Incentives for giving

Robert Merkel is riding his bike through the Pyrenees to raise money from Crohn’s Disease. He wrote a few econbloggers an email asking for advice as to how best to raise funds from this exercise. He proposed some pledge based on whether he can achieve some goal in his upcoming ride.

Personally, I think they way to go is for Robert to undertake a task that creates a risk of money or embarrassment or both if he fails to achieve some goal. In effect, he needs to make a bet with his readers as to whether he will make it or not. Here is a possibility. Riding a bike is a public display. That means that if you do it wearing some goofy costume and then put the results on Flickr or YouTube that will garner some interest. Perhaps the pledges could be tied to the minutes of footage with stunned or amused French people, he is able to get.

PS. I have written about these sort of things at Game Theorist here and here. I also used a risky matching option for MS and found myself out $1000.

7 thoughts on “Incentives for giving”

  1. Thanks for responding, Joshua.

    I don’t think I’ll be taking up the option of the goofy costume.  This ride will be quite difficult enough without the extra impediment of costume goofiness.

    What I I might do is have a scheme where people can nominate a “par time”, a base donation (which might be $0) which they make if I beat the par time, and a bonus (which also might be $0) for every minute by which I beat that time). 

    The benefits of this scheme are as follows:

    1) It should prompt some nerdy discussion as people try and figure out what my likely time up the mountain is.
    2) If people just want to chuck in a few dollars, they can do that without hassle.
    3) Those who are into such things, can have a lot of fun figuring out how they want to incentivize my efforts.
    4) Before I go, I’ll be able to make up a nice graph which will show how much money I’ll raise based on my time.
    5) From my perspective, I’ll have a specific challenge to push me to try as hard as I can, rather than just accompanying Damian. 

    What do you think?


  2. I should add that the time of interest would be the time I take to ride up the <A HREF=”″>Col du Tourmalet</A>, the toughest climb that I will tackle.


  3. Depends on your definition of “fun”. 

    As well as a) publicize, and b) fundraise, for Crohn’s disease,I want to push myself to my physical limits, and I suppose I wanted any donation scheme to encourage that.

    What I should have made clear earlier is that I’m very grateful to you for your suggestions, and I very much see my scheme as taking the key concept – essentially, betting with potential donors – if not the specifics.


  4. Anyway, if you want hints, here’s a successful bike ride organiser speaking, from the Our Community newsletter Raising Funds;

    “The Fundraiser: John Rathgeber leads the Big Heart cycling team each year in the annual Murray to Moyne bike ride, a heroic 536-kilometre dash from one end of Victoria to the other.
    Unique Selling Point: Total commitment.
    Success factor: In the last three years John has raised over $30,000, over $60,000, and over $70,000 respectively for DEAL Communication Centre, an enormously impressive feat.
    The Murray to Moyne is a bike ride, of course, not a bike race, but I notice that you manage to lead the Big Heart team into the finish first every year.
    John Rathgeber: I don’t like wasting time. If I’m going to ride 536 k I want to be on the bike for as short a time as possible, and so we try to start last and finish first. It’s the same with fundraising. My time is pretty valuable – not because I’m special, but because I’ve got a lot of things to do, especially with my family, and because I lose a whole month doing this it has to be worth while. Selling tickets, running raffles, rattling the tin – that isn’t a good ratio of dollars to kilojoules. It’s not about that, it’s all about being able to make a call to a director of Telstra and get him to throw in five grand. It’s about recruiting people with influence and having them leverage it.
    What do you mean by ‘leverage’ in this context?
    John Rathgeber: I look for people with some influence that they can leverage into funds. This year, for example, Mark, one of the riders, has a real estate company that does a lot of business with one of the major corporate law firms and one of the banks, so he was able to ring them up. Mark’s good for $28,000. I ring Terry at another firm and say Terry, it’s that time of the year again, and you can do one of two things – you can give me two thousand dollars or you can come on the ride as support crew. And he says What shall I make the cheque out to?
    I’m selective about who I ask to join the team, for that reason. Most of us are from the corporate sector – though we have a mix of people, of course, to keep it interesting. You don’t want it to be aggressively corporate.
    How do you get the funds in?
    John Rathgeber: There’s no simple formula. But I do set a threshold goal of $2,000-$2,500. Not everybody can make it. One of the team who’s been on the ride for years is a schoolteacher, and she has to work like hell to raise half the money some of the newer riders can get with two phone calls. In general, though, I look for people who can leverage their influence into a greater net fundraising capacity, and if they’ve never thought about raising funds before, I encourage them to explore their opportunities in new ways. Last year, for example, we had a surgeon on the team. He found it very difficult to come to terms with asking people for money, so he just donated $500 of his own money. This year I got him involved. You work in an upmarket suburb, the people you operate on are generally fairly wealthy, quite often you’ve saved their lives, why don’t you tell them what you’re doing and ask them for money? They’re giving it to someone, and unless you ask them they’re not going to give it to you. He identified patients with high net worth whom he’d treated for life-threatening conditions, and I helped him write letters to them and worked out how he should talk to them about focusing some of their charitable efforts in our direction, and he raised about $5,500. You just have to get people to work through their contacts.
    I’m developing a real feel for people who can raise serious amounts of money. We’ve picked up two or three new ones this year who have been fairly lucrative. One rang up when I already had sixteen riders and said he wanted to join; I said Look, Lloyd, I can squeeze you in, but it’s going to cost you. How much? he said. Three and a half grand, I said, minimum. All right, he said, Three and a half grand it is. It’s no longer ‘What we get, we get’; this is business. There’s a small window of opportunity, and I know how much it means to DEAL, and I drive it as hard as I can. Next year I’m aiming for $100,000.
    How important is the Murray to Moyne?
    John Rathgeber: I’m a great believer in event-specific fundraising. It allows you to focus your energy – there’s an urgency about it. We leverage our sponsors to the event, and the emotion, and the commitment — I’m putting my body through all this pain, the least you can do is sponsor me. And the Murray to Moyne is quite well known now, so it’s partly sold in advance and we don’t have to do the whole selling job.
    How do you get people to front up for such a long and gruelling ride?
    John Rathgeber: The event is a whole heap of fun. I don’t have to ring people back the next year to ask them if they want to be part of it, they ring me asking when it’s on. This year we got a speaker system for the support van, and Matt, our driver, acted as disc jockey and comic – he told some really disgusting jokes, several of us nearly fell off our bikes from laughing. We do it properly. Everybody gets a Big Heart Team shirt, with the logos of our sponsors on the front (which isn’t to say that our sponsors do it for the advertising, they don’t, but it demonstrates our commitment). It gives the event a signature – come and ride with us and you can get a shirt. And to make it even more enjoyable, you can pay for it. We charge every participant $250 for meals, motel expenses, ride entry fee, and the shirt.
    What’s the secret to great fundraising?
    John Rathgeber: Commitment. It’s a mindset. I’ll do a thing properly or not at all. I don’t want to be involved with a half-hearted effort. I’ve had some discussions with another team, trying to encourage them to make a real go of it, and they just said no, we’re happy enough just rolling along. That’s stupid, I said, you’re investing all this energy and you’re still missing out on a wonderful opportunity to make a difference. No, he said, that’s the way we want to do it… And so they raised about $10,000 all up. I couldn’t work that way. The way to look at it while you’re doing it is that first is first and second’s nowhere. I don’t know that that approach endears me to everybody, but this is the only chance I have each year to make my contribution to the bigger effort, and I know the money we raised has done a lot of good.”

