Rewarding Donors

Last month, a discussion unfolded on Gift Hub that I never got around to commenting on. In response to a question from Phil Cubeta I wrote:

I was trying to say they do not give away the bulk of their lifetime giving “today”. In other words imagine you had someone with $10 million in investable assets. Assume that an analysis of their financial wants/needs and their desire to give showed that they could and would like to give away $6 million over the course of their life. Imagine that all of the tax issues have been handled and the donor is free to give purely in the way that follows their altruistic motives (one of the reasons for organize your giving cited in my article is to separate the tax planning from the altruistic motive).

What I’m saying is that I rarely run across people who would choose to give the $6 million away today and then giving nothing else for the rest of their life. Instead, most people want to give over the course of their life. I think that while there may be a impact maximization case for giving everything asap, that most people want to give over their life and that that choice is OK.

Phil responded:

I agree with your perspective. Most people don’t want to just cut loose of the money, the big bundle, the ultimate gift, until late in life, since they actually enjoy the giving and may want to be actively engaged. Also, if you do give all at once to XYX charity, and you are then tapped out, will XYZ send roses on your birth day a year from now? You lose leverage, also, in giving the bundle at once, rather than doling the money out against progress and results on the things you care about.

Then, Gift Hub reader Michelle wrote:

Phil’s last remark is vital to note, and it’s something we see constantly on the inside. This is where the transaction becomes a relationship. Our donors do want the birthday flowers, the mentions in the newsletter, the gradual, long-term, and consistent shaping influence that keeping their recipient on a sort of allowance creates. Every day we see the many ways the donation relationship creates personal meaning and belonging. Were the gift made outright, with no future expectation on either side, the donor would risk the disappearance of a relationship – in many cases an important, self-defining one.

I think Michelle is right. Donors do want “birthday flowers”. But the question is why? Why is it that people who see an important need and are willing to part with their hard earned money to help alleviate the problem, want some flowers sent to them? Isn’t it enough that their money fed a child, lifted a family out of poverty, provided education, healed the environment or even saved a life? It is not enough because most nonprofits are unable to provide any convincing feedback to their donors that indicate the impact of their gift.

When you buy a new computer, you don’t need Dell or Apple to send you flowers as a thank you because the product in your hand affirms your choice to spend the money. Philanthropy is much more challenging in this regard because the “product” you “buy” goes to someone else or is part of a large, longterm event that can be hard to see your impact on.

But imagine the nonprofit that manages to figure out how to demonstrate to their donors (both emotionally and quantitatively) the huge impact of their gift? Suddenly, the nonprofit doesn’t have to spend resources providing “feedback” like birthday flowers. Suddenly, donors’ gifts result in the feedback that humans crave when trying to evaluate their actions.

Relying on birthday flowers is a bit like building a great customer service center to cover for the fact that your customers have no idea if your product is any good (“I don’t know what I bought, but they sure were nice to me!”). It may be necessary, but a much better choice would be to figure out how to show your customers how great your products are. Unless of course, you product isn’t anything special.

7 Comments

  1. Alanna says:

    I think donors want to feel like they are part of the good fight, making things better. To use a sports analogy – they don’t want to be one who pays the boxer’s salary – they want to be in the ring. Coaching, training, tying the gloves on, maybe even taking a swing themselves. That’s why people pay to go on volunteer vacations instead of just giving money to the charity.

    We need communications that make people feel like they’re part of the team, not just the team’s wallet. Birthday flowers are one way to do that. We need to find others. Involving your donors in advocating for the organzation might work (not fundraising, but advocacy). I also think there is a lot of potential in social media. A twitter every few days on what’s up with the non-profit (and not a request for money!) might keep donors engaged.

  2. I definitely think that involving donors and creating a community around a nonprofit are important concepts. But I think flowers are an artificial way to do that. I’m not saying never send flowers, saying thank you is important. But I think a much better model is to focus on how a nonprofit’s “product”, the good they do, can be a reward unto itself for donors.

