How transactional donor relationships kill generosity

In nature, giving to unrelated others can be sustainable. But it requires some form of reciprocity. This need not be immediate. It need not be proportional. It can be a different size or type. It can occur much later. But it starts by answering a question:

Who is able and willing to return a favor?

Answering this simple question can get complex.

Able and willing

As seen in the last article, predicting who is able involves many factors:

  • Who is likely to have a shared future with me? (Who is near me? Who is stable?)
  • Who has strength (or other valuable resources) to share?
  • Who can observe my giving?

Predicting who is willing is even more complicated. In real life, people use signals to predict the type of relationship. The relationship then defines reciprocity expectations.

Answering “What will this person do?” starts with “Who is this person to me?” Is the person a loved one, friend, neighbor, stranger, or enemy? This defines reciprocity expectations. In a scale, it might look like this:

Helpful reciprocity

Loved one (lover, spouse, close family)
Friend
Teammate
Colleague
Neighbor
Community member

Transactional reciprocity

Customer
Merchant
Stranger

Harmful reciprocity

Competitor
Enemy

Relationship signals are reciprocity signals. Move up this scale and sharing increases.[1] Move down and sharing decreases. Then it disappears. Then it turns to warfare.

Relationship and giving

Effective fundraising builds higher, “helpful reciprocity” relationships. These relationships build trust.[2] They support giving. This is nothing new in fundraising advice. The emphasis on love and passion led Dr. Beth Breeze to comment that,
“The ‘how to fundraise’ literature risks being classified as romance if computers ever displace librarians.”[3]

It’s not a shocking new idea. “Relationship” works. The fundraising books agree. But there’s a problem. As Dr. Breeze explains,
“Telling fundraisers to ‘build relationships’ (Burnett, 2002; Burk, 2003), to ‘love’ their donors (Pitman, 2007), and to treat the process ‘like a romantic courtship’ (Green et al., 2007, p. 121) is of limited value without insights or examples of precisely how this can be achieved.”[4]

So, what exactly do we do? And what do we not do?

Let’s start with what not to do. Sustainable fundraising requires relationships of helpful reciprocity. We can ruin these relationships by

  1. Acting with no reciprocity or
  2. Acting with transactional reciprocity.
No reciprocity means no giving

Giving to unrelated others does happen in nature. It can even include giving to those of other species. But these all start with some form of reciprocity. This reciprocity need not be similar in

  • Amount
  • Kind, or
  • Timing.

It can be

  • Smaller
  • Different, or
  • Much, much later.

These are no problem. But without some kind of reciprocity, giving always loses. In nature, giving outside the family without any reciprocity is deadly. It’s an unnatural act.

When a charity asks donors to give without any signals of reciprocity, it’s asking donors to perform an unnatural act. It might have clever advertising. It might have a detailed marketing plan. But underneath it all, it’s sending primal messages. It’s saying,

  • “We’re not here to help you!”
  • “We’re not partners!”
  • “Sharing with us is foolish!”

No marketing plan can overcome those underlying signals.

Transactional reciprocity excludes generosity

The next step above no reciprocity is transactional reciprocity. This fits merchant/customer norms. Exchanges are brief and “strictly contingent.” Any trade must immediately benefit both sides.

Such relationships can be beneficial. But here’s the problem for fundraising. Transactional relationships don’t include generosity.

Transactional behavior in anthropology

Across human cultures, whenever a relationship becomes transactional – or “strictly contingent” – giving stops. Anthropologist Raymond Hames explains,
“Ethnographers studying people as diverse as foragers (Mauss, 1967) and Irish smallholders (Arensberg, 1959) have long noted that attempts to [strictly] balance exchanges are tantamount to ending … relationships.”[5]

This isn’t just for people. Zoologist Gerald Carter explains,
“Similar to humans, nonhuman primates cooperate in a more contingent manner with less bonded partners.”[6]

Following transactional norms signals a strictly contingent relationship. It signals the absence of a sharing or helping relationship. It kills generosity.

Transactional behavior in the movies

What’s so bad about being transactional? The classic 1960 movie The Apartment gives an example. A cheating husband is trying to restart an affair with a younger woman. The following scene shows how much of a heel he is. He leaves his family on Christmas Eve to meet her for a rendezvous. He says,
“I have a present for you. I didn’t quite know what to get you — anyway, it’s a little awkward for me, shopping – so, here’s a hundred dollars — go out and buy yourself something.”

