Every(Re)Action | 10 Key Findings to Understand Donor Giving Decisions
Although the number of households donating to nonprofits has been on an overall multi-decade decline, exacerbated by the 2008 financial crisis and the COVID-19 pandemic, new research from IUPUI’s Lilly Family School of Philanthropy finds that donors do want to engage with and support nonprofit work—especially work to create systemic change. Captured in three new report briefs, this information can help nonprofits understand donor giving decisions, evolve the way they communicate with donors, and ultimately raise more funds to advance their missions.
Funded by a grant from the Bill & Melinda Gates Foundation, IUPUI conducted research on “the causes and implications of the decline in donor participation shortly before the significant societal changes that took place in the United States in 2020, while also exploring the effects of the COVID-19 pandemic and the movements for social and racial justice on individual giving decisions moving forward.” Una Osili, Ph.D., associate dean for research and international programs at the school, said in a statement to the NonProfit Times:
“Our newest findings make it unmistakably clear that donors not only want to understand the impact of their gifts, but value organizations that intentionally foster meaningful relationships with their donors[…] While such donor expectations are not new, our research suggests donors have increasing expectations for how organizations build connections with them and communicate the scope of their impact.”
The first of the three new briefs, Understanding How Donors Make Giving Decisions, can help nonprofits fundraise more effectively and transparently by illuminating the logic behind donor giving decisions—here are some interesting and actionable points.
Understanding donor giving decisions
Broadly, the report “explores how individuals consider internal and external factors, their personal identities, and the events of 2020 when making current decisions about giving to charity, as well as how they plan their future charitable giving decisions.”
Report structure and key findings
The report derived its findings from a total of 16 focus groups, made up of 83 people. As described by the authors, their research centered around five guiding questions:
- How donors make charitable decisions;
- How donors’ giving decisions have changed in the past 5 to 10 years;
- What role their identity plays in giving decisions;
- How recent social and political events, such as the COVID-19 pandemic and the movements for racial equity and justice, changed their giving behavior; and
- What factors might affect donors’ giving behavior in the next 5 to 10 years.
The researchers found that donors were likelier to give if external factors (like stock market gains and demographic factors like being married or having kids) and internal factors (like the donor’s values and identities) were present or being affirmed by the organization receiving their donation.
The report also answered these five guiding questions with ten key findings about donor giving decisions—below are action steps for fundraisers based on those findings.
1. The near future’s giving rates
Key finding #1 was that “donors intend to keep their giving rate consistent in the coming years and give selectively to organizations and causes.” Respondents in the report told researchers they “intend to keep their giving frequency and amount consistent over the next few years, but give more selectively” (i.e., giving more to fewer organizations) in order to increase the impact of their giving.
Organizations whose goal is to retain their donors need to clearly demonstrate the impact of even a small gift—which first means identifying what “impact” means to different donor segments, and then messaging supporters about what their gift, no matter the size or amount, allows the organization to achieve.
2. Issue awareness, giving decisions, and motivations
Key finding #2 was that “being aware of an issue or the needs of an individual or organization strongly shaped giving decisions and motivated people to give in response to crises or perceived needs.” Donors “gave more in the short-term due to an increased awareness of needs highlighted by the ongoing COVID-19 pandemic.” This giving included giving more non-monetary gifts, like their time.
This finding is backed up by the M+R Benchmarks, which found that in 2020, organizations responding to the pandemic saw their fundraising results skyrocket compared to organizations whose work was unrelated to the pandemic response effort. For many organizations, clearly communicating their needs to donors resulted in those donors responding.
3. Donors and long-term solutions to current crises
Key finding #3 with respect to donor giving decisions was that “recent events such as the COVID-19 pandemic and the movements for racial equity and justice evoked an increased desire in donors to have a greater and long-term impact on issues through strategic giving choices.” Focus group members reported “a greater desire to address root causes of systemic and structural issues through their giving and [said] that they are considering the long-term impact of their gifts.”
This seems to be true across giving levels: for example, Nonprofit Quarterly reported in 2021 that growing numbers of younger donors with generational wealth were moved by the growing wealth disparity and mass unemployment to come together through organizations such as Resource Generation and redistribute their wealth to achieve more transformative change.
4. Donors’ impact and personal engagement
Key finding #4 was that “donors expressed a greater desire for nonprofit organizations to communicate the impact of programs and services and to be informed in more engaging and personal ways.” Focus group members reported “a greater desire to engage in research and communication with an organization before they commit their support”—and that they expected their giving histories to affect how organizations communicated with them. Said one donor:
“For organizations that I’m making significant contributions to, it’s about how are they educating me to incentivize and to give more. If I’m making a major gift and I’m getting the same communication that someone who is giving $10 a year is getting, that organization is not going to elevate my giving to them. The ones that identify that opportunity and make the right type of engagement with me are going to be the ones that are much more likely to get increased giving from me.”
Clearly, nonprofits who communicate with all donors in the same way risk losing their support. Segmenting donors by factors like their giving history—along with utilizing creative that is both ethical and effective—can help nonprofits connect with supporters and continue moving them to action.
5. Relationships as giving drivers
Key finding #5 showed that “personal connections and a previous relationship with nonprofit organizations were important drivers of charitable giving.” Many donors, said the report, “gave more to organizations they have a personal or previous connection with,” including volunteering or direct giving to their personal networks.
