- Thu, December 01 2011
- Filed under: Fundraising essentials
Today, Hope Consulting and GuideStar release the second part of the Money for Good research, and it’s packed with fascinating findings.* Going into giving season, it provides useful insights into influencing donors’ donation decision making.
The goal of this study was to determine if and how it’s possible to direct more charitable dollars to high-performing nonprofits. The authors of the study believe this is an especially important aim right now. With giving down overall, we need donations directed to where they will accomplish the most good.
The challenge is that most donors don’t spend much time thinking about nonprofit effectiveness. They are loyal to their favorite causes, and they are quite satisfied with the work those organizations do. They give for personal, emotional reasons rather than ratings. Earlier research by Hope found individuals research only about one-third of their donations, and they almost never do it to find the “best” organization. Advisors and grantmakers do far more research than individuals but are similar in that the relative rating of a nonprofit isn’t usually the determining factor for funding. Is it possible to change this? Hope set out to find out with new research on over 5,000 donors and 1,500 advisors and foundation grant-makers. They determined that moving just 5% of donations will lead to a $15B impact, and they believe that scale of change is possible.
The researchers say donors, advisors and grantmakers do care about what difference their charities make and would like better information on impact, financials, legitimacy, and organizations as a whole. According to the research, these audiences profess to want a Consumer Reports or Morningstar for nonprofits, with several dimensions to any rating rather than simple seals of approval. Of course there isn’t a single source of this quality of information on all charities right now, though there are many organizations like GuideStar, Charity Navigator, Great Nonprofits, GiveWell and others who rate some charities on various different dimensions.
Donors specifically state:
—They want a broad range of information on nonprofits’ impact, financials, and legitimacy.
—They want data provided in transparent formats or portals that provide them with several pieces of information. They prefer these formats more than 2:1 to simple seals or ratings.
—They want this information from third-party portals that provide information on nonprofits. Specifically, 53 percent of donors want to use such sites, though few know they exist today; and
—Of all the information they are looking for, impact and effectiveness data are seen as the greatest unmet need for each group – and the most urgent need for the sector.
So what is your highly effective nonprofit to do?
Here’s my opinion. When it comes to individual donors - who account for two-thirds of giving—the right brain decides and the left brain justifies. Donors are compelled by the heart but want approval by the head before giving. By showing why your nonprofit will do a great job making a difference, you ensure engagement with both sides of the donor mind.
I agree with Greg Ulrich, an author of the study, who says: “We found that donors want a range of information provided very transparently. Giving is ultimately an emotional and personal decision, and this keeps the power in the donors’ hands.”
Here is some further advice from the authors of the study.
– Donors are pressed for time, so giving them what they need – and not what they don’t – is more critical than ever. They look to you first for information on your organization.
– Explain your impact clearly and transparently along with how you use money, your legitimacy, and your mission. You can shift the conversation from overhead to these more important considerations.
– Make sure your GuideStar report is up to date! It is another key source of information for donors.
– Seek out reviews from organizations like Charity Navigator and Philanthropedia, and then show them off on your homepages and in your solicitations. Place this positive information where donors are looking for it.
– Donors are all different, so get to know your supporters and connect on what they care about most.
You can review the full study here.
(Full disclosure: I was on the advisory committee for the study but my enthusiasm for the study is independent of that role.)