# Fundraising and Social Psychology

## Beyond Homo economicus

In discussing the Snowdrift Dilemma, we describe the dynamics around calculating the risks and benefits of contributing to public goods. Whether to participate can relate to how much we want something done, how costly it is for us to help, whether we can freeride while others take care of it, and so on. Many interesting dynamics arise just from the setup of how players in a game are rewarded for different combinations of choices.

But we are social creatures. Our decisions go beyond rational self-interest. Our motivations involve emotional factors like compassion, desire for approval and belonging, concern about the larger impact of our actions, grudge-holding, guilt, and spite.1 Both the holistic context of a fundraising platform and the specific design can affect whether users tend toward a calculated, self-interested approach or a more social, community-focused approach.

### Money can displace social considerations

Most of us are often generous and thoughtful of others, but when money enters the picture, it can displace rather than augment our social focus. People tend to see relationships as either social or transactional. A strict contract being completed means neither side has any obligation to continue their relationship. People find it offensive if a friend or family member offers to pay them a fair market amount for a favor or gift that was intended as a social gesture.2

Prices encourage calculated cost-benefit analysis. The perks offered in conventional crowdfunding sites like Kickstarter and IndieGoGo can put focus on the economic cost-benefit of pledging, risking a deemphasis on the social value of doing your part to support a project.3

### External rewards can crowd out intrinsic motivation

People achieve their best when driven by desire to solve challenges and contribute to the greater good. Providing adequate basic income provides a freedom and autonomy that allows people to focus on their work without distraction. Beyond assuring a comfortable well-being, further focus on pay can counteract social motivations.

### Social considerations can override rational self-interest

People desire gratitude and approval. We may feel good about being generous, but we still appreciate acknowledgement. On the flip side, when we feel exploited, we may choose to suffer ourselves just to punish the freerider(s). We may hold long-term grudges. In cases of widespread freeriding, we may lose trust in society and become cynical and discouraged.4

Consider another well-known game theory scenario: the Ultimatum Game. One of two participants gets to propose a split of $100 with a second participant. If the second participant rejects the offer, both get nothing. Pure economic analysis says that the second participant should accept any non-zero offer. Even a 99 to 1 split still gains the second player$1. In practice, however, participants often reject insulting lowball offers.5 Of course, the first player usually realizes that others may retaliate for unfairness and will tend to offer a more equitable split in the first place.

## Social validation and cooperation

Different players may have a different threshold for whether they are willing to shovel alone versus at least having one partner or perhaps wanting to see some portion of the players helping out.6 A related concern is the pure cost per-player. Some players might be only willing to do so much, and they need a critical mass of help before being willing to participate.7

## How effective fundraising considers psychology

For effective fundraising, we must encourage cooperation and maintain social sensitivity.

In a “walk-a-thon”, for example, the walkers don’t do anything to directly help their cause; they merely show donors that others care about the cause as well. When everyone participates, it reduces the psychosocial problems caused by freeloading. The wider and more active the participation, the better the likelihood of maintaining social norms over market norms.

Of course, activities like walking mean more when financial pledges are proportional to the amount of walking and the distance is not predetermined. That way, walkers know that they actually make a difference for the cause if they push themselves to go farther. Donors then also feel more inspired by the show of commitment. When the challenge itself has value (even as just good exercise), then we get that along with the donations to the cause and the feelings of accomplishment. That set up is a win for all.

Too often these days, fundraising organizers recognize the contrived nature of such events. Instead of asking for pledges in the form of “$X per mile” (which requires the hassle of later getting the appropriate donations after the walk), they say simply have walkers announce “I will walk 5 miles”. The predetermined distance allows donors to simply decide to give a flat$X total in advance. Unfortunately, that divorces the whole connection between walking for donations. This makes the setup much more tenuous and contrived. The next logical step is for people to just ask for flat donations and skip the walking. We then fail to develop the social cohesion that makes these fundraisers most effective.

## How Snowdrift.coop avoids focusing on money

In addition to crowdmatching as a core set up, other aspects of Snowdrift.coop emphasize pro-social values and a sense of community.