    Kiva has been able to do this to some extent by connecting donors directly to the people they fund and having the borrowers send updates.

    Flowers seem to me to be a way to make donors feel good about themselves for making the donation. I’d rather see nonprofits figure out how to make donors feel good about themselves. I’d rather see nonprofits work on making donors feel good about the good the nonprofit is doing and make them feel that the cost of their donation is well worth the good being produced.

  3. Alanna says:

    I’m not sure feeling good about the nonprofit’s “product” is sufficient. It’s valuable, but it’s not sufficient. The donor wants to feel like they were part of making that product.

    I’m not convinced they even want to be rewarded. I think they want to join the team, and to keep them around we find a way to let them do that.

  4. Chris Cardona says:

    Fair points, Sean, but I think there are two things going on with the flowers. One may be covering up for lack of metrics in the field. Fine. But the other is about forming a personal relationship with the organization, because for many people, a gift says something about who you are, in a way that a purchase of a Dell computer doesn’t. (Although, Apple is interesting because its recent success has, IMHO, a lot to do with the way they’ve made people feel that the purchase of an iPod or iPhone *does* say something about who they, the purchaser, are.) Who sends you flowers? People that care about you and that you care about. The flowers are a personal touch in an impersonal world, and bring the relationship away from the realm of the market and closer to the realm of family, friends, and loved ones. So to speak to your question, why do donors want birthday flowers? Because it feels good to have your contribution to a cause recognized as a personal expression and not solely a market transaction. The flowers symbolize the personal nature of the gift and help make it reciprocal. Though of course, sometimes a flower is just a flower. ๐Ÿ™‚

  5. I agree with both of you. A personal connection is key (that’s the community part I discussed in my last comment). But flowers are about a relationship based on what a donor can do for a nonprofit and vice versa. I think a much better relationship to cultivate is one that includes the community being served. We don’t disagree on this I don’t think. I just think that the “flowers on your birthday” is based on a transactional relationship.

    When your sister moves to a new house and asks for your help, it might be great to get a thank you card. But the critical part is that you have a relationship with her and are HAPPY to help for the sake of helping.

    It is hard to form that relationship between donors/nonprofits/community served, but I think it is critical. Sending donors flowers on their birthday (especially as a policy and not a true personal relationship) is indicative of a view of donor/nonprofit relationships that keeps nonprofits dependent on “gifts” from donors instead of empowering nonprofits to be an organization that donors seek out and choose.

  6. young staffer says:

    I agree with Sean that we want to connect donors not just to nonprofits but to communities served and that we want to empower nonprofits to feel less dependent, more sought after. I think there is a great deal of progress to be made on this issue.

    But not everyone is giving to feel self-actualized. I’ll say what everyone else has, I think, been too polite to say – there are some wealthy people who are at least as interested in having their own egos gratified as they are in seeing communities served. You’ve met them – the donors who have to have the building named after them, who have to it done their way, etc. It’s not everyone and there is hope that a newer generation of donors is functioning differently, but there is certainly a segment of donors who do it for prestige in their community or to bolster their own sense of self-importance.

    So some donors give partly or even largely BECAUSE their gift is sought after. And as long as there are nonprofits that need their money, there will be a competition to make those donors feel special and important. Those donors have created (and continute to perpetuate) the incentive for nonprofits to focus on ego rather than impact as the building block for “cultivating donor relationships.”

    I look forward to a day when high returns on your social investments earn you more praise from your peers and gratitude from your community than your name on the wing of the hospital, but fear that won’t be true for a long time.

  7. Young Staffer, you make a good point. Of course you need to do what it takes to get the money in. If sending someone flowers gets $100,000 gift, those flowers are well worth it.

    In the restaurant business, most investors lose money. They make the investment at least in part because by doing so they get a reserved table and the chance to bring friends to “their restaurant”. But most businesses don’t raise money based on satisfying their investors’ egos.