By Giovanna Mazzeo Ortolani
Recent events around the world show the potential damages to non-profit organizations or public institutions which face revenue uncertainties, usually due to funding cuts during economic slowdowns.
At the beginning of September, a fire burned down Brazil’s National Museum in Rio de Janeiro, a 200-year-old institution whose collection used to contain, among other preciosities, the oldest human fossil ever found in the country. Not only was its repository lost, but also a part of Brazil’s memories and national identity. The main explanation behind the accident is that the institution did not have a protection against fires due to consecutive cuts in its budgets, despite the billions of reals funneled towards the 2014 World Cup and 2015 Olympics. Although this is an ultimate consequence of restrained budgets, there is a common understanding that culture and arts are not perceived as top priorities in national investment. What can be done to remediate this?
Private donations are a common supplementary source of revenues to exhibitions, but the search for donors is a pursuit on its own. One possibility is to explore the psychological characteristics of prospective donors. For instance, nudges can be used to induce loss aversion through a hypothetical scenario of missing existing exhibitions instead of emphasizing the possibility of attending additional ones.
The maximization of private donations is challenging and has been approached by different researchers. Kotler and Scheff (1997) believe that factors influencing market segmentation are fundamental to effectively reach potential donors (e.g. differing their interests, attitudes and motivation). Bennett (2003) emphasizes the importance of a connection between donors’ personal values and those of the organization in order to stimulate willingness to donate, while Guest (2002) remarks the influence of emotional response or aesthetic appeal for arts organizations.
Lee, Fraser and Fillis (2017) investigate how it is possible to nudge visitors of a major visual arts gallery in Scotland to increase private donations to a specific exhibition. Using a contingent valuation method to estimate the value attributed to art by individuals, the authors assume that loss aversion affects willingness to donate. Three different scenarios are proposed to individuals, who have to precise how much they would like to donate under each case, i.e. a voluntary price discrimination on donations:
- Unframed: assesses the current utility position of visitors (control group)
Q: “This exhibition is the only exhibition showcasing the artworks of Scotland’s emerging talent. Supposing that the gallery was raising funds for the exhibition, how much would you be willing to donate?”
- Gain-framed: elicits visitors’ willingness to donate so as to enjoy an additional similar event (first treatment group)
Q: “Supposing that the gallery is raising funds to provide another platform similar to the exhibition for emerging artists within Scotland, how much would you be willing to donate?”
- Loss-framed (second treatment group)
Q: “Supposing that the gallery was in a position where it had to discontinue the exhibition because of financial constraints, how much would you be willing to donate in order for the gallery to be able to continue with the exhibition?”
They found that non-frequent gallery-goers allocated to the gain-framed scenario are willing to donate more than those allocated to the unframed scenario. However, frequent gallery-goers are more prone to donate under the loss-framed scenario, as the social value attributed to the exposition experience is significantly correlated with their willingness to donate.
Therefore, there is a potential to nudge art lovers to contribute with private donations to stimulate the cultural economy. Alternatively, other strategies have also been proven effective to increase charitable giving, such as drawing on peer effects (as presented in this NOTM article), default options to increase membership levels, and personalized messages to communicate with future donors.
Behavioural Insights Team (2010). Applying behavioural insights to charitable giving.
Bennett, R. (2003). Factors underlying the inclination to donate to particular types of charity. International Journal of Nonprofit and Voluntary Sector Marketing, 8, 12-29.
Guest, S. (2002). The value of art. Art, Antiquity and Law, 7, 305-316.
Kotler, P. & Scheff, J. (1997). Standing room only: Strategies for marketing the performing arts. Boston, MA: Harvard Business School Press.
Lee, Boram, Ian Fraser and Ian Fillis (2017). Nudging Art Lovers to Donate. Nonprofit and Voluntary Sector Quarterly, 46(4): 837-858.
Thompson, E., Berger, M., Blomquist, G. & Allen, S. (2002). Valuing the arts: a contingent valuation approach. Journal of Cultural Economics, 26, 87-113.