### Emphasizing livable salary

Patronage systems operate most effectively when everyone views one another as people with needs and feelings. To emphasize cooperative social norms, Snowdrift.coop endorses paying team members fair market salaries for their work without putting hard numbers on billable hours. We encourage patrons to judge projects on overall monthly progress rather than pricing every detail. We aim for projects communicating with candor about their progress, challenges, and contexts. Patrons should have a sense of the degree to which the project teams are dedicated to the project. Given a basic transparency, patrons should give deference to the decisions and autonomy of project teams. The teams obviously have incentive to make sure that patrons feel good about the project progress and priorities. The only real competition between projects is toward showing themselves to be the most deserving of continuing patronage.

### Encouraging volunteering

FLO projects often thrive on volunteer input, so we want to maintain that at the same time as we fund primary project teams.

Some say that time is money, and maybe there are ways to quantify and then achieve some sort of crowdmatching for volunteer time. But we are not proposing that at this point. Quantification of volunteer time is problematic. How do we gauge the factors of quality and quantity? Instead of formally measuring time, we appeal to positive social encouragement such as public acknowledgement in general.

We support having various formal ways to thank volunteers. For example, officially recognized volunteers could be listed on project pages or have a badge by their account name elsewhere (such as in discussion forums) marking them as “contributors” (a distinct title from that of “patrons” who provide funding; of course, the two titles are not mutually exclusive).

As we develop, Snowdrift.coop will include further elements to encourage everyone involved to contribute creatively as best as they can to all sorts of projects.

## Designing for humans

In addition to the many considerations discussed above, there are many other psychological concerns to address in supporting public goods, including:

• Reducing friction: making it as easy as possible to use, understand, and support projects
• Social signals: perhaps showing people what projects their friends or trusted others support
• Honor and identity: emphasizing patronage as the pro-social responsible thing to do (to the degree one is capable, and to the degree projects need and deserve the support; we don’t want to shame freeriders who can’t afford to do more); recognizing patrons for their generosity
• Political, ethical values: emphasize why public goods matter and the importance of rewarding public-goods work instead of rewarding proprietary projects that use artificial restrictions
• Optimism and vision: inspire everyone to see what could be possible with enough cooperation

1. For an evolutionary framing of these social motivations and how they can evolve out of game dynamics, many works discuss this, notably the The Selfish Gene by Richard Dawkins (1976, updated 2006).

2. For a concise summary of many studies about the conflict between social considerations and calculated financial incentives, see pp.190-196 of Practical Wisdom: The Right Way To Do The Right Thing by Barry Schwartz and Kenneth Sharpe.

Note also a study on the tipping point between social and economic motivations suggests that money facilitates cooperation in large but not small, group settings: Camera, Gabriele, et al, “Money and trust among strangers”, Proceedings of the National Academy of Sciences, 26 August 2013. http://www.pnas.org/content/early/2013/08/21/1301888110.

For a broad, anthropological discussion of social debt dynamics, see Debt: The First 5,000 Years by David Graeber.

3. Of course, most crowdfunding sites are dominated by proprietary projects, so social value is already dubious in those cases.

4. See Give and Take by Adam Grant for discussion about the general orientation people have as givers, takers, or matchers. A particular note is that givers who are too careless in watching out for their own needs and balance can burn out, get resentful, and become strict matchers or even takers. The details depend on the circumstances and the mix of attitudes of different people in various situations.

5. Tirole, Jean. “Rational irrationality: Some economics of self-management.” European Economic Review 46 (2002) 633–655. http://teaching.ust.hk/~mark329y/EconPsy/Rational%20irrationality-Some%20economics%20of%20self-management.pdf

An interesting note: trained economists tend to act with rational self-interest in these games instead of showing the social behaviors of most other participants.

6. The psychology of social threshold is often called the “Threshold Model of Collective Behaviour”, discussed somewhat at https://en.wikipedia.org/wiki/Threshold_model and for a superb story describing the idea in reference to basketball and players refusing to use good technique because others aren’t using it, check out https://www.thisamericanlife.org/590/choosing-wrong/act-one-0.