« Top 5 Reasons to Dig into the CPA Exam Blueprints | Main | Tips for Stress-Free Summer Travel »

What Motivates Donors to Give?

Shutterstock_583541458In the summer of 2014, dumping a bucket of ice water on your head while being filmed was all the rage. My Facebook newsfeed was filled with videos of friends voluntarily drenching themselves for all to see. This activity was sparked by the ALS Association’s Ice Bucket Challenge, a brilliant fundraising effort designed to increase awareness and support research on amyotrophic lateral sclerosis (also known as Lou Gehrig’s Disease). In one month, the ALS Association raised more than $100 million. How could other not-for-profits recreate this success to benefit their organizations? While I don’t have the answers, I would recommend that you consider why donors give as a starting point.

Donor motivations have been researched, but results are not as straightforward as they may sound. What donors say is not always consistent with what donors do. So, what looks good on paper, is not always going to translate into success.

We know that some people give to support the fundraising efforts of a family member, friend or neighbor. Others like to create a philanthropic image for themselves or their company. Still others feel guilty saying no to someone expressing a need. These reasons for giving often are understated and under-reported. So, while this article presents helpful statistics on primary donor motivations, keep in mind that unspoken factors may come into play.

Key Factors Driving Donations

The 2016 U.S.® Trust Study of High Net Worth Philanthropy, conducted in partnership with the Indiana University Lilly Family School of Philanthropy, looked at factors driving charitable giving among wealthy households. This biennial study found that donors’ primary stated motivations for giving were as follows:

  • Believing in the mission of the organization (54%)
  • Believing that their gift can make a difference (44%)
  • Experiencing personal satisfaction, enjoyment or fulfillment (39%)
  • Supporting the same causes annually (36%)
  • Giving back to the community (27%)
  • Adhering to religious beliefs (23%)

Matching contributions are also a motivating factor, but the amount of the match is not as significant. According to a study by Dr. John A. List of the University of Chicago and Dr. Dean Karlan of Yale University, offering a matching contribution increased giving by 20%, but doubling or even tripling the match had virtually no additional impact on increased giving.

It Pays Not to Be Pushy

Drs. James Andreoni and Marta Serra-Garcia published a study in 2013 related to their research on soliciting pledges for contributions. They designed a test to solicit contributions using three different approaches:

  1. Request an immediate contribution
  2. Request a pledge now and contribution later
  3. Request a nonbinding pledge, which, if successful, would be followed by an immediate "thank you" email and a second “thank you” email one week before the pledge fulfillment request

Individuals who made the nonbinding pledges produced the highest level of actual donations in the study—35%. The researchers concluded: “if people feel there is a context of mutual trust and respect, many individuals will stick to their promises.”

Furthermore, according to the 2016 U.S. Trust® study, nearly one out of five wealthy donors (17%) stopped giving to at least one organization last year. When donors stopped giving to a charity they previously supported, the top-cited reason (41%) was receiving too-frequent solicitations from the nonprofit organization.

Taxes: The Understated Impetus

Just 18% of wealthy donors in the same study said they gave primarily because of tax benefits, compared with 34% of those who cited this as a primary motivation in 2014. But, based on previous tax research, people do not always admit how important tax considerations are to their charitable giving. In 2010, among discussions surrounding the fate of charitable contribution deductions, 67% of people said they would somewhat or dramatically decrease their donations if the deduction was eliminated.

In addition, people in higher tax brackets are usually willing to give more. A higher tax rate favors individuals who make large contributions because it gives them larger tax deductions. High-net-worth individuals and their advisers recognize this advantage. The prospect of donating highly appreciated stocks and avoiding taxation on the gain altogether is even more compelling to astute donors and their financial advisers.

Know Your Donors

Many reasons motivate donors to give. Some are spoken, some are not. Financial planner and author Patrick Renn wrote of this in his book, Finding Your Money's Greater Purpose, saying:

"Each of us, through our contributions as volunteers and benefactors, holds the power to change the course of society for the better. We can leave our mark on this world with the time and resources that we dedicate to others. That is what becomes our legacy."

Getting to know your donors is the key to understanding what truly motivates them. Once you understand that, your solicitations will be easier to develop and more fruitful.

As those results come in, be sure you have adequate systems in place to track your pledges and donations. Timely and accurate recordkeeping is essential for financial accounting purposes, as well as for donor relations. The AICPA Not-for-Profit Section is here to help. We support our members working in and for the not-for-profit sector by providing timely information, resources and articles to assist with all of their financial accounting and reporting, governance and management, tax compliance and assurance needs. You may be interested in reading this article on drafting gift agreements, and reviewing this sample gift acceptance policy.

Bliss Jones, Director- Not-for-Profit, Jones and Kolb in Atlanta, GA. Bliss is responsible for overseeing its services to a wide variety of organizations. He has more than thirty-five years of experience specializing in the not-for-profit sector and is a frequent speaker on key issues impacting the industry.

Donation jar image courtesy of Shutterstock

Comments

Comments are moderated. Please review our Comment Policy before posting.
comments powered by Disqus

Subscribe

Subscribe in a reader

Enter your Email:
Preview