All posts by Beth Breeze

How Donors Choose Charities

Last Friday I launched the final report from the first project I’ve been undertaking within the new ESRC Centre for Giving and Philanthropy, How Donors Choose Charities.

Having interviewed 60 committed donors about how they make their giving decisions, I found that  most people tend to support organisations that promote their own preferences, help people they feel some affinity with and support causes that relate to their own life experiences.  These non-needs-based drivers exist despite widespread beliefs that charities exist primarily to help the needy,

Other key findings include:

  • Donors find it difficult to make choices between the vast number of potential beneficiaries; the overwhelming amount of choice makes it impossible to rationally assess all possible alternative destinations for donations
  • Donors create their own classifications and ‘mental maps’ to try and cope with the complexity of the charity sector – for example making binary distinctions between ‘animal’ and ‘people’ charities, or automatically excluding certain types of causes
  • Donors’ personal backgrounds are a key criteria behind gifts; people draw on their personal and professional experiences and use their ‘philanthropic autobiographies’ to shape their giving decisions
  • Donors often base their judgements on how efficiently charities spend their money by evaluating the quantity and quality of direct mail appeals, rather than by accessing information such as annual reports and accounts
  • Donors are motivated by a desire to ‘personally make a difference’ and are keen to avoid their donations becoming a substitute for government spending

Given the voluntary nature of charitable activity, it’s not so surprising that giving is more accurately characterised as ‘taste-based’ rather than ‘needs-based’. The freedom to support things that people care most deeply about is what differentiates charitable giving from paying tax. Donors value the control they have over their charitable giving decisions, and expect to distribute their money according to their judgements about what is important and worthwhile.

But the findings do raise a timely question about the extent to which governments can realistically expect donations to replace public spending cuts on charitable activity, as people have far higher hopes for their donations than simply plugging gaps in government spending.

I hope this report is useful to charities and their fundraising staff, and would be happy to hear what you think.

Why incentives for organ donors matters to fundraisers

I haven’t blogged in a while as life, work and (finally) summer have got in the way. But I can’t resist writing about today’s news story that proposals are on the table to create financial incentives for organ donors.

It is tragic that so many people die waiting for a transplant, and I entirely support the suggestion that donating become ‘opt-out’ rather than ‘opt-in’, which enables people to retain control over their body parts whilst ensuring that the majority, who are quite happy to see their organs used by someone else after death, are not foiled by having not got round to joining the donor register. But I’m not at all sure about the impact, or effectiveness, of offering inducements to nudge people towards making the decision to donate organs.

I got started studying charitable giving as a result of reading a wonderful book by Richard Titmuss called ‘The Gift Relationship: from human blood to social policy’. Published in 1971, Titmuss compares the blood donor system in the UK, where donors make a ‘free gift’ of their blood, with the system in the US, where donors are paid to donate. He concludes that the UK system produces healthier blood, as people are not incentivised to cheat by making excessive numbers of donations or attempting to sell infected blood. But, perhaps more crucially in the context of those of us trying to encourage charitable giving, he wrote that the importance of a voluntary national blood service lies in the fact that very few opportunities exist in modern, technical, large-scale organised societies for ordinary people to act altruistically outside their own networks of family and friends. He therefore concludes that we must maintain a voluntary, rather than incentivised system for donating blood (and, by extension, for donating organs) because it is important to create and support structures in our society that allow and encourage people to demonstrate generosity to strangers.

The voluntary giving of blood and organs is part of a wider set of norms regarding the exchange of significant gifts between strangers that fundraisers rely upon. We draw upon that tradition every time we ask someone to give away some of their private wealth to support the public good. I do hope that any changes to encourage organ donation do not end up threatening the concept of free gifts in our society.

Changing places

Having worked as a fundraiser, and now as a philanthropy researcher, I’ve done a fair bit of asking, and an awful lot of thinking about asking. But as I’m not wealthy myself, I’m never on the receiving end of a personal, direct ask. So it’s been fascinating to find myself in the shoes of the asked not just once but twice in recent weeks. And both experiences gave me tiny insights into what it must be like to be courted by causes wanting your cash, and how easy it is to get the asking wrong.

