Commentary: Mind games and suggested donations

Claire Ruud, Glasstire.com, 8/20/11

Museums have a lot to gain by thinking about their admissions fees and membership dues in terms of behavioral economic theories. And one museum I visited recently, The Contemporary Arts Museum Houston, appears to be thinking about them. CAMH doesn't charge admission. It accepts donations. It also doesn't make you go through a line to give your suggested donation. It puts out a donation box old-school style. Nonetheless, this donation box is a little bit different. The sign on it reads:

Average cost per visit $22

Your admission charge $0

Suggested donation $5

The sign caught my eye because it exploits a basic theory of behavioral economics: anchoring. Anchoring describes a simple cognitive bias. People tend to be more influenced by certain pieces of information than others. For example, people are apt to place more weight on first impressions of others than on information learned later on. This anchoring effect is about primacy. We tend to overweight the first pieces of information we gather. I'd venture that in museums that do not charge admission, the anchoring effect of "free" significantly affects visitor donations. You walk in the door with the idea "free" in your head, see a donation box, and, if the museum is lucky, pull a couple of crumpled bills out of your pocket. When your reference point is $0, $2 seems totally reasonable. Raising the suggested donation has the potential to pull visitors toward higher donations, to a certain extent. However, because you're already anchored at zero, there's a limit to what seems reasonable. A $25 suggested donation is going to feel obnoxious to you. It's too far from your anchor. (By the way, if you're interested, William Poundstone discussed behavioral economic theory and the Met Museums' pricing scheme on ArtInfo.) Certainly, when you walk by the donation box in a museum you're not thinking these things consciously. It all happens instantaneously in your brain. That's part of the power of anchoring. It's instinctual.

Commentary: "Pay-what-you-can" means more than what theatergoer can afford

Jack Marshall, Ethics Alarms blog, 2/1/12

Toronto Star columnist Ken Gallinger does a pretty good job today answering a query from a financially strapped theater-lover who feels guilty about attending "pay-what-you-can" stage productions.

"...My husband says paying less than full fare takes advantage of the theatre company. Technically, we could pay the ticket price; we still have access to credit. And there are things we could cancel...What do you think?" asks the inquirer.

Gallinger explains the benefits to the company of not having a sea of empty seats, and also how discount tickets have promotional value. [Also,] the increased audience size [improves] the audience statistics a non-profit can use to seek ads and argue for grants. [Moreover] "pay-what-you-can" and other discount programs are essential if theater companies are going to meet their own ethical obligations to the community. In my theater's market, for example, the regional company acclaimed for its musicals charges between $75 and $90 for its seats, with various fees capable of bringing the cost to over $100. How often can an average family go to theater at those prices? I'm not sure theatergoers should feel guilty about not paying full prices. Perhaps the theaters should feel guilty for charging so much that what once was a spontaneous decision -- "Hey! Let's go to a show!" -- now has to be accompanied by a household budget review and a week of Ramen noodles. What does "what-you-can" really mean? It certainly doesn't literally mean what the theatergoer can afford. It means something more complicated..."pay-what-you-want-to-remembering-that-you-did-get-something-in-return-and-this-does-cost-money-and-the-company-is-barely-getting-by-or-it-wouldn't-be-having-pay-what-you-can-performances," perhaps. I think, unless the performance is total garbage and you feel the company has a nerve charging anything for such incompetent dreck, a fair "pay-what-you-can" payment is half the usual ticket price. Once the theatergoer has paid that, he or she should consider a tax-deductible contribution to make up the difference, or even exceed it. This might allow the company to keep its ticket prices out of the stratosphere, so live theater doesn't join ballet, opera and polo as pastimes only the wealthy can afford.

Comment posted 2/1/12 in response to Marshall's  blog post: There are a growing number of smaller professional theatre companies that operate entirely on Pay-What-You-Can ticketing. LA's Coeurage Theatre and Columbus OH's Available Light Theatre are two that I know of, and Seattle's ACT Theatre offers PWYC for all remaining unsold tix at the door. Available Light calls it "Pay What You WANT;" I'm not sure if the semantics make a difference. Matt Slaybaugh, their artistic director, talks about it here: http://avlt.co/avltpwyw. His audience, ticket income and budget skyrocketed upon implementing PWYW pricing, and immediately saw an increase in audience diversity. Their average ticket works out to be about $13 (I had spoken to the AD of a prominent DC-area theatre who charges $25-$35 a ticket, but after comps, discounts, paperings etc, their average ticket is actually under ten bucks). They don't have to deal with student/senior discounts, dynamic pricing, special discounts, online discount codes, etc. I am seriously considering implementing an all-PWYW policy when I start producing.

Commentary: How dare they tell me how much to give?

Nonprofiteer blog, 2/6/12

Dear Nonprofiteer, I've noticed a trend in fundraising appeals -- in letters that go out to previous funders, the dollar amount they contributed in previous years is named, with a request for a specific increase in the current campaign. ("Thank you for your generous contribution of $100 in 2011. Would you consider a gift of $125 in 2012?") It really irritates me, especially from the organizations that I contribute to generously. And this year, when, as a board member, I was given the fundraising "ask" letters that were going out under my name to my personal contacts, I felt especially irritated to see the request for a specific additional amount. I would certainly never have written my friends directly with this request. Could you illuminate me as to when this practice started? Why it started? And whether I should offer, in a kind way, feedback to the other organizations that are asking for a specific dollar amount increase to my giving? Does this bother anyone else? Or am I just being pissy? Signed, Possibly Pissy, But Really Very Generous At Heart

Dear Generous, The practice is at least 40 years old, and was pioneered by the universities, probably because it's natural for those institutions to think of givers in terms of the passage of time: the class of 1960 can reasonably be expected to have more resources than the class of 2010. [And] most individuals will just keep on giving unless you affirmatively offend them. But what you're saying is that the request for elevated support is just such an affirmative offense. The problem is that the cost of everything continues to go up, and unless the monetary inflow goes up at the same time the agencies you support will find themselves seriously behind the 8-ball. Perhaps the agencies requesting your increased support would do better if they reminded you of that -- "We haven't been able to give our actors a raise for five years while their rents and grocery bills just keep on rising" -- rather than beginning with a flat-out demand that you do more. Most prospective donors, whether offended by an appeal or not, give money to [nonprofits] because of what they're going to do and not because of how much they need. That, most probably, is the source of your feeling offended by the approach: that what you want to hear is how great they are and how much they can do with your help, not how needy they are and that they're so desperate for your support as to reach their hands directly into your pocket.