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Nonprofit InsightsPart 1 Why Donors Give: The Psychology of Fundraising

April 23, 2019

To Receive CPE Credit• Individuals

Participate in entire webinar Answer polls when they are provided

• Groups Group leader is the person who registered & logged on to the webinar Answer polls when they are provided Complete group attendance form Group leader sign bottom of form Submit group attendance form to training@bkd.com within 24 hours of webinar

• If all eligibility requirements are met, each participant will be emailed their CPE certificate within 15 business days of webinar

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Presenter Dan PraterSenior Managing Consultantdprater@bkd.com

Learning Objectives

Identify basic principles &

trends in fundraising

Describe giving preferences

among various generations

Better understand

the motives of donors

At the conclusion of this webinar, participants will be able to

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Introductory thoughts

Presentation title – “Psychology”

. https://unsplash.com/search/photos/psychology

Fees for services/goods,private sources 47.5%

Fees for services/goods,government sources 24.5 %

Privatecontributions 13.3%

Government grants8.0 %

Other income 1.9 %Investment income 4.8 %

Source: “The Nonprofit Sector in Brief 2015,” Urban Institute

Revenue Sources for Public Charities

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Seven Reasons People Donate to Charitable Organizations

1. Personal experience2. Because someone they know asked

them to donate3. Family, cultural or religious practice4. Makes them feel closeness to

community or group5. Social status (peer pressure) 6. Altruism (happiness, was emotionally

moved)7. Desire to help improve someone’s life

Four ReasonsPeople do not donate to charitable organizations

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One vs. Many

• People are more willing to help a single individual than many

• People can grasp the problem of one more easily than those of hundreds, thousands or millions

815million live in

hunger

Futility Thinking

People tend to focus on those they cannot save rather than on those they can save

Helped 80% of 100 people

vs.Helped 20% of 1,000

people

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Bystander Effect

The more people that are aware of a problem, the less likely someone is to help a person in need

Money Management

Donors get turned off by the thought that their money may be used for marketing or other

overhead costs, rather than on direct services

$1,000 to save 5 lives

Group A

$800 to save lives,

$200 left over

($160 per person)

Group B

$900 to save lives,

$100 left over

($180 per person)

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In the report, they listed the top reasons donors stop givingto charitable organizations

The Rockefeller Corporation compared donor retention in nonprofits to customer retention in the commercial sector

1. Could no longer afford to give

2. Felt others were more deserving

3. Poor service or communication

4. Death

54%

36%

18%

16%

Source: https://fundraisingcoach.com/wp-content/uploads/2013/04/GuestPost-Jay-Love-Why-Donors-Stop-Their-Support.png

In the report, they listed the top reasons donors stop givingto charitable organizations

The Rockefeller Corporation compared donor retention in nonprofits to customer retention in the commercial sector

Source: https://fundraisingcoach.com/wp-content/uploads/2013/04/GuestPost-Jay-Love-Why-Donors-Stop-Their-Support.png

5. Never thanked for donating

6. No memory of supporting

7. No information on how monies were used

8. Thought the charity did not need them

13%

9%

8%

5%

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Five out of the eight top reasons donors stop giving to nonprofit organizations are basic communication issues

Eight Fundraising Essentials

1. Accurate tracking of donors in database2. Prompt follow-up3. Report results of gift4. Recognize donors5. Maintain consistent contact6. Segment your communication to

donors7. Ask for donors’ opinions (happy or not)8. Set donors up w/volunteer opportunities

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Measuring Outcomes

The age of assumed virtue is gone

Doing good must be supported by facts

Whenever & wherever possible, we must design programs that provide data about what works & then act on that evidence, expanding what is successful & adjusting or closing those that fail

“Donors would support nonprofits if they could just

find information on the organization’s effectiveness”GuideStar survey – out of 5,000

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The New Normal for Fundraising1. Strategic vision & plan

2. Culture of high performance

3. Culture of learning & performance

What is your organization aiming to accomplish?What are your strategies to make this happen?

What is your organization’s capabilities for doing this?(internal & external)

How will your organization know if progress is made?What have & haven’t you accomplished so far?

Performance MeasurementFunders (donors, foundations, government) want to knowHow was the donation used? (What did you do?)

How did the donation help you do the task better?

What has happened as a result of the donation?

“Attempting” to do good is no longer

good enough

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What Are Outcomes?

An outcome is a promise delivered

It tells donors, community partners, volunteers that

We told you we were going to do ...

We closely monitored & evaluated the

work ...

We can say for sure that it worked

Your trust & investment paid off!

Outcomes vs. Activity

Activity = What you doOutcome = Result of the activity

ActivityWe feed hungry kids before schoolOutcome• Improved health (not hungry)• Better behavior• Better grades• Higher graduation rate

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Prospecting New Donors

L Linkage

I Interest

A Ability

Who do you know that has a personal “in” or connection?

Is there a passion? Past record of interest in this cause or issue?

Does this person have the capacity to give what you want? History of other gifts this size?

Four Stages of Engagement

Decisions are frequently made at an unconscious level, based on previous knowledge & experiences

This includes affiliation & activities with nonprofit work

Level1

Level 2

Level 3

Level 4

Attributes – (features of your org.)You save lives & help children.

