queer ideas

Fake philanthropy

I've seen one or two fundraising campaigns recently that seem to have taken a strategic leap in a strange direction – they tell people that it gives you a nice feeling when you give to charity.

I can understand the thinking behind the approach. When you speak to donors in order to uncover their motivations, it doesn't take too long to discover that donors really do give because it makes them feel good.

The trouble is, you can't stop there.

You have to dig deeper.

When you do, you'll see that if you give donors even a sniff that they might be giving with selfish aims, it completely destroys the reason to give in the first place.

It happened to Larry David when he gave a very large donation to fund a wing in an environmental resource centre. To thank him, the charity concerned named the wing after him.

However...

His friend, Ted Danson, also donated a wing. But he did it anonymously.

Though it wasn't as anonymous as Larry would like. All of which makes him feel rather uncomfortable...

The web is older and so are (some of) its users

A rather interesting statistical view of the digital landscape in Europe has just been published by comScore.

The report provides insights on content categories, trends in social networking (and the knock-on effects on email and instant messaging), with a great snapshot of what's happening in online advertising, video, search and smartphone use.

Key points worth highlighting (with a nod to the older demographic that tends to interest fundraisers) include:

• The Dutch and the British spend most time online (31.39 and 30.38 hours / month respectively).
• Europeans spend more time on Facebook than any other site.
• As you might imagine, this means social networking and photo sharing are the fastest growing things to do on the web.
• Which also means that social networking has been the main driver in the growth in display advertising.
• Email use is still growing amongst those aged 35 and over (though nowhere near as fast as social networking).
• There seems to be a shifting preference to watch fewer, longer videos online (the average length of a video is now 5.6 minutes).
• Europe-wide, smartphones account for about 30% of the mobile market.
• 28% of European Facebook users are aged over 45...

...but over 36% of LinkedIn users are in the same age group.

With the significantly older (and wealthier) profile of LinkedIn users, it makes me wonder why I hardly ever hear about it as a fundraising medium. It might not be as sexy as Facebook and Twitter, but with the right offer it could be far more successful.

I personally find LinkedIn a great source of information on attitudes to giving amongst higher-value donors. We are just starting to use it to enhance the higher-value DM appeals that we create at Bluefrog. As you can imagine, It's a great way of learning about prospects. But it's useful in a number of other ways too.

If you're new to fundraising on LinkedIn, you might find these tips or this case study useful.

I'd also suggest you download the full paper from comScore (it's available here free of charge but registration is required). You'll also find the 2010 US digital review and the 2010 mobile year in review at the same site.

So what have fundraisers been doing over the last 30 years?

A rather interesting paper has just been published by CGAP and CMPO looking at three decades of charitable giving in the UK.

It's based on a detailed analysis on the main trends in giving that uses the government's Living Costs and Food Survey (which used to be called the Family Expenditure Survey – FES).

The last thirty years have been a period of massive social, technological, political and economic change. And by taking a long-term look back in time we should be better placed to make plans for the current turbulent era and those yet to come.

The full paper (all 64 pages) can be downloaded here, but for those of you too busy to read it yourself, here are a few points that I think are worth highlighting:

The Millennium marked the end of a decline in the proportion of households giving to charity

Back in 1978, the number of households that gave (during a two-week survey period) to charity stood at 32%. It had fallen to 25% by 1999. Over the first eight years of the current decade it averaged at over 28%.

To my mind, that bounce back matches the explosion in face-to-face recruitment and is representative of all those young donors finding their way on to our databases.

Donations have increased

Donors are now giving almost three times as much as they did in 1978.  But the rise in giving over the last twenty years only reflects the growth in GDP.

As a share of total spending, households give just 0.4% – the same as they did in 1988.

All the new charities that have been set up, the new fundraising techniques that have been introduced, the growth in regular giving (up from 36% in 1983 to 63% in 2008) and the impact of the web haven't had that much impact on how much people actually give.

Giving is largely recession-proof

This is something that a number of us who have lived through economic downturns have been highlighting for some time. It's good to see that the statistics support our opinion. As you'll see from this chart, even during the difficult times (marked in red and green), giving has remained strong:

I've posted before that recruitment and subsequent development of new donors can get rather tough when money is tight. Some analysis that I've seen has shown that more donors are just giving a single gift to a charity and simply not responding to subsequent appeals. I'm also hearing of some frightening rates of attrition regarding street fundraising.

