How Elon Musk Could Get You More Donors

Photo by  Steve Jurvetson

With a few minutes to spare, I was looking for a last minute gift for a friend and decided they'd love a donation made in their name. I picked a favorite nonprofit of ours here in Chicago, went to their website, clicked Donate, then, saw I needed to complete at least 28 form fields to make a donation.

So, I typed in a new URL. I filled 8 form fields. I was done.

I've been building websites since 1999, and one of the things I see over and over again are lost opportunities like this.

A huge culprit and opportunity for improvement? An organization's forms. Why do they get so large?

First, let me quickly tell you a story about batteries.

Batteries are expensive. When Elon Musk was in the market for batteries to power his first Tesla, he was told that the cost of batteries had reached a limit of about $600 per kilowatt hour (kWh) and things weren't going to improve past that limit. Afterall, that's what everyone else in the industry sees as the limit in battery technology.

But Elon knows a thing or two about the human condition. For example, he knows we're pattern matching machines. We do X because we saw someone else do X. Or we do Y because we did something a lot like Y before.

If we didn't live this way, it would be impossible to grow up. You'd have to learn everything from scratch rather than watching your parents. Or you couldn't leave the house. If you ever encountered a door, you'd have to relearn all over again how to turn a new doorknob you hadn't seen before.

The problem though with pattern matching is that while it's wonderful for efficient learning, it isn't always ripe for innovation. We get stuck with what we've seen someone else has do.

So when it came to these batteries, Elon recognized the trap of pattern matching. He instead forced himself to use first principles thinking, where he'd go to the absolute truths he knew about the problem and work up from there.

For example, without discovering a completely new kind of battery chemistry, batteries are made of cobalt, nickel, aluminum, and carbon. There's some polymers used as a separator between the anode and cathode, and everything is contained in some kind of container.

If you take that list of materials to a metal exchange, they can tell you exactly how much cobalt, nickel, etc. would cost you. That battery then is about $80/kWh. That's the limit of today's battery chemistry, not $600/kWH. We weren't close to achieving what could be done with batteries, which lead Elon to intelligently invest in making better batteries.

On November 20, 2018, Financial Times reported that Elon Musk's batteries were now being made for $111/kWh and was on track to reach $100/kWH by the end of the year.

Elon Musk is a stunning example of the power of first principles thinking.

Elon is also inspirational when it comes to thinking about even the small, but incredibly important details, of optimizing donations on a website.

Far too many organizations rely on pattern matching what other organizations do in their field.

I wish Watsi's dedication to optimization, testing, donation funnel analysis, etc. was the norm, but it's an outlier. A quick survey of my favorite nonprofits' forms show their saddling donors with dozens and dozens of form fields to fill out before they can make a contribution.

Many of those extra form fields are for full addresses. Billing, Mailing, even the Mailing address of my friend.

Now, I recognize that there are laws in place to identify donors and how much they've contributed to the IRS. It's the law! But if we apply some first principles thinking and read the letter of the law for nonprofits:

26 U.S. Code § 6033 - Returns by exempt organizations

Every organization described in section 501(c)(3) which is subject to the requirements of subsection (a) shall furnish annually information, at such time and in such manner as the Secretary may by forms or regulations prescribe, setting forth—

the total of the contributions and gifts received by it during the year, and the names and addresses of all substantial contributors

Substantial contributors is defined as:

A substantial contributor includes any per­son who contributed or bequeathed a total amount of more than $5,000 to the private foun­dation if the amount is more than two percent of the total contributions and bequests received by the foundation from its creation up through the close of the tax year of the foundation in which the contribution or bequest is received from that person.

One could surmise, you may only need someones address for the IRS if that person contributes more than $5000 AND that amount is more than 2% of your total contributions since your organization was started! That's a high bar for needing to collect an address. Potentially, you could save dozens of fields.

Now, there are other legal hurdles, for example, a state's guidelines on soliciting donations from within their state. You need to know where people are donating from so you can register your organization there. But this hurdle might be accomplished with a Zip code captured not entire addresses.

But please be aware, I'm not giving you legal or accounting advice. We aren't lawyers or accountants. You should absolutely consult with a lawyer or accountant for their advice on this topic.

And there's likely many other reasons why someone would still need address fields. For example, many nonprofits make very little online. Their direct mail outreach is what makes the impact.

What I do want to point out is that there are plenty of nonprofit organizations pattern matching on other organizations, without understanding how that original organization arrived at doing what they do. There are many organizations that haven't consulted with a lawyer to try and improve their conversion rates because lawyers are expensive! (Ugh, believe me. I know.)

But, many of us, myself included, could benefit from a little more first principles thinking. Maybe an 8 field form could replace a 28 field form, if we made sure we had our legal obligations fulfilled with our counsel. And just maybe after those kinds of optimizations you could see things like a 500% improvement on conversions like we've even seen with our own organizations. And when you see huge improvements in conversion rates like that, spending a few hours of time with your lawyer going over IRS law doesn't sound so expensive anymore.

P.S. Hope you've enjoyed the article! Stay tuned for the next, which will cover even more concrete ideas on optimizing online donations.

And would you like a free marketing design review?

I've been optimizing web designs for over a decade. A couple recent examples, improving the Highrise conversion rate 35% and the conversion rate of Rockstar 500%. Here's a great example of the review I've done for others: Markd.

Happy to look over your site for free. Please reach out. (As long as slots are open. My free website review queue can get oversubscribed.)

Nathan Kontny is the CTO of GoodFolk. Previously: CEO of Highrise, 2 time Y Combinator alum, created Draft. You should follow him on YouTube: here.