Philanthropic fundraising: what can we learn from wealthy donors
How do people decide what to support
Fundraisers will not be surprised that the key criteria for about three-quarters of those interviewed for Richer Lives are having an existing interest in the cause and a ‘good fit’ with predetermined giving objectives. An equally strong weighting is given to the donor’s confidence that their money really will make a difference.
Another factor is that wealthy donors are, or define themselves as, increasingly strategic; older as well as newer philanthropists seek to be “hands on”.
“Personal due diligence is key”
There are various ways this is defined: Strategic Philanthropy is perceived as long term and considered, maximizing positive outcomes and creating sustainable projects. At the root of it all is trust between the donor and the organisations that they fund.
We know of the growing attention to impact; many donors are interested in investing in organisations that (already) use some kind of impact measurement in any case - as a tool to monitor their own performance and to help them make decisions about the most appropriate interventions. Donors see it as evidence of good management. In other words charities should not be doing it (just) to please funders, but to inform themselves and their trustees. If they are not already doing this, then how are they deciding where to put their scarce resources?
We note a small trend for new entrepreneurial philanthropists to establish and run their own non-profit organisations, sometimes raising money from others – mainly their peers. Some develop strategic partnerships with existing NGOs. Others design, test, refine and implement an operational model. Yet others are working in partnerships with governments. This is not only because they want to be hands on, but also because they do not respect the way they think that charities operate. They do not trust their efficacy. However we note that while the issue of trust is universal, the establishment of new entities is still the approach of a small minority.
But if they are not (yet) driven by a vision of how their money could make the world a better place, or they are not sure about the worth of particular interventions, or the competence of specific organisations, how do they decide what to support in the first place?
The importance of who asks
As well as the importance of the cause and confidence in competence, we also find that over two-thirds of respondents will consider a request if asked by someone they know and respect, who is themselves a donor. This rises to three-quarters for older donors, making this factor as important as the first two reasons. They may not give, or give substantially, but they will consider a request from someone they regard as (at least) a peer.
As well as donors we interviewed many expert observers of the philanthropy scene, and they concur that peer pressure in all its forms is crucial, in particular when it comes to making an appropriate ask:
“One reason why the rich give is that their interest is engaged by the right person in the right way at the right time. This is fundamentally important.”
The most important factor for new and younger donors was developing a deeper understanding of the issues. Increasingly their choices within a range of organisations that appear to address similar problems are prompted by an adviser. Those in turn will be considering reported impact and effectiveness as key criteria. It is a mutually reinforcing trend. Advisors are also asked for introductions to other donors who support the same cause – another aspect of the importance of peer endorsement and collaboration.
Donors’ experience of asking
Some donors recognise the importance of an ambassadorial role and of engaging potential donors in the causes to which they give time and money. Not surprisingly the appetite for asking ranged between reluctance and enthusiasm, but several common themes emerge from their experiences. They include
- Asking must be for a cause or causes known to be supported by the asker. The donor must be a passionate and knowledgeable champion.
- It is essential to take time to develop a relationship
- Initial gifts may be low in relation to the prospect’s capacity to give. One must take a long view about the eventual value of the donor to the charity
- It is essential is distinguish between gifts that are reciprocal - given because of who the asker is – and those that are a real commitment to long term support for the cause
Even though there is now a body of evidence about what matters in developing links with wealthy donors, we still had reports of really inadequate approaches - most of which boiled down to being asked to support something that was not central to the prospect's philanthropic interests by quite the wrong person, long before any kind of relationship had been developed (a process that might take years).
So what about fundraisers? How are they regarded by donors and potential donors?
There is some recognition by donors and by expert observers of the philanthropy scene that fundraising has become more professional over the last decade. However under half of new interviewees believe this, with nearly 40% suggesting that individual standards are too varied. And while the most significant area of perceived improvement was that of better research before donors are approached, fewer than 60% of younger donors think that fundraisers have a better understanding of how donors wish to engage with causes. Only 15% in this category think that fundraisers are better at explaining tax breaks and helping with planned giving, compared with nearly 40% of the original set, and only a quarter of the younger donors believe that fundraisers are better at offering appropriate recognition.
So whether expectations are getting higher or there is some other reason for less satisfaction among emerging philanthropists, there is no room for complacency in the fundraising profession.
However, it could be said that this matters less than other factors, since only 1/3 of respondents cited liking the approach of the fundraiser as an element in their decision whether to consider a request, compared with the importance of being asked by somebody they know, which as we see is significant for at least 2/3 of interviewees.
Clearly one lesson is to build on the area of improvement - better donor research - and ensure that the orchestration that underpins cultivation and stewardship is invisible to the prospect and donor! The combination of the right asker and excellent research is very powerful. People are very annoyed at scatter-gun approaches.