And when I look to the future, even with these statistics in mind, I have some real concerns about what will happen over the next twelve months. The number of people who look likely to lose their jobs (particularly older women employed in the public sector) worries me and I will be amazed if we don't see an even more pronounced effect on recruitment. I just hope, that as in the past, our loyal donors will make up the shortfall. Whether they do is probably down to the actions that we take now. But more on that later.

Older donors are becoming even more important

The over 65s now account for 35% of all donations, compared to just 25% in 1978.

One area of particular interest that the report uncovers is the giving behaviour of baby boomers (the youngest tranche of this demographic group is highlighted in grey in the table) whom we first observe when they were in their early twenties and then track right through to their forties. As you'll see, participation grows as they age. That to me is rather good news. A number of people have questioned whether baby boomers will be as generous as their parents and grandparents. The trend indicates that they are (for more on this, please take a few minutes to read the comments to this post).

Affluent donors are giving more

The richest 10% of households now account for 22% of total given (up from 16% in 1978). From 2003 to 2008, the top 50% of households (ranked by donation size) accounted for 92% of all giving. It should be noted that the largest donation observed in the 30 years of data is only £1,500 so it seems very likely that many high-value donors haven't found their way onto the survey. If they were included, the impact of the rich would be even more pronounced.

So what does this mean for those of us fundraising today?

First off, I think we can draw some comfort from the evidence that donors keep giving at times of economic hardship. Though the current recession is particularly tough, I'm confident most donors will remain true to form.

However, qualitative research undertaken by Bluefrog shows that when money becomes tight, donors are likely to focus their giving on favoured causes and organisations.

As a result, charities must concentrate on giving donors what they want – a real understanding of what their giving has achieved and a means of becoming part of the charity rather than just a a source of funds.

This is important for donors of all ages. An ongoing worry of mine is the possible impact a poor relationship might have on donors who are early in their giving lives. A large number of young people recruited on the street are currently cancelling their regular gifts shortly after sign-up. The response of many charities seems to be little more than hoping for the best and expecting the recruitment agency to replace the lost donors as part of a guarantee. Of course, this approach might be effective in the short-term, but what is the long-term impact on how that donor sees the charity when they enter the prime charitable stage of their lives?

Charities should also look at how they treat mid-value donors (those who give between £100 and £5,000). At Bluefrog we've seen that donors in this range respond best to charities who drop the mass marketing approach and concentrate on adding value through increasing relevence and personalisation. The result is a significant increase in income.

Finally, a robust win-back strategy should be developed for donors who lapse. If donors are lost, it doesn't have to be for ever. But winning back should not simply be handed over to a telephone agency. A real relationship is based on hearts and minds, not just repeatedly asking until someone says yes just so they can put down the phone.

How to get a £1 million donation

The Coutts Million Pound Donors Report 2010 has just been published.

It takes a look at the condition of British philanthropy at the very top of the giving scale – which, as you might guess, covers gifts of £1,000,000 and more.

There were just 201 donations of this magnitude made in the 2008/09 financial year, with a pretty healthy combined value of over £1.5 billion.

That doesn't actually mean that money found its way into the hands of charities – half the money recorded was actually 'banked' in foundations for distribution over time. But the remainder was donated, with 58% going to hIgher education and 13% going to arts and culture.

'Traditional' charities didn't do too well. International aid received 5%, human services and welfare generated 4% and environment and animals brought in just 1% of the top-end gifts.

Which got me thinking about what universities, art galleries and theatres have that the rest of the charity sector lacks.

It certainly isn't need. In a matter of life and death, I'm sure that few people would prioritise a painting over saving a child's life.

And it's not like people are falling over themselves to give to universities, theatres, museums and art galleries. A paper published by Arts & Business – Arts Philanthropy: the facts, trends and potential estimates just 1% of the UK population give to arts organisations and the Ross-CASE Survey 2008-9 (that analyses trends in giving to universities and higher education institutes) shows that about 0.26% give to higher education.

