Characterizing Donors and Motivations for Giving
April 22, 2013
I recently read a report prepared by a group Hope Consulting – “Money for Good II” which researched factors motivating donor preferences for supporting financially a charitable organization. The motivation for the research was to gain a deeper understanding of the ‘voice of the customer’ for charitable giving – what drives an individual, or a granting organization to decide to financially support an organization. What type of information is key to the decision making process?
It is an interesting read – you can delve into detailed research findings, or scroll through the summary findings. I liked the way the report characterized donors into six segments:
¢ Repayer :
|“ I give to my alma mater, I support organizations that have had an impact on me or on a loved one” 23% of donors|
|¢ Casual Giver :||
“ I give to well-known nonprofits because it isn’t very complicated” 18% of donors
|¢ High Impact :||
“ I support causes that seem overlooked, I give to nonprofits I feel are doing the most good” 16% of donors
|¢ Faith Based:||“ We give to our church, we only give to organizations that fit with our religious beliefs” 16% of donors|
|¢ See the Difference :||
“I think it is important to support local charities, I give to small organizations where I feel I can make a difference” 13% of donors
|¢ Personal Ties:||
“ I give where I am familiar with the people who run the organization” 14% of donors
Overall and not a surprise, a key driver for a donation is ‘caring deeply about the cause’ – 35% of donors. Generally donors are not highly motivated by maximizing social impact. Few donors ever research a charity before making an initial donation. When research is undertaken about a not for profit, it is more to confirm the ‘acceptability’ of the organization, and not on finding organizations that are ‘best in class’. Individuals and granting organizations begin to differ in behavior in some respects – individuals want to support organizations which make good use of their dollars. They care about legitimacy, respect and where the funds are going. Granting organizations differ in that they seek to maximize impact and find the most ‘effective’ organizations. A high premium is placed on effectiveness and impact of their grant. Granting organizations research almost every grant and have a high need for comprehensive information about the organization – they are ‘information hungry’. Any arts organization applying for grants know this well….
All groups tend to be loyal with their giving – repeated donations to organizations they develop a relationship with. All donors would like financial information from the organization they support, followed by information on the effectiveness of programs. It appears that information describing effectiveness of programs represents an ‘unmet’ need, or opportunity. This is an opportunity for not-for-profit to enhance their reporting in order to attract additional or increased support. An interesting comment was made on the role of advisors – the report suggests that advisors tend not to advise clients on where to donate. When you consider that most financial advisors want to be involved in every aspect of a client’s financial affairs, it is interesting that this is an area where they are less involved.
The implications of the research suggest that not for profit organizations can be more responsive to donors by:
- Improving information, particularly on the impact of programs, charitable activity
- Provide information in more detail, following a ‘consumer reports’ style format
- ‘Push’ information to where people look for it today – people rarely ‘shop’ for a charity – websites/forms of solicitation to build awareness
- Adapt constantly – always try new things
The report did not break out the not for profit sector, it would be interesting to see if the general results change at all for arts organizations.
For more detailed information, you can access the report here.