rob's favorites 175.jpg •Who Donates •Motivations for Donating •Donor Profiles •Prospect Research •Trends in Fundraising • • ¡ So if we are competing for these fundraising dollars, it only makes sense that we have a good understanding of who these donors are and what is going to motivate them to give to our cause. What,then, do we know about who donates: on an international basis, in the Czech Republic and in the U.S.? ¡A True/False Quiz ¡About 7 in 10 adults in the U.S. give away money. ¡Middle and lower income donors are responsible for a significant percentage of the money given – from 50-80% -- and are the majority of givers. ¡Most people who give to nonprofits give to at least 5 and as many as 15 groups. ¡About 20% of people on welfare give away money and about 97% of millionaires give away money. ¡Volunteers are more likely to be donors than people who don’t volunteer. ¡More people give away money than vote. ¡Most people who give away money describe themselves as religious or spiritual. ¡PEOPLE GIVE WHEN THEY ARE ASKED!!! ¡People give to people § Social relationship between donor and recipient People give to people. Giving and getting is a social relationship involving interaction between donors and recipients. Agency Prospect Psychological and social: Self-esteem, achievement, purpose, status, group endeavor, power Need Resources: dollars and time Satisfactions Blau talks about it as a transaction between the givers and the recipients triggered by an argument of a case for support. The result is social exchange. There must be some kind of integrative relationship between the agency and the prospect that deals with status, identity, community, legitimacy, loyalty, benevolence and so on. The gift to the agency provides the donor some return in the form of status, recognition or some subtle psychological transfer. The diagrams shows the charitable organization presenting client needs and services to a prospect along with a request for funds. The manner of presentation varies from an impersonal media message to face to face solicitation. If the request is favorably received, the prospect responds with a donation of funds/time. To continue the relationship, the recipient provides some form of satisfaction to the donor. This may be as simple as a thank-you letter or as complex as naming a building after them. The essence of what is returned to the donor is not a commodity or service that can used profitably by the giver, but an intangible, psychic satisfaction that relates to donor’s personal motivations. Giving satisfies donors’ fundamental human needs and desires. ¡The Samaritan’s Dilemma ¡The Prisoner’s Dilemma ¡The Free-Rider Problem Other theories may explain the nature of this relationship as well: ¡ Values that affect philanthropy include: ¡ •Philanthropic motivation •Concern about effects of wealth on heirs •Desire to control access to wealth by succeeding generations •Desire to create a legacy •Sense of moral or legal obligation ¡ ¡ ¡ ¡ ¡ ¡ §Should help those in need §Feeling of personal satisfaction §Desire to give something back §Meet request of personal friend/associate §Ensure continuation of services §Serve as example to others §Fulfill community obligation §Memorial §Tax deduction §Meet request of employer ¡Personal Factors §Self-esteem §Achievement §Growth §Cognitive interest §Guilt reduction §Meaning of life §Personal gain/benefit §Spirituality §Immortality §Survival ¡Social Factors §Status §Affiliation §Altruism §Power §Group endeavor §Family ¡Negative Factors §Frustration §Insecurity §Fear and anxiety §Unknown situations Other research has found that people give for a mixture of personal, social and even negative consequence reasons. The negative factors are particularly interesting: some people give because they get frustrated with either the ask or with the inability to make progress in impacting the problem; others give out of insecurity (over status, relationships, legacy), some give out of fear and anxiety (I should give because if I do so, I won’t need this kind of help or it will be there when I need it) or because of unknown situations (is it an expectation, what am I dealing with here?) Family reasons are also interesting – legacy/tradition of family, commitments made, family members have benefitted, etc. ¡Rewards §Recognition §Personal §Social ¡Stimulations §Human needs §Personal request §Vision §Private initiative §Efficiency and effectiveness §Tax Deductions § ¡Situations §Personal involvement §Planning and decision-making §Peer pressure §Networks §Family involvement §Culture §Tradition §Role identity §Disposable Income They may also give because of the intrinsic rewards they expect to realize. Or simply because there was some stimulus that prompted