The government has actively tried to boost giving to the educational sector. 2008-09 was the first year after the launch of the £200 million three-year matched funding scheme where, depending on the size of the donation, the government would match a donor's gift.

But that isn't enough to account for the large number of super-high gifts these sectors receive.

I'd suggest that one significant issue might be that many people working in the educational and arts sectors are actually used to dealing with very wealthy individuals and, as a result, are very comfortable asking for very large sums. We also need to remember that both sectors can also offer a very special type of recognition.

David Spinonla, Head of Individual Philanthropy at the Royal Opera House, explains how they treat people who donate £1 million or more:

"People who donate £1 million or more to the Royal Opera House are invited to become mebers of the Chairman's Circle and their contribution is also honoured on a glass panel in the Paul Hamlyn Hall, in addition to the supporter acknowledgements already in place within Royal Opera House print and in the foyer.

Royal Opera House philanthropists are offered an exceptionally wide range of opportunities to experience how their support is being put to use. Involvement is closely tailored to the interests of donors, taking account their preferences to specific art forms, artists or practicioners and their existing knowledge and experience. Our Chief Executive, Tony Hall, describes them as "a family", and donors relish the opportunities we offer to meet with artists and senior staff...and to see how productions are put together, from initial designs through to the creation of props and costumes."

It sounds pretty glamorous. Meeting up with stars, watching shows come together and probably the odd party to go to as well.

High value donors to universities are given very special treatment too. Take Oxford University for example. Depending how much you donate, you can be invited to join the Vice-Chancellor's Circle or The Chancellor's Court of Benefactors.

You'll be able to attend dinners, debates, receptions, balls and sporting events. The Court of Benefactors even has a ceremony of admission where you get to wear a rather groovy gown and 'bonnet'. Your name will also be engraved on the Clarenden Arch alongside other great benefactors such as Henry VIII, Elizabeth I and Sir Ernest Oppenheimer. And the most generous benefactors are likely to receive The Sheldon Medal.

It's all a rather long way from what many 'traditional' charities might be able to offer in the way of recognition. For many people, a cup of tea in an office in Islington might struggle to compete with dinner at the High Table or watching La Boheme from the wings.

But there are some things that can be learnt from these massively successful campaigns. And a number of these are spelled out by the author of the Coutts' report, Beth Breeze.

Rather sensibly, she didn't just collect information on income and expenditure. Beth also asked donors and fundraisers to share their top tips on fundraising and she includes them in the report. And here are just a few examples that you might find useful:

"Take your time and ask at the right time. It can take 3 or 4 years before a donor is ready to make a really significant financial commitment."

"Find out what benefits the donor would be pleased to get, as they are not always obvious or that difficult to fulfil. We give one major donor an annual staff car parking pass and he is delighted with it."

"Be prepared to give major donors access to the people within the charity that they want to speak to, including the most senior staff who can talk about strategy and the front-line workers who can explain what is happening on the ground."

"Major donors will rarely ask for formal acknowledgement, like naming opportunities, but they usually appreciate being asked."

"Involve your major donors as much as is appropriate. Million pound gifts come about because someone is passionate about what you do, so give them every opportunity to enjoy their passions."

"The bigger the donation, the more reassurance the donor usually needs. Give them every reason to trust you and believe their money will be well-spent for maximum effect."

What do high value donors actually value?

The 2010 Bank of America / Merill Lynch Study of High Net Worth Philanthropy has just been published.

Though this blog takes the UK fundraising perspective, we can learn a great deal from what's happening in other markets and this series of US studies deserves serious attention on our side of the Atlantic (and elsewhere).

So much of what they report has been remarkably close to what we've found in Bluefrog's qualitative research into higher value donors (you can download a number of our reports free of charge by clicking here or checking out the listing over on the left hand column - you'll need to scroll down the page a little for the links).

The full Bank of America / Merill Lynch report can be downloaded here. You'll also find a detailed synopsis and a twenty minute video outlining the main findings.

But if you are too busy for that, here are my highlights:

Commitment is steady (to favoured charities) but giving has declined

Donors tend to place their charities in a league table and It's important to stay near the top. This study found that just over a third of donors stopped giving to at least one organisation in 2009 (with 27% turning their back on two charities).