She starts crying, begins to take off her coat and says, “Okay … as long as it’s paid for …” [7]

It’s a cringe-worthy Hollywood moment. His behavior is “transactional.” The relationship drops from “lovers” to “merchant selling goods.”

Making a relationship transactional isn’t just a problem in anthropology or Hollywood romance. It’s a problem for charities.

Transactional behavior in charities

I often share research findings with nonprofit groups. Once, I was talking about which words and phrases work best with donors. A frustrated manager interrupted, “But I just want their money. Can’t I tell them that?”

Of course, that doesn’t work. Try selling anything with this line. Suppose you walk into a business. On the wall in bold lettering is their motto:
“We just want your money.”

How would you feel?

No business would be this foolish. So how do charity administrators go so wrong? It’s an issue of worldview. From their perspective, their “relationship” with donors is this:
“We’re great!”

“Therefore, people should give us things.”

“Because we deserve it. (Because we’re so great!)”

“Our part in a relationship? Just keep being our fantastic selves!”

“And, oh yes, keep reminding people how wonderful we really are.”

Have you ever known someone like this? How would you like to be in a relationship with them? If you found yourself in that relationship, how long would you stay? Why do you think donor retention is so low?

In this worldview, donors are just an ATM. Helping an ATM makes no sense. It only reduces transactional efficiency.

The cheating husband in The Apartment explains,
“Go out and buy yourself something. They have some nice alligator bags at Bergdorf’s.”

His “present” is efficient. Transactional norms are efficient. But they contradict sharing relationships. Ultimately, they destroy generosity.

One research study analyzed key factors underlying successful major gift “asks.”[8] The secret? It started with this:
“First, they are made within relationships of trust rather than as a result of a transactional approach.”

Tiny signals

Even small signals in word choice make a difference. Leading with formal, technical, financial, and contract terms sends a signal. It signals an arms-length, market, strictly contingent relationship. It signals a transactional relationship. In experiments (reviewed in previous articles[9]), these signals consistently reduce generosity.

Small signals can hurt. But they can also help. They can reflect a helpful relationship. They can even reflect love. In one experiment, solicitors for a muscular dystrophy charity changed the phrase on their T-shirts. Changing from “DONATING = HELPING” to “LOVING = HELPING,” increased donations by more than half.[10]

An experiment for African famine relief placed donation boxes in 14 bakeries. Changing the headline on the box from either “DONATING = HELPING” or no headline to “DONATING = LOVING,” nearly doubled donations.[11]

An experiment for a children’s charity changed the shape of the donation box. Changing the box from either round or square to heart-shaped nearly doubled donations.[12]

One massive experiment involved 540,000 Alaska residents in a statewide giving campaign. A third received postcards beginning a donation request with “Make Alaska better for everyone.” These had no impact on giving. Another third instead received postcards beginning with, “Warm your heart.” These people were 6.6% more likely to give. They also gave 23% more money.[13]

Signals, even small ones, indicate the relationship. The relationship defines giving norms. Signaling transactional relationships undermines generosity. Signaling emotional relationships supports generosity.

Let’s get practical

We’ve looked at relationship concepts. We’ve looked at what not to do. But how precisely do we build these relationships? In the next article, we’ll look at several practical examples. We’ll see how it’s actually done in the real world. And we’ll see how one simple strategy underlies it all.

Footnotes:

[1] In experiments, giving to family members always exceeds giving to non-family members. At each level as the relationship becomes more tenuous – friend, group member, outsider, competitor – giving falls. Ben-Ner, A., & Kramer, A. (2011). Personality and altruism in the dictator game: Relationship to giving to kin, collaborators, competitors, and neutrals. Personality and Individual Differences, 51(3), 216-221; Scaggs, S. A., Fulk, K. S., Glass, D., & Ziker, J. P. (2017). Framing charitable solicitations in a behavioral experiment: Cues derived from evolutionary theory of cooperation and economic anthropology. In M. Li, & D. P. Tracer (Eds.), Interdisciplinary Perspectives on Fairness, Equity, and Justice (pp. 153-178). Springer.

