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Policy and Public Affairs at CAF

Charities Aid Foundation

Nudging the nation

28 May 2013

How nudge theory can improve charitable giving

Over recent months the Charities Aid Foundation (CAF) has been working with the Cabinet Office’s behaviour insights team to investigate the potential impact that the usage of ‘nudge’ theory could have on the charity sector.

Today’s publication of the ‘Applying behavioural insights to charitable giving report’ provides an interesting insight into the ways that people can be judged to behave differently, and how that could make people give more to charity.

Nudge theory was first proposed by Richard Thaler, Professor of Behavioural Science and Economics at the University of Chicago Booth School of Business. The theory, explained in detail in Thaler’s co-authored (with Cass R Sunstein) 2008 book ‘Nudge: Improving Decisions about Health, Wealth and Happiness,’ derives from the concept that small changes can generate a significant impact on people’s behaviour.

The new study, also supported by the University of Bristol’s Centre for Market and Public Organisation, found that nudging people to give could generate tens of millions of pounds of additional income for good causes.

Nudge effectiveness

As part of the study, a number of trials were conducted to investigate the effectiveness of nudge theory, many of which uncovered a significant increase in interest in charitable engagement, including:

  • Informing people that ‘many of our customers like to leave money to a charity in their Will’ trebled the amount of people including a charity in their will
  • Automatically increasing regular giving such as payroll giving raised the proportion of people increasing their donations from 6% to 49%, potentially unlocking an extra £30m a year for charities  
  • Personalising messages to staff from the Chief Executive of a large investment bank helped promote a fund-raising drive and raised £500,000 in a day

The report recommends making it as easy and attractive as possible to give, and the findings of the report could provide much-needed to support to the charity sector during a difficult period.

As the Back Britain’s Charities campaign has argued, a drop in donations of 20% combined with cuts to Government funding and an increase in demand for the services provided by charities means that many are struggling with the challenge of doing more with less.

Research by CAF has found that one in six charities fear being forced to close over the next year as a result of the challenging financial climate, and it is vital that charities are supported as much as possible during this difficult time. This report is extremely positive because it highlights the charitable nature of people across Britain, and demonstrates why Britain is once again one of the most generous countries in the world. Importantly, the report also suggests ways of ensuring people translate their charitable spirit into action to support the causes that they care about.

The findings of the nudge report are so useful because they explain how a few small and simple practical actions can make a significant difference into the way that people behave. It’s an exciting piece of work, and the report is well worth a read in full. At CAF we’re delighted that policy makers are focusing on innovative ways of supporting charities, and we hope that these ideas will translate into positive action to make it as easy as possible for people to give.

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