The overall average gift amounts fell by 35% in comparison to 2007.

Most (83%) usually give in response to disasters and for more than nine out of ten donors, this gift was in addition to their regular charitable giving.

People want value from their gifts

Knowing that their gift made a difference was top of the list of motivations (there's a clue there for getting to the top of a donor's charity league table). Feeling financially secure came a close second along with knowing that the organisation was efficient in using donations.

Giving is increasingly undertaken by families - not just individuals

I think this is going to be an issue of growing importance. Over two-thirds of those surveyed spoke of the collaborative nature of their decision making. If families give, the recognition should be for the family. Not just the individual.

Special is normal

High value donors are used to special treatment and come to see it as the norm. If you fail to match their expectations you are unlikely to build a lasting relationship. This study found that asking too often and asking for inappropriate amounts were the most likely ways to turn a donor off (59%).

It's blindingly obvious, but there's a simple way to ascertain how often donors want to give and what they see as appropriate levels of support – ask them – either face to face or on the telephone.

Donors like a guaranteed return

Wealthy people may be willing to take a risk with their financial investments, but when it came to their charitable work, just 23% reported high levels of risk tolerance, with 26% being completely risk adverse.

Though some donors may want to fund innovative, risky projects, the majority want their money to fund work with a high chance of success. How do you tell the difference? It's easy. Ask.

In conclusion

In short, these highly valuable supporters want a personal relationship where they retain a level of control over how you communicate with them and how their money is used. By responding to that need, you'll increase your chances of building a long-lasting, mutually beneficial relationship.

Or as one high value donor put it recently...

"You don't have the bargaining power in this relationship. This is a totally voluntary thing. A charitable act...any attempt to force me will get my back up."

Understanding the barriers to giving

Donors don't particularly like to say no to charities.

That's because charities are great. When you give to them, you demonstrate to yourself and others that you are both kind and generous.

But what does refusing to give say about you?

It might be something a little unpleasant. As a result, many donors create emotional 'barriers' to help them deflect any accompanying negative feelings.

At Bluefrog, we've identified three main barriers that any good fundraising strategy needs to tackle if it is to be effective:

• Feeling unable to give
• Thinking that a gift will be ineffective
  
• Feeling unengaged by the charity or the cause.

You can read more about the barriers and how you tackle them here.

I mention them because I've been writing a paper on higher value donors and have found a couple of good pieces of research that will add to our understanding this particular part of the fundraising process.

The first was produced for HMRC by Ipsos Mori and can be downloaded here (PDF).

The second was produced by Barclays Wealth in co-operation with Ledbury Research and can be downloaded here (PDF).

As you'll see, only a third of wealthy people currently donate more than 1% of their net worth to charity.

But both papers identify that this group could give far more – both in terms of time and money – if it wasn't for the barriers that restrict their engagement. The Ipsos Mori paper is particularly interesting as it uncovers a growing desire amongst wealthy donors to retain control over the timing and destination of their donations.

I've also discovered a video that takes a look at a group of very wealthy people discussing why one of them doesn't like giving to charity. You won't necessarily learn much from it, but it will hopefully make you smile.

What can a few billionaires teach you about fundraising?

Bill Gates and Warren Buffett have put together a group of 40 billionaires who have promised to give away at least half their wealth to philanthropic causes.

That's pretty good news. But unless your charity is in line for one of the resulting gifts, you might think that's the end of the story.

You'd be wrong.

Before you get back to putting together your next appeal, can I suggest that you take a quick visit to The Giving Pledge and have a look around. Within a click or two you'll find details of the actual pledges.

When you do, you'll see that Bill and Warren have given us all a rather special gift – a copy of the original letter from each billionaire that explains just why they are giving so much money away.

Stop and think about that for a minute.

Just a click away are 40 letters written by the wealthiest donors in the world explaining just why they give, what they are interested in and what motivates them.

That's a priceless resource.

When you'll read them, you'll see that time after time, what comes over is the joy that people get from giving. Take this quote from Peter G. Peterson, Chair of The Blackstone Group:

"As I watched and learned from my father’s example, I noticed how much pleasure his giving to others gave him.  Indeed, today, I get much more pleasure giving money to what I consider worthwhile causes than making the money in the first place.  As I checked with other philanthropists, I found this was a very common experience."

