Donors Basically Donate For the Same Reason … NOT!!!

Recently a nonprofit leader expressed anxiety regarding a decrease in donations. When I asked what he thought the problem might be his response was “If we did a better job letting donors know what we need we would have more success in fundraising!” A typical answer. Certainly this is a helpful communication point with donors. But believing that communicating organizational need will significantly enhance fundraising will not guarantee success. Why? Because the communication focuses on the nonprofits’s needs and not the donor’s interests. Fundraising success requires a focus on donor’s desires and interests.

As a caveat regarding this point we must dispel any idea that donors as a group will be motivated to give because of one specific factor. This simplifies the fundraising task by objectifying donors and reducing them into a caricature.  Donors are, like all people, unique individuals. Each person’s background, personality and interests are a mixture of intrinsic and extrinsic social and psychological factors. They donate for a multitude of reasons and often these reasons can change.

Given the multivariate nature of donor motivation the best one can say regarding donor motivation is that donor’s charitable behavior is typically the result of their values. Values are quite simply what one considers or believes is important. And it is not merely our words but also our behavior which are the best indication of our values. Therefore sensitivity to a donor’s charitable drive requires nonprofits to first clarify what donor’s value. Why? Because in the nonprofit/donor transaction the donor typically gives (an action) in exchange for positive personal, social, and psychological return (a mental/emotional state). The act of giving and the return desired is connected to a donor’s values.  Values drive their behavior and behavior affirms their values. This personal “exchange channel” requires that nonprofits listen and observe carefully their donors and their donor community. By listening and observing a nonprofit can discover what donors value. The task then becomes connecting the donor’s values with the nonprofit’s values. Of course this strategy implies a nonprofit must:

  • Understand what its values are,
  • Use value-based language in its fundraising work,
  • Accept the fact that not all donor’s values will mesh with the nonprofit’s values, and
  • Recognize that a single issue cookie-cutter strategy rarely achieves maximum effectiveness in securing support.

Finally because donors give out of a mixture of values their giving is not always the result of one specific value. For example, a donor may give because she values belonging and justice. Her gift helps affirm, intellectually and emotionally, her values. Making sure this donor feels personally connected to your organization and is furthering justice through her gift is vital in helping fulfill these values. However this may differ for other donor’s.

The bottom line: If a nonprofit wants to increase its fundraising efficiency it must have clarity regarding its values and develop a fundraising strategy that maximally matches its values with its donor’s values.  This is the core task and responsibility of nonprofit fundraising. This helps achieve the nonprofit’s business purpose — meeting unmet human need by maximizing an effective value exchange between  their organization’s clients and donors.

JRR

 

 

Chartable Giving Is Increasing…NOT!!!

This sadly is not true. While press reports may communicate that total charitable giving has increased over the previous measured period this is only the result of the growing US population and income. But when measured as a part of the US economy’s total expenditures the percentage of charitable giving has stayed the same over the last half century. Gross domestic product (GDP) is the standard economic measure used to determine expenditures and output. This measure includes consumer spending. Charitable giving has consistently hovered at 2% of GDP. The fraction of income we give away has not increased.

Over this time period however the number of nonprofits has grown dramatically. By the end of the 1960s there were approximately 132,000 nonprofit organizations registered with the IRS. As of 2016 there are over 1.5 million tax exempt organizations registered as nonprofits. Over 86,000 were added in 2015, and almost 80,000 in 2016. Indeed, since the 1980s the number of registered nonprofits has grown almost tenfold! The 1.5 million number does not include the great majority of religious congregations, approximately 350,000, and nonprofits with less than $5,000 in revenue. Neither of these two categories are required to file tax returns and/or register with the IRS.

The bottom line: Increased demand for donations is competing for a static percentage of giving to the nonprofit sector. Bottom-bottom line: To increase market share the nonprofit sector must change the way it does business including more investment in marketing, more innovation, better fundraising education and training, and a focus on impacts/outcome as an important component of effectiveness. Nonprofits need to operate as a businesses including changing many of the misperceptions about the sector found in this blog.

JRR