Recently, the GiveWell blog looked at how individuals are by far the biggest philanthropists in the United States. Total annual giving from foundations pales in comparison to donations by individuals. Depending on how you slice it, well over 80% of giving comes from individuals.
This fact was a driving force behind the creation of the philanthropic services platform at my firm Ensemble Capital Management. The way that the chart shown on the GiveWell site is designed, “individuals” and “bequests” become proxies for “non-institutions”. However, they are actually just “non-structured” giving. With donor advised funds, private foundations and charitable remainder trusts (a potential replacement vehicle for bequests) becoming available to smaller and smaller donors, I believe we’ll see a huge decrease in “individual” giving as defined by the statisticians. But we’ll actually being seeing a rapid increase in the use of sophisticated giving techniques by individual donors.
This doesn’t just matter to me (as an advisor to these donors) it matters to the whole field of philanthropy and by extension to the social sector because these “non-institutional” donors are our field’s “low hanging fruit.” Recently marketing guru Seth Godin commented on the magic of low hanging fruit:
Imagine that half the cars in the US get 10 miles per gallon. And half get 40 miles per gallon. Further stipulate that all cars are driven the same number of miles per year.
Now, you get one wish. You can give every low-mileage car a new set of spark plugs that will increase fuel efficiency by 5 mpg, up to 15. Or you can replace every 40 mpg car with a car that gets 75 mpg, an increase of 35 miles for every gallon driven.
Which is better?
It turns out that the 5 mpg increase is far better for overall mileage than the 35 mpg increase, even though it’s smaller both as a percentage and absolutely. That’s because the 10 mpg hogs use up so much gas. They’re the low-hanging fruit, not just easy to fix, but worth fixing.
As marketers, we’re tempted to tweak the already tweaked, to turn the 100 to 101, to optimize for the peak performances. That long tail is very long, though, and if there’s a way you can raise the floor (instead of just focusing on the ceiling) you may be surprised to discover that it can have a huge impact.
I love to try to “tweak the already tweaked, to turn the 100 to 101, to optimize for the peak performances.” But frankly I think that philanthropy is such a deeply inefficient market that we can make great headway as a field by simply working on the basics.