In my post on Tuesday, I discussed a study that seemed to suggest that donors are not interested in information about whether nonprofits are any good at what they do. My conclusion was that donors are interested in this sort of information, but only if it is presented in an engaging way. In other words, donors (like everyone else) are bored by statistics and metrics, so when they are asked about “charity rating systems” they say they are not interested, even though they do care whether the nonprofits they support are effective.
The post generate a couple of responses. Sasha Dichter, the director of business development at Acumen Fund, wrote:
“The other way to look at these numbers is to conclude that donors don’t believe that a rating scheme is going to work; that they don’t believe that such an approach is going to effectively inform them about how to make charitable decisions. (I happen to agree that it won’t, though that’s a post for another day.) If that’s what’s really going on, then the right headline – much less catchy, and much less likely to be retweeted – would be: “Do donors believe that rating agencies are any good at their jobs? No.”
There’s a lot of good stuff in both Sean’s and Nathanial’s posts, especially Sean’s point that we need to put as much effort into spreading ideas as we put into assessing impact. But I also think we have to be careful. I don’t think we advance the field of philanthropy and champion the cause of effective philanthropy by making and tearing down caricatures of philanthropists, and I think the blog post titles do just this.”
This response surprised me, because Sasha seems to think that I was being critical of donors in my post. But if Sasha thought that, then other people did too and I clearly didn’t make my point well. So to try to be crystal clear, any criticism in my post is directed towards the effective philanthropy movement (of which I’m a part) for not being savvy enough about spreading the idea of great philanthropy in ways that are sticky. It shouldn’t be surprising to us that donors say they are not interested in, and are unmoved by, metrics and statistics. We too frequently talk about effective philanthropy as if we’re encouraging people to eat their spinach. Great philanthropy isn’t a moral obligation that donors should feel like they need to struggle to get right. Effective philanthropy should be a hugely engaging, exciting activity.
The headline I chose, “Do Donors Care Whether Nonprofits Are Any Good?” wasn’t meant to provocatively suggest that I think they don’t. It was in response to the New Philanthropy Capital blog post titled “Do Enough Donors Care?” which I was commenting on. Oddly, Sasha seems to criticize the blog title for being designed to get people to actual read the post and share it with others. But of course that’s exactly what I’m arguing our field needs to do better and which Sasha says he agrees with.
Taking a different angle, Nathaniel Whittemore responded to with a post of post of his own titled “Do Donors Care About Impact? Not Really.”
“I believe that the further the apparatus of giving is from the person whose money is being used, the more likely to be interested in impact metrics a certain class of money will be. What I mean is that a group like the Ford Foundation has a mandate to address a particular set of issues. For them, their raison d’etre is their impact.
For your average personal donor, it’s something much different. Most people give because they feel a longing to be a part of something bigger than themselves…
The important thing to recognize here is not that people are un-interested in impact; it is to recognize that when people give with a desire to be part of a community, or reinforce their investment in friends, the emotional satisfaction they get from their gift — their personal impact, you could say — is immediately gratified at the moment of giving…
The point is, it’s not that people are dumb, or ultimately only care about their warm fuzzy feelings. Most people that I’ve met genuinely believe in the causes they support, and believe they’re helping achieve change. It’s just that their "due diligence" is all about who brings them through the door and the community that surrounds them there, and they will trust that over more abstractions.”
I agree with Nathaniel that donors will never make donations based on “abstract,” statistical reviews. This was one of the points of my post. But I think there is an important nuance he is missing when he says that donors care more about being “a part of something bigger than themselves” than they do about having an impact.
The “warm fuzzy feelings” that humans feel when they make a donation or do anything to help other people is hardwired into how our brains operate. The warm, fuzzy feeling is triggered when we believe that we are helping someone else. This means that we are hardwired to seek impact in our giving. All “seeking impact” means is that we want our efforts to help to actually be helpful. If donors are consciously aware that their gift in fact will do nothing. For instance, if they are consciously aware that the gift they are making is to a fraudulent nonprofit, they certainly aren’t going to feel a “warm, fuzzy feeling”. Rather they are likely to feel sick to their stomach.
The problem faced by the movement to make philanthropy move effective, is that donors understandably judge nonprofits based on their personal experiences with the nonprofit and the recommendations of friends and family who are drawing on their personal experiences. But unlike normal consumer products, in which the “customer” both buys and uses the product, donors pay for the products and services produced by nonprofits, but they are then delivered to the nonprofit’s beneficiaries, not the donor. That means that donors are unable to judge whether a nonprofits products and services are any good and instead judge the nonprofit based on the effectiveness of its sales and marketing.
The dumb way to try to change this situation is to yell at donors that the way they are making donations is bad, urge them to override the way their brain is hardwired, to dismiss the warm, fuzzy feeling of giving and instead consult statistics and metrics when making gifts.
