Our Weirdly Wired BrainsThe Neuroscience of Grantmaking & Giving

Tony Macklin, CAP®

for Indiana Philanthropy Alliance, June 2016

“Humans are to thinking as cats are to swimming – we can do it when we have to, but we’d much prefer not to.”

Daniel Kahneman

Graphic by Upfront Analytics

System 2 tires easily

Uncovering Our Mental Shortcuts

Quiz

Answer the three questions on your own – don’t overthink it

Discuss your answers with your peers

I.

Q8: Loss Aversion or “Endowment Effect”

• We dislike losses more than equivalent gains

• Same gamble, same result, but different words

We’re bad

at assigning

value & risk

I.

Q14: Risk Aversion

Prefer an assured result over a favorable gamble with same or slightly higher result

Q18: Sunk Cost Fallacy

Place undue significance on previous decisions

We’re bad

at assigning

value & risk

II.

Overconfidence

• “Curse of expertise”

• Too much faith in our own knowledge

Fundamental Attribution

Over-emphasize personality traits, abilities, motives over external situational factors

We believe

ourselves too

much

III.

Anchoring Bias

“first impression” bias - fixate on initial information

Confirmation Bias

Seek info confirming existing beliefs, downplay info refuting them

• Worse with experts

• More data = backfire

We misinterpret

and limit

information

IV.

Groupthink

“Bandwagon effect” – desire for harmony outweighs realistic appraisal of alternatives

Reputation Risk

Decision will damage standing with friends, peers, higher-ups

We overly rely

on social cues

Self ReflectionIdentify the hidden biases in your grantmaking or scholarship program

Countering Our Mental Shortcuts

I.

Check Yourself

• Built in time for quiet reflection?

• Purposefully sought evidence that disproves an idea or shows something isn’t working?

• Purposefully tapped a range of sources, many angles?

• Assume current options off the table. Then what?

Individual

Decision-Making

I.

Find an accountability buddy or trusted challenger

Individual

Decision-Making

II.

The People

• Devil’s advocate or trusted challenger role

• Observer or group dynamics role

• Broader range of perspectives, including “outsiders” and clients/customers

• Rotate positions more often

Group

Decision-Making

II.

The Process

• Pre-mortems

• Successive “if-then” or “why” statements

• Present 3 possible pathways of action, encourage real dialogue

• Blind reviews

• Delphi method & ladder of inference

Group

Decision-Making

III.

Scenario planning with grantees

Risk conversation with grantees

Collaborative learning agendas

Allow for course correction, exploration of alternatives, failure

Implementation

The 4 “A’s” Triggering & Reinforcing Generosity

Warm Glow Theory

Anchoring – amounts I

can relate to

Part of something bigger

I. Aspiration

Storytelling:

Lead with emotion

Benefit to one

Relatable situation

$ believably = change

Shareable

II. Association

Beneficiary striving and self-efficacy

Donor as hero

Donor choice

III. Agency

Integrity, trustworthiness, transparency

“Wise use” may not = “no risk”

Donor-Centered Fundraising

IV. Assurance

What are you going to change back at the office?