The Science of Giving
By: Dave Erasmus, Founder, Givey
Before writing this blog, a homeless man living in Menlo Park asked me for some money for food. When I opened my wallet but had no cash, I replied, ‘No man, I would, but I am sorry I’ve got nothing on me.’ In a gracious and loving tone he said to me ‘Don’t be sorry, be happy!’
Sitting here with a water from Starbucks that I paid for on card makes me think, what is it that makes us choose between giving, saving or spending our money?
Not all things of value have obvious effects that can be measured, quantified and then optimised for, but thankfully we are getting better and better at understanding why we give, why it feels good to give and why it is good to give.
The macro-economic perspective
Sarah Smith, the Economics Professor at Bristol University said in an interview with me that social endorsement and matching make a massive difference in our propensity to give.
Dr Smith takes the time to critique my hypothesis that giving little and often creates the maximum utility and larger one off donations have diminishing returns on her CMPO blog.
Sarah and her contemporaries within the progressive world of Micro-Applied Economics, sometimes known as behavioural economics have come to accept that there is a utility gained through altruistic actions known as The Warm Glow, coined by James Andreoni. But even in the pockets of progressive economic theories that go beyond the Homo-Economicus rational expectations of human behaviour, there is still a belief that the Warm Glow is still largely unaccounted for.
The neuroscience of giving
I traveled across the pond to speak with Jim Doty, A Neuroscientist at Stanford Medicine, and Chairman of the Dalai Lama foundation who has spent 30 years studying exactly that – The neurochemical effects of altruism on the brain. In my interview with him he unpacks the evolutionary pay off that we receive from giving with altruistic intent that sets off the same reward circuitry as sex, chocolate and drugs and has been proven that a lifestyle of giving can actually help us live much longer!
But does Giving actually have an impact on society or is it just a neurochemical indulgence like chocolate? Back in London I met with Michael Green the CEO of the Social Progress Imperative and Author of Philanthrocapitalism who explains the effective use of philanthropy as societies risk capital and that his biggest critique of philanthropy is that ‘we don’t take enough risk’. Giving as a form of capital is about following your passion to use unaccountable capital to fund projects that the government or institutions could not in order to derisk them to allow partners to help the solutions scale and eventually solve the problem.
“Infrastructure in the data-centric, Digital Age”
…But that leaves me with a problem, in this world that is moving crazy fast and with tech innovation blowing stuff up, what values are important to ensure we are building and supporting the right kinds of infrastructure? Dr Lucy Bernholz PhD a member of the Stanford Centre for Philanthropy and Civil Society and author of celebrated Philanthropy 2173 Blog shared with me in our conversation that respecting data like you would a friend in conversation is the root of a successful future digital civil society.
Anthropology and our primate heritage
To top it off, and to make sure I wasn’t getting caught in the weeds I met up with long time friend, mother nature herself, Jane Goodall at Windsor Castle no less! To ensure that we weren’t looking at this with too small, or short term a lens. Dr Goodall Impressed upon me the fact that the world has never been in worse shape across the board and that we desperately need a reframing towards a more ‘giving’ mindset. Jane delivers this beautifully with over 1 million young people around the world participating in her Roots and Shoots program.
So why don’t we give more?
So then I pose the question; If it is so good for ourselves, society at large and is a social norm, why don’t we give more?
We are living in times where attention is the economy. We can connect to anything, anytime, anywhere, but we can only connect to things we become aware of.
Multibillion dollar corporations are experts in getting our attention and helping us build sufficient connection with their products and services that we end up transferring value to them. The consumeristic machine has insane momentum and infrastructure behind it and the Giving Economy has almost nothing. This means we have to play the attention game to get giving on our agendas, in the strategic plans for businesses, governments and individuals. Religious gatherings have provided us with many important values and social norms around giving, forgiveness and contemplation for generations. In our post religious society we need to find other mechanisms to instill this vital behaviour into our system 1 psyche, as per Mr Kahneman’s beautiful articulation of how we consider decision making in Thinking Fast and Slow.
The Three ‘Effects’
There is incredible value in the giving economy, most of which cannot yet be articulated by our state of the art in any of the sciences, however I am glad to see that there are three effects that can be measured, accounted and optimized for.
The True Effect
- The Neurochemical individual effect of giving with Altruistic intent, measured through FMRI machines
The Social Effect
- The Social Endorsement Impact of seeing others in your community respond (in a non-competitive, non-transaction focused method) to needs, measured by the Viral Co-efficient
The Capital Effect
These 3 effects are not present in any other form of value transfer and make every $1 injected into the system invaluable to our society.
I will gladly hand deliver $100 to any person who can provide me evidence that there is a more effective way to spend $1 than gifting it with altruistic intent in a social setting to a progressive, problem solving compassionate project.
At Digital Shoreditch in London a few weeks ago I presented the results of our workplace giving experiment with Ogilvy London, where we saw 5x the amount of givers and 10x the amount of donations through our ‘Instant Matching’ platform compared with any workplace giving solution they have ever used. Pretty awesome! But even more exciting than that was we observed our first evidence that Givey is working and donations are making ‘The Hop’ through the social networks.
The current online fundraising websites only cater for first order connections as the donation is linked to your friend doing an event it means there is close to 100% drop off past one friendship connection.
Givey’s platform is designed to allow donations linked to digital content to spread like wildfire across the web, unleashing a whole new giving experience for individuals, new revenue stream for charities and new way to engage with employees for businesses! Every donor automatically becomes a mini-fundraiser which creates a new epicentre which allows ‘The Hop’ to occur.
The amazing fact is that we are beginning to see 2nd order donations of greater value than the first!!! This is no small thing and on the basis of our progress we are likely no more than weeks away from lighting a compassionate fire in our digital worlds which businesses will be desperate to be a part of.
We are taking phenomena like #ALS ice bucket challenge which raised $100m in 30 days and systemising it into a replicable, easy, everyday activity.
Hopefully one day Givey will help me to be able to do more to help the homeless guy in Menlo park without having any cash on me.
Thank you for reading!
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