“The asking out there is prodigious. When we set up the foundation we’d get every month a 30cm pile of mail – the waste of paper! It was all blind asking, nobody had read our charitable objectives. Eventually we put on our website: ‘we are not a grant-making organisation’ and that has worked.”
Inadequate or non –existent research not only wastes money; it makes the whole sector look un-business-like and profligate.
For many the approach of the fundraiser is not seen by them to be important because their expectations of the relationship they with the causes they support goes beyond and sometimes excludes the fundraising staff.
What kind of relationship do donors expect and with whom?
Everyone wants to be “involved” with the causes they support, with emerging philanthropists wanting more than older donors. Not surprisingly some people are “hands-off” with some of the charities they support but expect to be more fully involved with others. While a small minority “only” expect to be kept fully informed about how their money is being used, far more newer donors want more of an involvement, with a quarter wanting participation such as invitations to events or to view the work, and another quarter expecting to be fully engaged, for example by serving on the board or being in regular contact with the charity leaders. This is in sharp and curious contrast with the older donors, of whom only 4 described themselves as being in this category.
Clearly donors do not expect such engagement with small or one-off gifts. But how would they define a “major donation”?
For hardly anyone is it under £10,000. For the vast majority of respondents there is a range up to at least £100,000. There is some variance between the two groups or interviewees, with more of the new donors at the lower end. This may reflect the fact that some of them are at an earlier stage in their philanthropic journey, and not making so many larger gifts.
But in any case it is apparent that for about two-thirds of donors taken together a major donation is at least £50,000.
Gifts below this level are often one-off or reciprocal, and should not be mistaken for the start of a long term commitment.
So how does this sit with their expectations of access to the leadership of the bigger charity or charities that they support? Is it related to the size of the gift, and is that the same as their perception of what for them is a major donation? Clearly excluded from this discussion is the range of small, often local, causes for which a gift of £1000 or £5000 would be a significant and appropriate contribution.
About a third of all interviewees said that they do not expect their access to the charity’s leadership to depend on the size of their donation. But over half of older donors expect leadership access with gifts ranging from £10,000 upwards, with nearly half of this subgroup mentioning £50,000 and above. For younger donors the “price” of access is higher with nearly 20% suggesting a level of at least £100,000.
What does all this mean for charities?
In essence our findings show that while government, the media and employers could do much to encourage a culture of giving, the most important player is the organisation seeking funding.
Time and again we heard of the fulfilment and enjoyment of visiting projects, of meeting beneficiaries, of seeing the difference that investment has made to individual lives. We were told of the satisfaction of learning more about the work and the issues and needs that give rise to it, or the activities that support it. We noted the pleasure of meeting others who share the same passions and concerns, the rewards of sharing the journey. We learn of frustrations too, but overwhelmingly we see lives that are immeasurably richer as a result of their involvement with the charities that they support.
In every case it became clear that the practice of giving becomes an increasingly essential part of people's lives when the experience is positive and life-enhancing, based on mutual respect, trust and recognition of shared goals.
As we have seen the main impetus for renewal and stronger engagement is respect for the institution doing the work and understanding the impact of their philanthropic investment. And not surprisingly donors want to hear this from those who are responsible for delivering the mission.
This is not only about looking after donors after they have given - what fundraisers call "stewardship". It is also about asking. As we have seen, it is about being approached by peers, and allowing time for a relationship to develop.
Most philanthropists understand that the role of the fundraiser, especially in larger organisations, is to provide the administrative infrastructure that ensures that the research, cultivation of the prospects and the stewardship run as smoothly as possible. But they do not expect to have their key links with the fundraisers, except for practical arrangements.
Unfortunately it is clear to us that there are still far too few organisations that not only understand this but have thought through the implications, both for the fundraising team and for all staff and trustees.
The development and management of the relationships with those who should be seen as partners in the delivery of the mission is the responsibility of everyone, from Chairman and trustees to chief executive and those who head faculties, conduct research, direct and manage social welfare programmes and put on performances and exhibitions.
As we heard, “It’s about leadership.”
About the author
Theresa Lloyd has written extensively on philanthropy and giving, notably Why Rich People Give (2004) Cultural Giving (2006) and, with Beth Breeze, Richer Lives (2013). She spent 10 years responsible for fundraising at a senior level for international NGOs. Theresa was the Founder-director of Philanthropy UK, and as a consultant over nearly 20 years has advised many charities, arts organisations and higher-education institutions, as well as philanthropists. She has been a board member of several non-profit institutions, and she and her husband run their own charitable trust. Theresa has drawn on this rich seam of experience as trustee, donor, and adviser, and particularly the recent research for Richer Lives, to explore what makes asking successful, and what wealthy people look for in their relationships with charitable institutions, and the important lessons that arise.