The smart way to try to change this situation is to make more effective ways of giving enticing, exciting and engaging. To recognize how humans are hardwired and to work with it instead of against it. To find new ways to trigger the warm, fuzzy feeling by bringing to market new approaches to giving which allow donors to help other people by taking actions that actually help.
Donors aren’t dumb. Donor’s aren’t doing philanthropy “wrong”. Donors are humans who take action in exactly the way that evolution has wired our brains to act. This isn’t a bad thing. This is reality.
Kiva.org is showing us that donors are willing to take radical new actions when they give. They are willing to not only reorient the beneficiaries they support, but to completely change the very essence of the transaction. But Kiva has been able to pull this off by working with the way the human brain works rather then against it.
It is time for the effective philanthropy movement to make products and services that donors want to use rather than moralistically making products and services that we think donors should use.
Great job tying it together. You articulated better than I did what I meant, which is that:
1. Impact is both personal and social
2. Social impact is way harder to feel than personal
3. All donors want social as well as personal impact
4. But they generally trust nonprofit leaders to be stewards of that social impact
5. That increases the burden on nonprofit leaders to actually be stewards
Nice job connecting the pieces and making it smarter
Nicely done, Sean.
Nathaniel, I would add that nonprofit leaders also have a responsibility to communicate, to tell the story of that stewardship.
And, as Sean said, to make those stories sticky.
Sean, thanks for the excellent collection of posts the last few days on this topic. The issue of communicating – EFFECTIVELY – about effective philanthropy to the broadest swath of donors is one of the most important issues facing the field. We know a lot about both things – effective communications and effective philanthropy. It’s not a great leap to put the chocolate and the peanut butter together here.
But we have to start with better defining ways of knowing whether or not a nonprofit or philanthropic initiative is, in fact, effective. It’s much harder to know this than to skillfully reach and influence donors with this information.
As we all know, there are hundreds of efforts underway around the world to define impact frameworks and collect the data that will bring them to life. None of these efforts are perfect, and no one of them will yield “the answer” about what works because certainty is and will continue to be elusive. Geoff Mulgan makes the excellent point in the current issue of SSIR that the main obstacle to accurate measurement of social value “is assuming that social value is objective, fixed, and stable,” which he argues it is not.
In my book, effective philanthropy has a great deal to do with a change effort’s ability to LEARN about how social change happens, and use this information to innovate, course correct, or fine tune program models. Philanthropic initiatives that can do this well – and it is harder than it sounds – stand a much better chance of ultimately being effective. Think of effective philanthropy as a way of doing business – a means to an end – rather than the realization of impact itself. Today’s impact is tomorrow’s local maximum.
Back to donors: I would agree that donors care about both personal and social impact. As the recent research efforts into donor beliefs and behaviors have indicated, it is the smallest fraction of donors who are personally hands-on with research on impact, nonprofit performance, or due diligence. Most donors seek intermediaries and guides, and there is an emerging menu of options, to suit every style:
WEBSITES with visuals and emotionally compelling stories, websites with hard data and academic research,, websites with crowdsourcing approaches, websites with expert recommendations.
PHILANTHROPIC ADVISORS providing a range of services from customized information to the selection of a giving portfolio.
NONPROFITS themselves that conduct direct mail or email campaigns often organized by professional fundraisers, or cultivate donors personally through events and/or board members.
FRIENDS AND COLLEAGUES who request a donation for a nonprofit they also support, or whose experiences motivate a gift (as in, “my friend suffers from breast cancer, so I will donate to breast cancer research).
It’s unlikely that the variety of types of intermediaries used by donors will decrease (though certainly – hopefully! – we will see some attrition in the plethora of online giving sites); in fact, we may see even more variety as the innovations in communicating with donors that Sean is calling for begin to materialize.
But to “win” in both domains – effective communication with donors about places in the sector where effective philanthropy is being practiced and deserves to be supported – we have to match style with substance. Imagine a simple trustmark – a seal of approval – that appeared (or didn’t appear) next to the names of the nonprofits or multistakeholder initiatives seeking support through all the websites, professional fundraisers, philanthropic advisors, and friendraising. An independent seal that is earned based on a range of criteria – the best of the best of what we know from the many ratings systems and impact measurement frameworks that are out there – and is updated periodically, the way hospitals and schools must maintain their accreditation. How might such a practice begin to reshape the philanthropic sector?
Donors are reporting that they aren’t interested in ratings systems, but would people have said they were interested in buying fair trade coffee before a fair trade certification was available and popularized? Nonprofit certification is a strategy for building awareness, and CREATING demand for more effective philanthropy, and coupled with a rigorous and independent certifying agency, and a sticky marketing strategy, I believe certification can move dollars in the sector.
I think we should try this approach. And we shouldn’t let perfect be the enemy of good. For example, the field of environmental product certification is far from perfect – many would say it’s a mess! But I would wager that mainstream consumers are vastly more educated about the impact of consumer products on the environment now, and are much more likely to purchase products that are certified “green” (through whatever standard – and yes, some of them are industry-created) than they were 10 years ago. And many, many more of these types of products are now available. Over time, details of green certifications will be revised, refined, rejected, and reconstituted (just like measures of impact and nonprofit effectiveness), but even as this debate rages, consumer behavior is changing. Also over time, this changed behavior stands to have an important effect on the environment and other domains.