Or this, from Gerry Lenfest, Chair of the Telvue Corporation:

"One is not measured by how many homes, yachts or airplanes you have. The ultimate achievement in life is how you feel about yourself. And giving your wealth away to have an impact for good does help with that feeling."

Or perhaps, most importantly, this example from Bernard Marcus, co-founder of Home Depot.

"I share this with you because of happiness one can conceive by watching the joys of their work.

I remember very vividly a child that I had seen about a year ago that was severely autistic in my walk through MAC. Someone pointed this child out to me and when he looked at me he went into total hysteria, e.g. screaming, butting his head against the wall, etc. These actions happen with children of these disabilities.

Approximately one year later we were doing a documentary with NBC and I walked into a classroom where the producer asked me to appear with one of the children.

There was this same young man and I was horrified he would have another episode as he had in the past. Instead he came over, sat in my lap and talked! By the way, he had not spoken for the six years of his life before going to MAC.

I cried, the teachers cried, the cameraman cried, and the parents cried. What a blessing this was to have changed one life and to have had such an impact on a life.

I encourage you to always try to see the faces of the recipients you help."

Few of these super-wealthy donors talk about the detail of the causes they fund. Expense ratios, cases for support and brands aren't mentioned at all. Just one donor talks of giving because of guilt.

Instead they concentrate on describing the emotional reaction they have when they see the impact of their giving.

And in that respect they are just like everyone else.

They are normal people who just happen to have massive bank accounts. They have the same motivations to give as the rest of us. The only difference is that their power, their wealth and their influence results in them being able to regularly see the impact of their actions, first hand.

As you read their letters, you'll see stories of involvement and engagement. The writers are not just giving money and walking away. They are staying around for the long-term.

They are building rich and rewarding relationships with the people and causes they are helping.

You can see that they enjoy their giving. And the more they enjoy it, the more they give away – millions of dollars more.

And that brings me to the point of this post. Why can't all donors receive this same level of insight and enjoyment from supporting a charity?

Take a look child sponsorship charities like ActionAid and World Vision and you'll see that providing good feedback to donors on an individual level isn't impossible and it certainly isn't expensive. In fact, the levels of income and donor loyalty that these charities generate demonstrates the complete opposite.

Great feedback raises more money. And donors love it. It doesn't matter if you are giving away ten pounds or tens of millions. What all donors actually want is to see the impact they have had on someone or something's life.

It shouldn't require a billionaire to tell us what we should be doing. But just in case, I've reproduced the pledge from Ronald O. Perelman. Should he every fancy a change in career, I think he might just have a bright future as fundraiser ahead of him.

Why do we treat donors like mushrooms?

YouGov published an interesting piece of research last week looking at attitudes to charity performance.

They found that just 40% of British adults were interested in a grading system (something similar to Charity Navigator in the USA) that would allow potential donors to assess the relative performance of UK charities.

That's a surprisingly small number of people.

Particularly when you take into account the fact that the same survey found 68% of people would transfer their donations away from a charity if they discovered it was performing badly.

On the surface, It's all a little confusing. Martin Brookes of New Philanthropy Capital muses that donors might think they have enough information already or that they don't actually want any more insight into how their gifts are spent.

As he rightly points out in his recent blog post, it would be surprising if donors feel they have enough information as...

"The quality of information provided by charities about their work and, crucially, their impact is poor".

Which leaves us looking at the alternative and wondering why donors might not want any more information?

I think the answer is that donors have learnt that when it comes to charities, they expect to be treated a little like mushrooms – left in the dark and fed on manure.

As a result, their expectations are rather low. And we shouldn't be surprised that their thoughts often match their surroundings.

I wrote about some nfpSynergy research a few months back that asked donors to estimate how much charities spent on support costs. The answer was shocking – donors thought that an average of 40% of income was spent on admin and 35% was spent on fundraising. That leaves just 25% left over to fund the work the donor actually cares about.

Understand this and you start to appreciate the real reason why donors don't seem to be clamoring for a grading system. I suspect that they feel that they might discover some upsetting facts...

1. That their gifts might not count for much.
2.  That they will have made the wrong decisions about which charity to give to.