an almost automatic giving response (one time givers), or because the situation is just right for giving. The point of all this is that as a development person, or someone engaged in serious fundraising, it is your job to identify at least for your major donors with whom you want to cultivate serious giving relationships, what it is that motivates their giving and appeal to them on that basis. ¡The communitarian ¡The devout ¡The investor ¡The socialite ¡The altruist ¡The repayer ¡The dynast Price and Filer wrote a great book in the mid 1990’s that looked at common profiles of donors- entitled the Seven Faces of Philanthropy. It studied more than 800 individuals in the U.S. who were regular donors to some cause and developed seven basic profiles of donors: The communitarians: Doing Good Makes Sense (26.3%); local business owners find that service on boards can good for their own businesses. The Devout: Doing Good is God’s Will (20.9%); it is God’s will for them to help others. The Investor: Doing Good is Good Investment (15.3%) There are benefits in terms of personal tax and estate and personal wealth consequences. The Socialite: Doing Good is Fun (10.8%) – Makes a better world and they have a good time doing it. The Altruist: Doing Good Feels Right (9%) Give because they believe it is a moral imperative and because it helps them grow as human beings or evolve spiritually. The Repayer: Doing Good in Return (10.2%) To pay back for services they formerly received. The Dynast: Doing Good is a family tradition (8.3%) Giving is something their family has always stood for. ¡In the Czech Republic, fifty-three percent of households made no financial or material donation in 2006. ¡In the U.S., twenty-eight percent of households do not give to any cause or purpose. C:\Users\Rob\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\8MB0504Z\MP900289930[1].jpg In the U.S. 28% of all households do not give to any cause or purpose. Why not? Further 69 million households give the majority of their contributions to religious organizations. Why not? Many households are simply not asked because assumed that their incomes are insufficient to give. Other reasons: lack of money, lack of trust or knowledge of charity/cause, charity’s misuse of funds, lack of similar beliefs, fundraising tactics, no personal interest, higher priorities, etc. ¡Inadequate financial resources ¡Lack of trust ¡No support for cause ¡Other priorities ¡Fundraising tactics ¡ ¡ ¡Not Asked!!!! ¡ Determining: PROSPECT RESEARCH nBasic Principles: vSystem for research that begins with determining internal and external constituents vProcess is cumulative and on-going vConfidentiality, accuracy timeliness of data is critical vProspect identification is the responsibility of board and directors n What should begin to be clear with capital campaigns is that we are dealing with a different type of donor – one that has the capability to give at a substantial level, has different expectations about the use of his/her gift, that takes longer to cultivate and that we hope has an affinity to our organization. How do we find these people? We find them through an important activity called prospect research – in big nonprofits, they have whole work groups or at least a few individual, who are solely dedicated to the task of prospect research. What is it? It’s the p ¡Board members ¡Staff ¡Volunteers ¡Friends, relatives, neighbors ¡Directories ¡Donor get a donor ¡Clubs (Rotary, Lions etc) ¡Professions/trade unions ¡Mail order buyers ¡Subscribers ¡Buy a list ¡List swapping ¡ ¡Reluctance of Board of Directors ¡No experienced fundraising vendor partners ¡No colleagues with experience to draw upon ¡No lists of donors to other organizations ¡Few, if any, good prospect lists available ¡Prospects not accustomed to giving ¡Major infrastructure and cultural challenges ¡“Rich men should be thankful for one inestimable boon. They have it in their power during their lives to busy themselves in organizing benefactions from which the masses of their fellows will derive lasting advantage, and thus dignify their own lives.” Andrew Carnegie was a noted philanthropist in the U.S. – a legendary steel tycomon who really crafted much of the early thinking in the U.S. about the obligations of the wealthy to give in charitable ways. He asserted that all personal wealth beyond a family’s needs should be regarded as a trust fund for the benefit of the community. Be believed that the money should be given during the benefactor’s lifetime to ensure that it accomplished the maximum good. You can go to many small towns throughout the U.S. and see Carnegie’s charitable legacy. Invariably the town library will have been constructed from funds given by Carnegie and you will