So what if we listen to what donors are saying, and keep it simple. What if a nonprofit or philanthropic initiative were either “GIVE Certified” or not?
I also had a similar reaction to Sasha’s, so I’m glad you’re clarifying. And I had a similar reaction to Nathaniel’s, in that most donors are primarily focusing on emotional bond that comes from their giving. Very happy that they wrote their posts because they put it much more clearly than I could have (also I got to be lazy. Bonus!)
Gifts happen for all sorts of reasons, but the “high impact” reason is a small minority. The Hope study says only 16%. The emotion-based ones (repayer, faith based, personal ties) are the majority givers, 52% total. You are right – figuring out how to trigger the warm fuzzy feeling of the emotion-based gifts toward the high impact areas is the key.
You make a number of great points. I think the certification concept makes sense, but I think it is very difficult to provide any sort of recommendation/approval for nonprofits at a large scale. For a certification to work, you’d need to be able to certify thousands of nonprofits. Charity Navigator has been successful at this, but only because they only look at financials.
The model that I think has the best chance of operating at scale and providing real signal, not just noise, is Philanthropedia (which Tactical Philanthropy is collaborating with).
I’m glad this post was more clear.
I believe that donations to high performing, high impact nonprofits are the most emotionally satisfying gift. It isn’t that we have to somehow “trick” donors’ brains into generating warm, fuzzy feelings, we just have to effectively communicate impact (and effective means both logically and emotionally).
Think about it this way. What if you volunteered to tutor low income kids. Wouldn’t it be FAR more emotionally satisfying if you watched them improve their grades, graduate from school, find a great job and build a wonderful family then if you put in the exact same amount of effort but watched nothing change? The first example is simply a high impact engagement and the second is not. It is clearly more emotionally satisfying to actually have impact. But donors often have no good way to understand whether they are having an impact and so their brains get stuck on triggering the warm and fuzzies based on catchy videos, sweet kids who tell a story or really nice fundraisers.
Thank you for raising the twenty million (or, more accurately, $45B) question about what it will take to enable donors to make smarter giving decisions. There seem to be two broad threads running through this week’s posts: that we can work with the way that donors currently behave to improve the quality of giving over time, or that we can push donors to change their giving behavior.
In our experience, we’ve found that it’s easier to work with customers’ existing behaviors and preferences than against them. If our end-goal is to get the most dollars to high-performing nonprofits, we believe that it’s important to identify the path of least resistance to doing so. Our recent Money for Good research (available at http://www.hopeconsulting.us) suggests that there is much opportunity to do so.
In that research, we found some striking things about donor behavior as it relates to giving to the highest performing organizations. First, we found that while 85% of affluent Americans (HH income >$80,000) say they care about nonprofit performance, only 35% ever do any research. And of those who research, the majority do so to simply validate their decision. Only 14% of those who research seek to donate to the highest performing organizations – which nets out to 3% of donors overall. Working with these behaviors, we see two opportunities to get more money to higher performing nonprofits:
1) Closing the gap between the 85% of people that say they care about performance, and those who do due diligence before they make a gift
2) Ensuring that donors who do research can access quality information on nonprofit performance
One good reason to focus on working with donors’ existing preferences and behaviors is that changing giving behavior in particular will be hard. First, we found that most donors don’t give to maximize impact – it ranks 7th out of 14 reasons people make a given gift. Second, we found that most donors think that the nonprofits that they give to are doing a pretty good job. This is different than in other industries, in which we regularly see strong area areas of customer satisfaction and dissatisfaction. In giving, donors don’t see a burning reason to do more research on their charitable gifts, because they believe their gifts are performing well.
With that said, what can we do to get donors to make better giving decisions?
First, let’s meet donors where they are. Most donors don’t do research; when they do, they look for information that will allow them to check that they’re not giving to a bad organization; and they look primarily to the nonprofit itself to provide such information. Solutions in this category include:
• Simple approaches that will enable donors to easily eliminate gifts to bad organizations – and drive billions of dollars away from poor-performing nonprofits
• Pushing performance-based information to the places donors already turn to for information. Forty-nine percent of donors turn to the nonprofit itself or those close to it for information on their giving decision, while only ten percent of donors use third-party information sites
Second, as you correctly suggest, let’s make the giving experience more enticing for the donor. But here’s a twist – let’s acknowledge that all donors aren’t alike. In our research, we found that donors break out into six discrete segments, with different core motivations for giving. The second way to encourage donors to give more or to give differently, then, is to provide each segment with a giving experience corresponds with their core motivations for giving. The $45B that I mentioned at the beginning of this post is the amount by which affluent Americans are willing to increase or change their giving, if the giving experience better meets their needs. Let’s not miss this opportunity!