In the commercial world, this type of emotion is well understood. It's called cognitive dissonance.  After spending a significant sum on a new car for example, people worry if they have made the right decision. That causes a feeling of discomfort that they want to reduce. It's why many advertisements for high ticket items are aimed at current owners.

It's exactly the same for gifts to charities. A site that might make you feel a twit is hardly going to be something that you'll be making a bee-line to on launch date, particularly if at the back of your mind you think you might have made a poor decision.

Take some of the other findings uncovered by the research – 68% of people think that a charity grading system wouldn't affect their giving behaviour even though 42% of respondents state knowing the results achieved by a charity influences their decision to donate.

It all points to people wanting to believe their decisions have been the right ones. I haven't seen the full set of research tables but I'd bet it's younger people who make up the bulk of people in favour of charity grading as they haven't got decades of charity decisions to justify to themselves.

I'd also expect to see a fair number of ABs in favour too. The larger the gift, the greater the potential for negative emotion should something go wrong.

It's something we've often seen in Bluefrog's qualitative research amongst high net worth individuals and legators – particularly when they don't have an emotional commitment to a specific charity.

When they are considering a large gift and have decided on which cause they want to support, efficiency and amount spent on administration are the two most important factors used to select which organisation they will give to.

But as with most other donors, they revert to the norm when it comes to small gifts. Just like everyone else, their giving can be very much on a whim.

Our goal as fundraisers is to turn the whims (and solid reasons) that bring donors into contact with our charities into ongoing commitment. We don't do that by having a cool brand or rolling out a string of appeals punctuated with poorly constructed newsletters that talk about the values and general approach of the charity.

We do it by demonstrating the impact of the donor's gift. This is the only way that we can make giving relevant, engaging and fulfilling. And luckily, it's also happens to be a pretty good way for donors to judge us as well.

Update: The research is also discussed on Tactical Philanthropy. The comments there are also worth reading.

Photo credit: Cyanocorax

Engaging entrepreneurial donors with creative thinking

Many years ago, whilst working for the YMCA, we created a very successful donor recruitment and development campaign. The only trouble was that we didn't have enough cash to realise it's full potential.

Rather than just sighing and waiting for the next financial year, my boss at the time, Charles Donington, decided to speak to one of the more forward thinking trusts that regularly supported our work.

The result was a six figure grant to help fund our fledgling direct mail programme, thousands of new donors and, within a relatively short space of time, a level of income that put the original grant into the shade.

It's always frustrated me that I've not seen much evidence of this sort of innovative thinking being repeated.

But a recent report from The Social Investment Consultancy shows that such an approach might be more welcome amongst funders than many charities might realise.

Financing Revenue Generation in the Third Sector, investigates attitudes amongst high net worth individuals to funding revenue generating activities.

44% of the 476 people polled said they would be more likely to give to a charity that would use funding for revenue generating activities that would make it financially self-sufficient.

At the YMCA, this approach enabled us to significantly speed up our supporter recruitment programme, but this report suggests than any charity involved in independent revenue generation should consider asking donors to help expand this area of work.

Many entrepreneurs are excited by creative approaches to charitible activities and would welcome working more closely with the third sector. It's perhaps best summed up by Sir Richard Branson...

"It's so exciting to see the growing opportunity for charities and donors to work together to create new entrepreneurial approaches to help drive the scale of change we need in the world."

The full report can be downloaded here.

What would make a donor give more to charity?

Back in 2006, a Bank of America / Indiana University study looking at the charitable motivations of high net-worth individuals identified a very simple fact.

It's a fact that at Bluefrog, we see time and time again in our research.

When donors are asked what would motivate them to give more, few talk about the attraction of an organisational brand, shared values or knowing more about the goals of a charity.

What is important is that they know the charity is using funds efficiently and effectively. Usually phrased in 'donor speak' as an organisation having 'low administration costs'.

Just behind, is the desire to determine what impact their gift makes. Donors want to know what their £100 or $100 has actually helped achieve.

It's a distinction around the concept of responsibility that more charities would do well to emphasise.

Though the charity is responsible for effective use of the donation, the donor is responsible for the life that is changed.

The more we recognise this simple fact and demonstrate it to our donors, the more money we will raise.