    That said, I have general reservations about this kind of event-based fundraising, and being in the professional fundraising business I add these comments to educate anybody who may be thinking of looking to similar challenge events as a means of fundraising.

    1) These events are not primarily fundraising events, they’re to provide an excuse – and a small charge – for people to enjoy themselves. If Robert really wanted to generate money for Crohn’s he’d give up the holiday, work at his day job, and donate the money he made there.
    2) As it is, the money is doubtless a useful addition to whatever charity gets it, provided that no work at all is required of it. If the charity gets suckered into providing the admin backup the net value drops precipitously and can easily drop into negative territory. Do your costings carefully including all admin time.
    3) In general, all these fundraising schemes are there to avoid the embarrassment of coming right out with it and asking for money – to take the curse of what we have been taught to despise as begging. They try to give the impression that there’s some sort of transaction taking place, that something of value is changing hands, when there isn’t. If you seriously want to raise money, cut out the shit and ask your friends and family to give it to you, and to ask their friends and family.

    I’m being a little harsh here, as a bike trip through the Pyrenees is pretty harmless. The ones that really need overhead are the riding-a-penny-farthing-around-australia or pushing-a-bathtub-across-the-nullabor vanity projects that cost tens of thousands and raise at best net thousands.


  5. ChrisB:

    1) I agree that I’m doing this primarily because I enjoy the challenge, as is Damian (who is riding the entire course of the Tour, I’m just tagging along for part of it).
    2) Raising the profile of Crohn’s is probably just a significant a goal as raising money.   Aside from my own modest efforts, Damian has organized a very neat publicity stunt that might well get his ride featured in the national media, and possibly the worldwide cycling media  To buy equivalent exposure for Crohn’s would cost tens of thousands of dollars.
    3)  Damian, his friends, and family, are doing all the logistical and corporate sponsorship work.  The charity just gets a cheque at the end, which they would not have gotten otherwise.


  6. Good for you, Rob, and good for Damian.  I’m happy for you; however, I’m making the economic point that it’s not really the case that  “Robert Merkel is riding his bike through the Pyrenees to raise money from Crohn’s Disease” in anything like the same way that, say, BHP is selling iron to China to raise money for its shareholders. You’re riding your bike through the Pyrenees and raising money for Crohn’s Disease (and best of British luck to you), but you’re not, at all, about profit maximisation.  You didn’t sit down and say “Well, I have seven person-weeks of economist’s time; what’s the highest-paying use of that resource? ” You said “Given that we’re going to be riding through the Pyrenees, how much money can we make doing that?” The answer to which, I would suggest, has little to do with Youtube gimmicks and everything to do with how much you’re willing to ask your friends and colleagues to give.
    Taking a longer perspective, you’re selling the bike ride, which suggests to me that you don’t think you can sell Crohn’s disease, which suggests to me that you need to work on your Crohns lift speech.  When you get home.


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