I like that

Functional consequences(perceived benefits)

My involvement has an impact on the problem/issue

Personal consequences(personal benefits delivered)I feel empowered; I am a better person because of involvement

Personal values(deep-rooted need)

I am protecting my family

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Why Does It Matter if

Donors Quit?Nearly 70% of first-time donors never

come back & make another gift, so we’re caught on a treadmill where we spend lots of money

to acquire new ones

Source: AFP – https://bloomerang.co/retention

Focus on Stewardship

It is estimated that most groups lose about 45% of all donors each year

It costs an average five times as much to secure a new donor as it does to maintain an existing one A lot of time & energy is wasted as communications are sent to those with no interest whatsoever in our program or service being offered

https://goo.gl/images/G4JWDm

Source: https://www.causevox.com/blog/donor-retention-statistics/

Major donor

Advocate – recruiting others

Multiple giver

One-time giver

Prospect

Suspect

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Values & Beliefs

Outreach & fundraising should be based on values & beliefs –not just on financial need

Philanthropybased in values

Donor developmentuncovers shared

values

Fundraisingenabling peopleto act on their

beliefs

WIIFM

Nonprofit Funding Sources

70% Individual donors(living)

5% Corporations(not foundations)

9% Individual bequests

16% Foundations

Biggest giving is from individualsMore than 50% foundations are private families – individualsBequests – again, individuals

About $9 out of every $10 given comes from individuals

Source: Giving USA 2018

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Source: AFP – https://bloomerang.co/retention

Engage Your Board!Most boards are filled with professionals & business people, the leaders of the community

Your Nonprofit

Organization

High-Net-Worth Individuals, HNWI

A person with at least $2 to $5 million of investable

assets

• 9 out of 10 dollars come from individuals• About 50% of giving is from HNWI• 98% give to secular causes vs. 56% as a

whole• 66% give to same organizations every year• 43% have an established will that includes

a charitable provision

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People give to people. Well, not exactly

People give to the right people

Actually, people give to great causes

But give appointments to the right people

We want board members to realize it’s really NOT about asking. It’s really about telling the story & opening doors

There are more than 1.5 million nonprofits out thereDonors are looking for great causes

BUT ...

One of the only ways they can learn about some of those causes & validate them is by talking to somebody they know & trust

YourCommunity

YourOrganization

Board

Donor doors will open for people they know & trust

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Donations vs. Partnerships

Investment into community –better ROI

Win-win

Value of contribution

Blurring the LinesBlurring the lines between for-profit & philanthropy

Making money

For-profit companies Nonprofits/charitable groups

Helping; improving

life

Making money so they can help improve life

Government

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Making a Shift

There is an expectation that nonprofits will shift from “serving” to “solving”

Focus is now on solving long-term problems, not just putting a Band-Aid on it

Shifting from house building to system-level change through advocacy & long-term projects

Generational Face of Fundraising

Source: Abila Donor Loyalty Study – http://www.thenonprofittimes.com/wp-content/uploads/2016/04/Donor-Loyalty-Study.pdf

# NP Orgssupported

3.7

3.4

4.1

5.5

Median annual gift

$238

$465

$479

$683

Donation method

39%online

41%online

52% check

65% check

Preferred frequency

2X per month

Monthly or more

Quarterly or more

Quarterly or less

31% check

38% check

41% online

31% online

# NP orgs.supported

Median annual gift

Donation method

Preferred frequency

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Be Clear About Your Work

• Identify your ultimate, long-term goal (vision) Map backwards

Paint a realistic picture of how change occurs

Show pathways to success

TheoryofChange

Underlying a logic model is a series of ‘if-then’ relationships that express the program’s theory of change

IF Then IF Then IF Then IF Then IF Then

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Sources: https://www.thebalancesmb.com/nonprofits-and-mobile-fundraising-2502424 &https://snowballfundraising.com/mobile-fundraising-statistics/

Older adultsexperience an

increase in quality of life

Older adultslive in safe &

accessible homes

Older adults havefulfilling social relationships

Older adults are physically healthy

Homes are properly

maintained

Older adults have aids & support to

access homes

Homes are properly

maintained

Older adults give with their skills to

community

Older adults receive adequate

medical care

Older adults know about healthy

habits

Older adults have tools to adopt healthy habits

What has to be truein order for ...

Older adults have have regular interactions

What is the ultimate goal or desire?Vision – “why”

How does change happen? Theory of change – “how”

What part of that can we impact?Mission – “what”

What change are we aiming for? Outcomes – “why”

How will we make that change? Logic model – “how”

Clarity

Toward

Impact

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“Designing aninfographic can be a great way to explain youreffectiveness” – Arts Council England

http://www.artscouncil.org.uk/

Fundraising Basics

• Website – social media• Print – newsletter, cards, letters• Traditional media • Email• Meetings – large groups• Meetings – face-to-face

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Make sure you calculate & clearly communicate the true cost of running your program/organization

True Cost of Doing Business – TCB

Volunteers’ time: $24.69 per hour (Source: independentsector.org)

Gifts-in-kind

Other donations

Questions?

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BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org

Continuing Professional Education

CPE Credit

• CPE credit may be awarded upon verification of participant attendance

• For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at training@bkd.com

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BKD Thoughtware®

• Webinars, seminars & articles

• Many are CPE-eligible

bkd.com | @BKDLLP @BKDNFP @BKDHigherEd @Dan_Prater

The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered

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