Sunday, August 8, 2010

A Philanthropic Forecast

Penelope Burk has released “The Cygnus Donor Survey, Where Philanthropy is Headed in 2010.” As is the case with everything Penelope produces, this report is full of interesting and useful information.

For instance, the report sheds light on an intriguing correlation between age and the number of non profits one supports. “The percentage of donors over 65 who supported sixteen charities or more in 2009 is double that of donors between 35 and 64 years of age and forty times that of respondents under the age of 35.” the survey says “Young and middle‐aged donors confirmed their growing preference for supporting fewer causes, which should be noted by not‐for‐profits that rely on volume of donors rather than on gift value for their profitability.”

Other donor trends noted by Burk include: “a preference for giving to charities that provide donors with measurable results (69%); eliminating or reducing support to not‐for‐ profits that over‐solicit (67%); a greater tendency to take cost‐per‐dollar raised into account when making giving decisions (65%); shifting more support to charities working locally (43%); and supporting fewer causes (41%). Additionally, 59% of respondents said they now do more research prior to supporting a charity for the first time, which speaks to donors' growing independence in managing their philanthropy.” These trends, corroborated by other survey, make it clear that philanthropy-seeking organizations will have to work on what I call the the C’s -- Cost containment, a compelling Case, and being more closely Connected to the concerns of their key constituents.

In terms of future giving, the Cygnus survey says donors will hold the line in 2010, “with the majority reporting that they will support the same number of charities with gifts of the same value as they gave in 2009. Only 8% of typical donors plan to give less in 2010, which compares favorably with 17.5% who responded this way in last year's survey.” Again, this comports with other analyses I’ve seen and seems to suggest that the recent survey done by CASE, in which respondents projected increases of four to five percent over last year, is overly optimistic. I hope my assessment of those numbers is wrong but, so far, I haven’t seen any evidence of a that suggest a turnaround.

“On the flip side,” the Cygnus survey says, “charities who have seen their donor numbers and fundraising revenue drop during the recession will not likely see those numbers bounce back immediately. Among select donors, 11% intend to give less in 2010, and among the top 10% of select donors (by 2009 total gift value), the percentage rises to 17%. Even a small downturn in giving among these very generous donors can have a substantial impact on overall fundraising performance.”

The report does offer an encouraging word by noting, “An opportunity to build support exists across the respondent group but especially among donors under the age of 35, with 39% indicating that they plan to give more in 2010. They referenced healthy household incomes, were less likely to be supporting children or aging parents, and were more optimistic about the future. When asked, "Could you be inspired to give more generously than you had planned this year?", 81% of younger donors said yes vs 71% for older donors.” In addition, the report stresses that young donors’ lower gift values are not indicative of their “real current and future potential.” That potential is not being realized “due to fundraising design which is more passive (waits for donors to give at above‐average levels before offering meaningful stewardship), than active (offers meaningful stewardship first in order to inspire more generous giving).”

Remarkably, “72% of respondents in the Cygnus Donor Survey said they could be inspired to give more generously this year. When asked how this could be achieved, the response most often given by donors over the age of 35 was "Do not ask me to give so frequently". Donors under 35 said, "Explain what you intend to do with the money when asking me to give". For years, even well before the current economic contraction, Burk’s research has demonstrated the adverse impact of asking donors too often. The findings are consistent and convincing, yet too many continue to ask, ask, ask with too little explanation of how the money will be used.

“The predominant themes that emerged from unsolicited comments are,” Burk says, unfortunately, negative in nature. They are concerned with unwanted token gifts (premiums) that donors receive either after they give or as incentives to contribute, lack of results or specific information on how donations have been applied or will be used, and over‐solicitation. Despite their concerns, however, donors remain firmly committed to philanthropy, even while continuing to contend with a struggling economy.”

Some of the unsolicited comments she cites, presumably because they are representative, include:

“I do see that the nonprofits I support are offering more information to donors relating to accountability and transparency. This is a good direction. Though best practices in the sector are nascent, they are emerging. Relevance and effectiveness are high on my list of things for which I seek accountability from the organizations I support financially.”

“People need a reason to give. Saying, "Give me money and I will do good things", is not enough. People need to know where their money is going and how it will help.”

“I volunteer (for Women International) and donate to them as well. The fact that they have an outlet for me to volunteer makes me feel closer to the organization, and thus more likely to continue giving long‐ term.”

There you go. Donors continue to show us the way. We need only to listen and respond. It really is that simple.

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