Behavioural economics proves that people find it easier to do things they enjoy rather than considering it a duty.
What is it about prime ministers and cash machines? A decade ago Tony Blair was hyping up the idea of police officers frogmarching
thugs to an ATM to pay on-the-spot fines for their antisocial behaviour.
Last year David Cameron offered a more optimistic vision - that ATMs would become terminals for philanthropy. Cameron, at least, is getting his way, with the announcement that 12,000 cash machines across the country will soon be inviting you to give as well as receive. Whether this innovation provides a welcome boost to beleaguered charities will tell us a lot about why people give and how to encourage more of it.
The cash machine donation idea comes straight out of the "nudge" playbook of behavioural economists such as Richard Thaler (who is advising the government on how to apply his ideas through policies like this one). The theory goes that by making the behaviours we want to encourage easier, citizens will be more inclined to act in that way. The hope is that giving as you receive at cash machines will make people more philanthropic because it reduces the "friction" involved in donating money.
It is certainly worth a try, according to the research in a new report, More Than Shaking A Tin Online, published by the Big Society Network (a kind of charitable special purpose vehicle for the prime minister's big idea). "Giving can happen because it is so easy to do as much as because it is so compelling to do", say the authors. Well, maybe. Yet the greatest success story in the use of the internet and social media to encourage do-gooding teaches a rather different lesson.
Kiva lets you lend $25 (£15) to a named entrepreneur in the developing world through a range of microlending partners. If you get repaid, as is the case for nearly 99% of loans, you can relend the money. As a donor you get to choose where your money goes (I tend to lend to women in Pakistan, a country that I'm particularly interested in) and know what happens to it. In seven years, Kiva has gone from garage startup to an army of 750,000 lenders, who have supported 750,000 borrowers to the tune of $300m.
The secret of Kiva's success is nothing to do with friction (although the website is well-designed and easy to use). It is all about the donor experience. I enjoy the feeling of a personal connection that Kiva offers. It is fun.
The challenge this poses for the charity sector is that harnessing this opportunity means reinventing their operations in a customer-friendly, fun-focused way. Kiva was able to do it because it was a startup. Another big American success story, DonorsChoose, which lets givers fund specific projects posted by teachers in schools in needy US neighbourhoods, is also a startup. They are not rebranded charities with a smart fundraising portal, they are new organisations that have been designed and built to work in a way that meets the expectations of a social media savvy age.
When Bill Gates goes round the world trying to get other billionaires to sign up to his Giving Pledge to commit at least half their fortunes to philanthropy, he thinks that fun is the biggest-selling point. This offends some in the charity world, who think that giving is all about altruistic intent and serious deliberation. But behavioural economics tells us that Gates is probably right - we find it easier to do things we like rather than things we find onerous or a duty.
Giving through a cash machine might be easy, but if we still have to be frogmarched there by our consciences, it's unlikely to make us much more generous. The real opportunity is finding new ways of doing good that give people that they really want, so forget friction and focus on fun.
Michael Green is the co-author, with Matthew Bishop of the Economist, of Philanthrocapitalism: how giving can save the world. He blogs here and tweets as @shepleygreen
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