see imprinted in stone above the front door his last name as designation of his gift. This summarizes his thoughts. ¡Professional training ¡Ethical standards ¡Business relationships ¡Valuable products and outcomes ¡Sophisticated tactics and resources ¡Movement beyond volunteer origins ¡Societal contributions ¡ C:\Users\Julie\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\880LLQPA\MP910220897[1].jpg ¡Be committed – personally ¡Be confident of the purpose and value of work ¡Understand that you are giving an opportunity to do something rewarding ¡Understand that philanthropy will happen C:\Users\Julie\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\IAIH7XO0\MP900427740[1].jpg ¡Regulations ¡Professional associations ¡Education/training ¡Testing and professional designations ¡ C:\Users\Rob\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\7PMG2LH5\MP900438566[1].jpg In the U.S., we have seen much progress in the area of development since Carnegie’s days. Today, we regulate how charitable work and fundraising are carried out – this after recognition that there were many organizations claiming to be charities and getting tax exemption status and other benefits of being charitable that they really didn’t deserve. They weren’t really charities – or very little of the ;many raised was going to a credible charitable cause. Also, regulations have been crafted that better protect the donor and assure that donors can give with assurance about the use of their gifts. We’ve also seen the field of fundraising become more of a profession. Today we have the American Association of Fundraising Professionals which has objectives of guiding fundraising into greater professionalism, setting ethical standards, encouraging exchange of ideas and discussions of experiences between agencies and building communications. We’ve seen a maturing of the philanthropic process. Many universities in the U.S. now offer degrees in nonprofit management with a key course requirement focused on fundraising practice. Professional designations have been established to indicate certification and mastery of fundraising practice. ¡Growth of nonprofits ¡Transfer of wealth ¡Changes in regulatory treatment ¡Internet use to raise funds ¡Commercialization of nonprofits ¡Competition from for-profits ¡Professionalization ¡Changing face of volunteerism What are some of the trends that are impacting capacity building and fundraising for nonprofits. Growth of nonprofit sector internationally has been phenomenal. Today the number is as compared to in 2000. This means that you have an increased number of causes competing for donative dollars that have not kept pace. The forthcoming transfer of wealth (from all adults alive today to heirs, charities, taxes and other recipients) for the period from 1998 to 2052 will be between $41 trillion and $136 trillion. Charitable organizations around the world must be included among the designated beneficiaries of some of this extraordinary sum. Changes in regulatory treatment. Increased scrutiny about nonprofit status. How gifts are solicited, whether causes are really charitable, accurate reporting of gifts, financials, quality of service, etc. Increased use of the internet to raise funds. Information technology is changing face of philanthropy. The fundraising marketplace is global, immediate, and timely. Commercialization of the nonprofit sector. Movement into areas that have traditionally been purview of for-profits. Imposition of fee structures. Will these business activities diminish charitable images and affect fundraising? Will clients suffer with change in emphasis? Competition from for-profit organizations. The trend toward privatization of human service delivery systems weakens the bond between private donors and charities. For-profit trend is being stimulated through governmental regulations and financial incentives. Private firms competing with charities include art galleries, clinics, fitness centers, nursing homes, schools and training services. For-profits cream skin. Professionalization of fundraising function – nsfre certification. Changing face of volunteerism. Levels and types of involvement changing – two career families. People want to see impact of gifts ¡Focus on outcomes ¡Recession and economic conditions ¡Devolution ¡Strategic partnerships ¡Ethics oversight Focus on outcomes – led by foundations and corporations which want nonprofits to prove that programs that hey help support are changing lives and world. Return on investment. Recession and economic conditions – Recession has increased the social problems demanding attention and resources. Homeless families and individuals, acute low-income housing shortages and rising crime rates have become center-stage