One of the most common questions I get asked is “how can I get my manager to invest (more) in our legacy program?”. Actually, it’s a question I asked countless times when I was a frontline fundraiser. It’s frustrating, isn’t it? I mean, there are countless studies and reports that espouse the importance of including legacies in a diverse fundraising program, not to mention that much talked about wealth transfer!
So why is it so hard to get management onboard?
It’s because we value immediate rewards more than long-term rewards, even when these immediate rewards are smaller. Crazy, right? Well this is a cognitive bias called hyperbolic discounting.
Say, for instance, you’re *this* close to hitting your year-end fundraising goal. You’re preparing for the last ask to close out the year when you learn that your donor is very interested in a project that will be launched in the next fiscal year. You know she has limited funds and that if you solicit her for that project, you will not hit your year-end goal. Knowing that your manager would be upset if you don’t reach your goal, you decide to ask for the current gift and figure you’ll deal with next year’s goal next year.
Notwithstanding all kinds of details in this example, that was probably the wrong decision when one considers the long-term viability of the organization’s programs. This is why hyperbolic discounting can result in poor decision-making – because it incentivizes impulsivity and immediate gratification.
It’s like the latté factor in budgeting that many financial advisors use. The latté factor suggests you forgo your daily latté and instead suggest you invest what you’d spend on that coffee which would see that small sacrifice bloom into a sizable nest egg after 10 years. As simple as that sounds, many people simply can’t do it because immediate gratification detracts and blinds us from our long-term goals.
The problem is that we know some (ok, maybe many) organizations have a problem with short-term thinking. This isn’t only endemic of the charitable sector – we see this in government as well. Politicians do this all the time by making promises and plans that will yield results for the next 4-5 years – essentially the next election cycle.
Why does this happen?
Hyperbolic discounting sits within another phenomenon called delay discounting. The theory is that when one increasingly experiences delays in receiving a reward, so does the value of those rewards. Why does the value of the reward decrease over time?
Because we like a sure thing.
The fact is, we are often risk averse when we have to make a decision.
Management, as decision-makers, are not immune to this risk aversion. They are often willing to accept a small but certain reward over a larger gain that is less certain because there’s a chance it won’t come to fruition.
The reality is that we have difficulty understanding long-term consequences – this is called temporal myopia. When you can’t imagine what the future looks like, it creates uncertainty. This creates tension in our reasoning. Add to that the fact that no one likes to wait for anything, even when it’s in our best interest!
The problem is that we don’t have a linear perception of time. Have you ever been on a roller coaster ride that you really liked and then were bummed because it was over too fast? And then you ride another roller coaster that scares you and it feels like it’ll never end? You see, depending on our particular situation, time will appear to go by slower or faster.
Make it stop, make it all stop!
A 2016 study concluded that future focus priming was an effective way of reducing hyperbolic discounting. Put simply, priming is when someone is exposed to a stimulus, such as a word, that influences their response to a second stimulus. The study’s authors discovered that being exposed to words like future, long-term and self-control made participants more likely to think of themselves and their future in this way.
This means that the next time you want to discuss a particular investment for your legacy program, start by priming your manager to think of the charity’s long-term plans. Another approach is to start picturing the charity’s future self. Picturing the charity that might result from short-term or long-term decisions could influence management to make decisions that favour the latter.
Will any of this happen overnight? Probably not. The important thing is to constantly have conversations about the charity’s long-term plans. This cannot be understated here. We know that legacies will take care of those long-term organizational goals – let’s endeavour to remind management Every. Single. Day.