Friction costs
Let’s consider ways to reduce or eliminate donor friction costs.
‘Friction costs’ are a common consideration in business transactions. Basically, ‘friction costs’ is a term used to describe the machinations or steps someone has to go through in order to complete a purchase. Businesses of all types think a lot about how to reduce friction costs so they can make the sale and receive your money as quickly and easily as possible. The last thing a business wants is to put up barriers that keep you from making a purchase.
Amazon has streamlined the friction cost of purchasing on their website drastically by instituting the ‘one click’ purchase. Square, a point-of-sale payment platform used by many small businesses, also eases the payment process noticeably.
We should start considering friction costs in the contexts of charitable donations. For example, how many steps does a donor have to go through to execute a donation to your charity? Maybe we should break this down. Start by considering the existing decision-making pathway below and ask yourself how much ‘friction’ exists in this system.
Existing:
Exposure to issue (Let’s say you see a homeless person on the street.)
Decision point (You want to know why this person is living on the street and who is helping this person get off the street.)
Cause Research (You get home and sit down in front of a computer.)
Go to google
Search, for example, ‘homeless’ and ‘name of your city’
Peruse multiple websites from agencies identifying this cause as aligned with their mission
Identify keenly packaged group
Ask friends via text for info on the group
Verify agency credentials on their website
Try to login into Charity Navigator
Find password that you forgot for Charity Navigator
Spend time going down a rabbit hole on Charity Navigator
Try to figure out how Charity Navigator became the authority of good charity
Figure out a way to ascertain the impact of the agency
Read the site of your chosen agency in greater detail
Find donation portal on website
Enter credit card information into website
Donate via credit card
Receive info on donation in form of ‘thank you’ letter highlighting recent work
Donating to a worthy cause feels good. Donors know this yet we make them suffer through multiple layers of friction in order to achieve that feel good donor ‘ping.’ Elimination of frictions costs would go a long way in not only increasing donations but creating more engagement with a donor. All the time someone has to sit in front of a computer and hash through information reduces the level of engagement someone will have with your agency. Time spent navigating a website or interpreting your message of why you should donate to them can take time away from the donor getting the gratitude and good feeling of donating.
A more seamless process would integrate multiple data sources into the decision-making process. These data sources would come from inside and outside the agency itself and draw from multiple platforms already in use by millions today. Data aggregating systems would parse data and synthesize all the readily available information into a decision making assistant.
For example, let’s imagine a donation process with less friction. Note this process draws from multiple sources, not just an agency website and Charity Navigator.
Donating with less friction:
Identify causes of interest (Accomplished through your phone or embedded sensors which follow your online interest and whether or not you ‘saw’ something)
Receive proximity notifications (You drove or traveled through an area where homeless people congregate.)
Receive predictive and forecasted impact model of agency(s) working on said cause. (These are push notifications that arrive in your inbox or on an app. Filters for these notifications could be managed up front by you.)
Donate electronically (Seamlessly as most systems already have your credit card info and don’t require a login.)
Monitor impact of donation in real-time (You get more than an email ‘thank you’ but continual notification of how the agency you supported continues to make a difference.)
Receive on-going notifications/impact indicators/impact reports from agency (This information flows continually to you after the donation is made.)
The second decision making pathway not only takes less time and produces less friction before the donations is made but it sends information back to the donor and draws from other systems. Notice the bulk of information flows back to the donor instead of the existing model which leaves the donor searching and researching in order to make a donation. These are the friction costs we talked about earlier. Allowing information to flow back to the donor in real-time will increase the amount of donations and their interest, while decreasing the friction (time and effort) required to make a donation.
This flow of information that you receive after your donation can be accomplished by integrating systems and other data platforms which provide information such as the amount of money from others going to a cause, the impact those funds are having and the agency’s digital footprint (how many people are talking about the agency online or referencing their work in online discussions.) These datasets are already out there and do not have to be aggregated on a site like Charity Navigator.
Existing data pathways do not allow for this type of data flow. It’s difficult if not entirely impossible to find a way to show us where the money is flowing and who is receiving the largest donations by area, cause, your city, etc. It is possible but the existing data systems and platforms do not coalesce and connect in a way to offer this information. Currently, data is segregated among payment companies (Amex, Visa, etc.), non-profits and the IRS. We can go to Charity Navigator to see how much one agency received in donations but why can’t we figure out how much money within a given geographic area is being donated from example to provide critical shelter to the homeless in your community. We need to breakdown paywalls withholding information on non-profits and their performance. This information should be readily available as it is for publicly traded companies.