[2] The relationship between trust in a charity and willingness to donate is well established in research. See, e.g., Alhidari, I. S., Veludo-de-Oliveira, T. M., Yousafzai, S. Y., & Yani-de-Soriano, M. (2018). Modeling the effect of multidimensional trust on individual monetary donations to charitable organizations. Nonprofit and Voluntary Sector Quarterly, 47(3), 623-644, p. 623. (“Data were collected in Saudi Arabia … Individuals’ trust in charitable organizations affects both the intention to donate and future monetary donation behavior.”); Chapman, C. M., Hornsey, M. J., & Gillespie, N. (2021). To what extent is trust a prerequisite for charitable giving? A systematic review and meta-analysis. Nonprofit and Voluntary Sector Quarterly, 08997640211003250; Hager, M. A., & Hedberg, E. C. (2016). Institutional trust, sector confidence, and charitable giving. Journal of Nonprofit & Public Sector Marketing, 28(2), 164-184; Küchler, L., Hertel, G., & Thielsch, M. T. (2020, September). Are you willing to donate? relationship between perceived website design, trust and donation decisions online. In Proceedings of the Conference on Mensch und Computer (pp. 223-227); Middleton, G. H., & Lee, H. T. (2020). Non-profit organization’s innovative donor management-the identification of salient factors that drive donor loyalty. Asia Pacific Journal of Innovation and Entrepreneurship. 14(1), 93-106; Sargeant, A., & Lee, S. (2004). Trust and relationship commitment in the United Kingdom voluntary sector: Determinants of donor behavior. Psychology & Marketing, 21(8), 613-635; Taniguchi, H., & Marshall, G. A. (2014). The effects of social trust and institutional trust on formal volunteering and charitable giving in Japan. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 25(1), 150-175.

[3] Breeze, B. (2017). The new fundraisers. Policy Press. p. 100

[4] Id. p. 118. Citing to,

Burk, P. (2003). Donor-centered fundraising. Burk and Associates Ltd.

Burnett, K. (1992/2002). Relationship fundraising (2nd ed.). Jossey-Bass.

Green, F., McDonald, B., & van Herpt, J. (2007). Iceberg philanthropy: Unlocking extraordinary gifts from ordinary donors. The FLA Group.

Pitman, M. (2007). Ask without fear: A simple guide to connecting donors with what matters to them most. Standish and Wade Publishing.

[5] Hames, R. (2017). Reciprocal altruism in Yanomamö food exchange. In L. Cronk, N. Chagnon, & W. Irons (Eds.), Adaptation and human behavior: An anthropological perspective (pp. 397-416). Routledge. p. 411.

Citing to,

Arensberg, C. M. (1959). The Irish countryman: An anthropological study. P. Smith;

Mauss, M. (1967). Essai sure le don. The gift: Forms and functions of exchange in archaic societies. Norton. (This is a translation of the 1923 essay)

[6] Carter, G. (2015). Cooperation and social bonds in common vampire bats. [Ph.D. dissertation]. University of Maryland, College Park, MD. p. 23.

[7] Wilder, B. & Diamond, I. A. L. (1960). The apartment. [Movie script]. https://www.dailyscript.com/scripts/apartment.html

[8] Breeze, B., & Jollymore, G. (2017). Understanding solicitation: Beyond the binary variable of being asked or not being asked. International Journal of Nonprofit and Voluntary Sector Marketing, 22(4), e1607.

[9] See Chapter 10. Using family words not formal words in fundraising story and Chapter 4. Math problems in fundraising story: Motivations & barriers in Book I of this series, The Storytelling Fundraiser: The Brain, Behavioral Economics, and Fundraising Story.

[10] Guéguen, N., Jacob, C., & Charles‐Sire, V. (2011). The effect of the word “loving” on compliance to a fundraising request: Evidence from a French field study. International Journal of Nonprofit and Voluntary Sector Marketing, 16(4), 371-380.

[11] Guéguen, N., & Lamy, L. (2011). The effect of the word “love” on compliance to a request for humanitarian aid: An evaluation in a field setting. Social Influence, 6(4), 249-258.

[12] Guéguen, N., Jacob, C., & Charles-Sire, V. (2011). Helping with all your heart: The effect of cardioids cue on compliance to a request for humanitarian aid. Social Marketing Quarterly, 17(4), 2-11.

[13] List, J. A., Murphy, J. J., Price, M. K., & James, A. G. (2021). An experimental test of fundraising appeals targeting donor and recipient benefits. Nature Human Behaviour, 5, 1339-1348.

 

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If your relationship with donors is merely transactional, you’re losing money

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