economists attempt to develop models that
make explanations as to the reasons why we are impatient and procrastinate. According to
Frederiks et, al. their models give explanations as to why we don’t make the best choice when
decisions are hard. Different from traditional economic decisions, behavioral economics consider
that human rarely makes decisions rationally. Here we are going to look at the behavioral
economic models with reference to the decision making the model in figure 1.
Considering the model of information and choice in giving, it is clear that nobody can
give donations to each and every person or even every charity brand benefit from his or her
generosity (Kashif et, al). Kashif et, al further explains that all donors ought to decide on how to
best allocate their limited resources and funds. Nevertheless, sometimes it becomes hard for the

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donors to assess the information about organizations, programs, and/or beneficiary. This paper
makes decisions on how people request, avoid, and/or make interpretations of different types of
information when deciding on the quantity to give as donations and to whom donations will go
to.
In this case, the choice of giving model would be the best for me in making decisions in
figure 1. This is because in figure 1, there are different decision-making models to choose from
depending on the requirement of the donor. These models have varying requirements which
make them differ in their market share percentage. Information and choice in giving model are
superb because it allows the donor to view the status of the market percentage share before
giving the donation, therefore, choosing the best charity brand to give a donation (Frederiks
et1385)
Question 2: How do charity brands attract /what tools they would use to gain the attention of the
donors and what impulses donors them to give money to these charities and not others? Please
use your analytical skills and critical thinking when trying to identify the specific engagement.
Heuristic approaches are acceptable.
There are various ways that charity brands can be used to attract potential donors and are
discussed here. First, they should make identification of the prospects. This is done by following
the ABC’s prospecting i.e.
 Access: asking yourself if you know the donor. It is good to note that prospects that are
rich usually aren’t strangers.
 Belief: Does the individual have a concern in relation to your cause? and

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 Capacity: Does the person have funds to offer you? If the person has some money to offer
you, he/she will definitely give it to you and therefore ABC prospecting will lead to you
having some donor (Mohan, John, and Beth Breeze 91).
It should also be understood that 80 percent of the Americans award non-profits thus the
middle-income and lower households are the ones that give most charitable dollars. The people
that we need to give us money are all surrounding us and thus we tend not to see them (Wallace
et, al. 91). In addition to this, we know that all the individuals you require to be able to raise the
funds you need.
The brands should educate and cultivate their prospects. Here “cultivation visit” is the typical
scheme of describing your work; it is good as well to get creative. Request them to come to a
performance, allow them to tour your facility, they can also come and play with the kids at your
school. There are many opportunities. The reason behind all this is that when donors get to have
direct experience, they will be encouraged to donate (Hobman, 455).
Another most effective method is to ask for support face to face. This can be done by setting
an engagement by email or phone and being open regarding the reason for the meeting. At the
time of the meeting, use some of the time asking some questions before you pitch your project.
One of the greatest skills when raising funds is listening not talking, therefore; make the
preparation of questions in advance (Berndt, 567).
Charity brands recognizing donors are important. Just a simple letter thanking the donor is
fine to start with, but only when starting. You can formulate the letter to be personal by including
a note that is hand-written. You can also call the donor to just say thank you. A donor
recognition event can also be organized. Bring donor flowers or homemade food.

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Another way of attracting donors is to engage them in a deeper way in the work that you do.
More methods are supposed to be found in order to increase your supporter’s emotional
investment. You can ask the supporters to volunteer, for example, the leadership roles in the
committee or in the board of governance. You can also recruit them to work as ambassadors to
speak with their colleagues. Above everything, request for direction. Even the saying says that
“if you want some advice, request for money and if you want some money as well, ask for
advice”. It is important to note that 20 percent in fundraising is “the ask” work. The rest of 80
percent appears after or ahead of asking. One of the most flourishing non-profits builds tough,
continuing associations with their donors, finding means of engaging them all through the
sequence. If you do this in a constant manner, there is the possibility of raising a lot of money
from donors.

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Work Cited
Berndt, Christian. "Behavioural economics, experimentalism and the marketization of
development." Economy and Society44.4 (2015): 567-591.
Drummond, Helga, and Julia Hodgson. The escalation in decision-making: Behavioural economics in
business. Routledge, 2016: 133-150.
Frederiks, Elisha R., Karen Stenner, and Elizabeth V. Hobman. "Household energy use: Applying
behavioral economics to understand consumer decision-making and behavior." Renewable and
Sustainable Energy Reviews 41 (2015): 1385-1394.
Hobman, Elizabeth. "Uptake and usage of cost-reflective electricity pricing: Insights from
psychology and behavioral economics." Renewable and Sustainable Energy Reviews 57 (2016):
455-467.
Kashif, Muhammad, Khurrum Faisal Jamal, and Mohsin Abdur Rehman. "The dynamics of Zakat
donation experience among Muslims: a phenomenological inquiry." Journal of Islamic Accounting
and Business Research 9.1 (2018): 45-58.
Mohan, John, and Beth Breeze. "How Intermediaries Affect the Distribution of Charitable Benefit." The
Logic of Charity: Great Expectations in Hard Times. Palgrave Pivot, London, 2016. 91-112.
Wallace, Elaine, Isabel Buil, and Leslie de Chernatony. "When does “liking” a charity lead to donation
behavior? Exploring conspicuous donation behavior on social media platforms." European Journal of
Marketing 51.11/12 (2017): 2002-2029.