We know that direct giving is a long tradition in many communities, and although it can be more difficult to measure at a large scale than giving to nonprofits, it matters deeply to many people who want to do good in their own communities—and nonprofits whose donors favor direct giving can model some of those qualities in their fundraising programs’ structure and communications methods.
6. Personal experiences, values, and donor decisions
Key finding #6 was that “more influential factors that shaped donors’ giving decisions, in comparison to social identities, were personal values and previous experience with an issue.” The focus groups found that when it came to donor giving decisions, “sexual orientation and gender played an important role in determining who and what organizations LGBTQ+ people support, who they won’t support, and what unique forms of volunteer work and informal giving they engage in.”
This is also reflected in a previous Women’s Philanthropy Institute report about women and crowdfunding; and some nonprofits, like the LGBTQ Victory Fund, have already taken steps to help donors find ways to support causes and candidates they care about most. Even for supporters who, like one donor in the report, feel “generationally limited in terms of giving” as a result of their income or debt status, their choices in volunteer opportunities and other non-monetary commitments reflect their values and personal experiences.
7. Supporter education and donor attrition
Key finding #7 held that “while donors did not describe a clear decrease in their individual giving, a lack of perceived awareness and donor education of nonprofit organization’s programs and issues were reported as being responsible for lower rates of giving.” Participants expressed that “a lack of impact or tangibility” could be leading donors to reduce their gifts to an organization. On the other hand, “logistical preferences” that influenced donors’ giving were automatic recurring gifts; direct asks either from their networks or direct mail; and focusing on local, grassroots campaigns rather than larger-scale campaigns.
Finding the right channel to educate donors about your work, and using tools like data visualization and storytelling can help inform your supporters and reinforce how critical their gifts are to your work. Additionally, the importance of easy, automated recurring gifts can’t be understated: donors across generations appreciate the smooth experience of automatically giving a smaller amount each month, and a robust sustainer program can help nonprofits raise more predictable revenue for the mission.
8. Adapting to digital giving and engagement
Key finding #8 was that “participants described adjusting to new expectations, including accepting payments digitally and changing the way they engage donors. They noted that it was important to create more engaging content, for example by including images and videos to increase engagement.” As was true for many, focus group participants described their pivot to new supporter acquisition and engagement techniques across digital channels as “inevitable but challenging.” Although many donors wanted to make more of a difference in response to the COVID-19 crisis, they “stressed the importance of standing out among the hundreds of emails they might receive within a few days.”
Digital channels of all kinds have evolved and become more important during the pandemic. Tectonic’s 2021 report on how nonprofits used video content in 2020 to influence and grow their audience engagement revealed that the pandemic had altered the way organizations used the medium, including the use of newer techniques like livestreaming to connect with supporters. Additionally, as one participant noted, SMS continues to grow as a channel for breaking through the noise: texting can help supporters “get updates quickly and easily and not necessarily through [their] email inbox[es]”—and we know that this channel’s clickthrough rates tend to be high, suggesting it’s an effective way for your organization to connect with supporters.
9. Sustainable giving for the long term
Key finding #9 held that “while there were some reports of a decrease in giving, fundraisers did express concern about the sustainability of the recent increase in contributions to their organizations, believing this pattern to be temporary.” Participants in these focus groups were “concern[ed] about the sustainability of these gifts”—specifically, they were unsure of how social and political topics would affect long term giving, and they “agreed on the importance of developing relationships with new donors” in order to retain them.
Sustainable fundraising—including converting crisis donors into long-term supporters—has been top of mind for many nonprofit development teams over the past several years. One strategy to achieve more predictable fundraising is to build a robust sustainer program: we know that monthly donors tend to give five times longer than single-gift supporters, and knowing how much to expect each month in donations can help nonprofits plan and budget for the future. Clear language and expectations around the financial commitment donors are making; and simple and smooth ways for supporters to create and adjust their recurring gifts online can really help you succeed with recurring gift programs.
10. Public perceptions of nonprofit impact
Key finding #10 was that “donors described a range of patterns in public perceptions of nonprofits. Overall, participants were confident that the philanthropic organizations they support would be able to make an impact with their donations.” The report found that “most participants stated that their confidence in philanthropy and/or nonprofit organizations has remained positive” and that “strong, compelling marketing that communicated impact and follow-up communication with donors after a gift was made helped participants feel that an organization was reputable.”
One way organizations can influence donor giving decisions, build trust with their audiences, and earn their financial support is by serving as experts in their field and giving accurate and timely educational information about an issue. This is especially true if other sources (i.e., news or government sources) are perceived by some supporters as less reputable. Nonprofit websites are a strong way to achieve this goal: by serving audiences with regularly-updated, expert-driven information on the cause, organizations can build relationships with the public and garner more support.
When it comes to acquiring and retaining donors year after year, relationships are everything—and so is the technology you use to maintain them. The report shares that “for nonprofit organizations, a possible avenue to increase giving and be seen as an organization donors enjoy supporting is through establishing and cultivating a personal and consistent relationship with donors”—and this isn’t just through donations, it’s also “through volunteer opportunities, increased digital outreach, and integrating non-financial forms of giving and engagement such as board service, community forums, and town halls.”
Building strong and resilient relationships with your supporters shouldn’t require more work. Talk to us to learn more about how the right platform, with functionalities like multi-channel messaging, accurate and actionable data, and volunteer management can support your retention goals for now and for years to come.