Nudging Art Lovers to Donate

Abstract

Many nonprofit organizations face revenue uncertainty due to funding cuts. It is crucial for them to supplement existing revenue streams by private donations, and apply thoughtful market segmentation in their pursuit of donors. We introduce the behavioral concept of “nudge” based on the possibility of loss aversion affecting willingness-to-donate, and investigate its implications for fund-raising strategies. Potential donors are nudged to donate by the hypothetical scenario of “losing” an existing exhibition, and also by that of “gaining” an additional exhibition. We observe significant loss aversion effects as frequent gallery-goers donate more to avoid losing an exhibition. While both prospective gain and loss scenarios are effective in nudging nonfrequent gallery-goers, the prospect of enjoying “one more” event is observed to be stronger. We argue that there may be scope to increase support for nonprofit organizations, particularly in the cultural sector, by exploiting the psychological characteristics of prospective donors.