Nonprofit organizations provide valuable programs and services in the field of Behavioral Economics to assist individuals with a variety of needs, often at no or low cost. It might be surprising to learn that some nonprofits struggle filling the spots for these services. For example, a scholarship program is unable to distribute all of their funding due to a lack of applicants; a library summer reading program has free books to give away but not enough people show up; a community launches a “promise” program to promote college savings accounts with financial matches, but parents don’t enroll.
An emerging concept in the social sciences combines economics and behavior science and is called “behavioral economics.” Through a meeting at the Wabash County YMCA with Duke University’s Common Cents Lab, some of the Transform Consulting Group team learned more about behavioral economics to improve program outcomes.
Of course we realize that most nonprofits don’t have an economist on staff who can review their programs and services to implement behavioral science principles. Fear not. There are some simple solutions that all nonprofits could implement on their own – without an economist on staff – to increase their uptake or enrollment in programming utilizing these simple behavioral economic principles below.
5 Behavioral Economic Principles
- Action-Goals – People have good intentions, but they do not
do what they intend to do. For example, families want their children to go to college and intend to put some money away in a college savings account but they never get around to it. Individuals get stuck in a now versus later mindset, and it is difficult for people to imagine long-term savings when the current costs are adding up. In order to avoid the action-goals gap, avoid providing more information and help individuals take specific actions toward the program goals. If a family wants to save for college, help them set up a specific savings plan. Connect them with a bank to open a savings account and offer a small deposit to get them started. - Decision Paralysis – When given too many options, people tend to make the easiest decision, which is often no decision at all. Some programs offer great benefits, but the application process is cumbersome and overwhelming. When was the last time your nonprofit reviewed all of the steps you are asking clients to complete to receive your program or service? Perhaps there are some items or steps that you can remove or condense to make it less difficult to enroll.
- Personalization – People are more likely to respond to messages or services that are tailored to them. A one-size-fits-all motto is not tailored to everyone. Individuals have different lifestyles and needs. So a program might benefit a variety of people, but what will attract them to the program to begin with, and what will help each person along the process? Personal interactions with each client will help create a clear focus of the program and how it relates to and will benefit the client.
- Herding – Behavior is impacted by what others are doing. We are social people and whether or not we realize it, we are socialized based on our environments. If we learn about a neighbor enrolling their child in a camp, then we might do it as well. We watch and listen to what others do and often follow. There is a convenience factor here where people are comfortable with what they know. Is your program leveraging the social aspect of your programs and services with your current clients and connections? If you have a college savings account program, are the parents who are contributing sharing that message so that the parents in their network realize that others are contributing and it’s a “normal” behavior to do so?
- Reciprocity – People have the inherent desire to help those who have helped them in some way. We like to “pay it back.” If your nonprofit can help an individual or a group, there is a greater chance they will return the favor. They might participate in your fundraisers, join another program within your nonprofit, volunteer, or donate money.
There are many more behavioral economics principles to consider when developing, assessing, or improving a program at your nonprofit. If you want to learn about more behavioral economics, visit the Common Cents Lab resources page. Want more help in reviewing your programming and thinking about how to enhance it? We can help! Contact Transform Consulting Group today!