issues. Lower tax revenues from reduced business activity (and consequently less governmental support) compound these difficulties and have put more pressure on charitable donations to supply essential services. During economic downturns, reduced corporate earnings limit both direct contributions and additions to company foundations; the foundation shortfall has a long-term effect on available funds. Devolution and greater reliance on faith-based and ngo to provide vital social services. NGOs saddled with the responsibility without the requisite funds to accomplish the mission. Strategic partnerships – joining together to achieve economies/efficiencies/impact/survive. Collaborations, alliances and mergers are among the options. Ethics inquiries – improprieties of organizations like Red Cross, United Way has led to increased investigation of all ngos practices. ¡Generation of newly super-rich ¡Impatient disdain for cautious and unimaginative check-writing ¡Tackling giant issues ¡More strategic in focus ¡More global in approach ¡Demands results ¡Involves more creativity and innovation ¡Social return on investment ¡ ¡YouTube: Key Traits of Social Entreprenuers bd10495_ And we have a generation of donors who view philanthropy in a new way. There has been literature written about the new philanthropist who deviates from the old views of giving. In the U.S., we increasingly have a division in the socio-economic strata of our citizens. And we have a growing number of donors, a new generation if you will, of the super-rich. The stock market run-up of the 1990s created a generation of newly super-rich executives and entrepreneurs worth hundreds of millions. Individual donors have ushered in a new era of philanthropy. (these are younger philanthropists than ever. They are determined to donate their fortunes not on their deathbeds but during their lifetimes. Doing so allows them to undertake important projects sooner and t o exert more control and to see the fruits of their labors). In this category would also fall your celebrity philanthropists who receive much publicity for the philanthropic efforts. New philanthropy displays an impatient disdain for the cautious and unimaginative check-writing that dominated charitable giving for decades. New philanthropy is more ambitious. Today’s philanthropists are tackling giant issues, from remaking American education to curing cancer (they want to concentrate their efforts – moves away from diversified giving and giving only to an area that is personal to them and for which they want to be identified and make an impact.) New philanthropy is more strategic. Donors are taking the same systematic approach they used to compete in business, laying out detailed plans that get at the heart of systemic problems, not just symptoms. New philanthropy is more global. Just as business doesn’t stop at national borders, neither does charitable giving. Donors from Bill Gates to George Soros have sweeping international agendas. New philanthropy demands results. New philanthropists attach a lot of strings. Recipients are often required to meet milestone goals, to invite foundation members onto their boards and to produce measurable results or risk losing their funding. New philanthropy involves more creativity and innovation – many of the philanthropists are corporate or entrepreneurial dropouts who want to work in the nonprofit sector. New philanthropists resonate with Carnegies claim that the man who dies leaving behind him millions of available wealth will pass away unwept, unhonored and unsung. The man who dies thus rich dies disgraced. They also approach giving as if it is a business proposition. They want to know what their social return on their investment is and will only be continued donors to those causes that show that their gift is supporting a winning business proposition. Start of this new era can be traced to late Sept. 1007, when cable-TV mogul Ted Turner anted up an historic $1 billion pledge to the U.S. and challenged wealthy skinflints to do likewise. Billionaires got an even bigger prodding two years later when the world’s riches man, Bill Gates, pumped a staggering $16.5 billion into his foundation to help pay for a campaign to improve health care for the world’s poor. Gates and his wife Melinda have since poured a total of $26.5 billion – 60% of their current net worth – into their foundation, making it the world’s largest. Their mission is to bring vaccines to poor children in Africa and India == it is a strategic and sweeping as Carnegie’s promise to build a library in every American town. ¡Who donates? ¡Why do people donate? ¡Profiles and motivations of donors ¡Prospect Research ¡Fundraising as a Profession ¡Trends impacting philanthropy