The first experience was a result of mistaken identity. I was visiting a major charity to present some research and my host – a senior member of the fundraising team – very kindly offered to give a me a tour of the building. Presumably this person would usually be giving tours to well-heeled potential donors or senior decision-makers from charitable foundations, so it’s not surprising that her colleagues assumed I had access to big bucks (though my shabby shoes ought to have given me away as a decidedly poorly-heeled academic). Towards the end of the tour I spotted something on the wall that I wanted to ask about, yet suddenly found myself being lectured, at length, about an aspect of their work that she thought I wanted to know about. Time stood still as the long-winded explanation went on and on, and  I began to appreciate visiting dignitaries’ ability to feign interest in things they never expressed any desire to know. Suddenly our time was up and I was bustled out of the room, slightly annoyed and no wiser about my unasked question. As I am not a potential mega-donor no harm was done, but I wonder how often we talk at, rather than to, potential donors, and make unwarranted assumptions about what will inspire them.

The second experience concerned an acquaintance who phoned out of the blue and asked me to join a committee to help a cause that she cares passionately about. As it happens I don’t share her interest in this cause, but have often shared what knowledge I have about charities and fundraising with people I know who are committed to things that don’t rock my boat. But the speed at which this ask came and the lack of groundwork in warming me up for an ask – albeit for a contribution of time and knowledge rather than money – was another case study in how not to inspire and motivate a potential donor. What’s worse, I felt terrible for saying no as I felt judged for my lack of interest in the cause.

Being a student of philanthropy is the best job in the world. It’s a subject I find endlessly fascinating and hopefully the findings will do some good at some point. But I’ve always been aware that my life experience is so very far removed from those I try to study. Thanks to an over-enthusiastic staffer and a clumsy request for help, I’ve had a tiny taste of what it must be like to be have something that other people want, and a tiny insight into why the answer might be no.

It’s not the money, stupid

Popes, catholics, bears and woods all came to mind when reading a recent article in the Wealth Bulletin. Apparently,  a new survey finds that a quarter of people defined as Ultra High Net Worth (UHNW, translation: the super-duper rich) say donating to charity is not key for them. According to the author of this survey, “They prefer either to invest their money or spend it on luxuries for themselves and family, but giving it to others less advantaged than themselves is not an important part of their lives.”

The notion that the rich automatically give, and that the poor can’t afford to, is frustratingly widespread and utterly wrong. Anyone who has tried to raise funds knows that the capacity to give is not the same thing at all as the desire to give. Money is a necessary, but not a sufficient, factor behind philanthropic decisions.

People don’t make donations just because they can afford to. If that were true then every rich person would be a philanthropist, and every fundraiser who met a rich person would walk away with a big cheque. And if there were a direct, causal link between money and donating then people on low incomes would not be so generous, yet we know that the poorest 10% actually give away more as a percentage of their income than do the richest 10%.

The UHNW people in this survey presumably know that they have money to spare, but a quarter of them do not yet know why philanthropy would be a good use of their money, how their donations would make a difference, and that they might even get a bigger kick out of helping others more than purchasing further luxuries for themselves and their loved ones.

So let’s stop being surprised that wallets don’t open automatically, and remember that people give because:

  • they think the cause is important
  • they feel good about supporting a particular charity
  • they trust the leaders of the charities they support
  • they are passionate about making something happen
  • they want to be part of a charity they admire
  • they enjoy meeting other donors
  • they couldn’t live with themselves if they didn’t

So it’s not really about how much money you have or don’t have. Whether rich, poor or even UHNW, it’s about knowing what needs exist, being asked properly to help, believing the donation can make a difference and being able to enhance our own lives at the same time as trying to improve the lot of others.

The real million pound question

The philanthropy research centre where I work publishes an annual report on ‘Million Pound Donors’ which collates and analyses data on charitable gifts worth £1m or more. Media coverage (for example in the FT and the Times) tends to focus on how many donors give at this level, and whether the value of these mega-gifts is going up or down. But when I discuss the findings with wealthy donors, it’s not the question of quantities that most interests them. The finding that catches their eye is the one that counts how many organisations are on the receiving end of gifts of this size – they are all amazed to learn how few charities have donors giving at this level.

In both the years that this study has taken place, less than 160 charities were found to be on the receiving end of donations of this size, and the vast majority of these ‘million pound recipients’ received only one 7-figure donation. Of the 159 recipients in 2006/07, 141 only got the one; of the 153 in 2007/08, 133 only got the one. Therefore in each year, only around 20 organisations got more than one donation worth £1m or more.

It may seem unrealistic, even greedy, to expect to have more than one supporter who is willing and able to give at this level. But a large number of charities have fundraising targets that require them to raise many millions of pounds each year. According to the Charity Market Monitor 2009, 8 UK charities raised £100m or more, a further 51 raised more than £50m and a total of 116 charities raised more than £10m. As the vast majority of these organisations have either one or no million pound donors, then these impressive targets are being hit as a result of the collective value of a huge number of smaller sums.

A headline in a recent edition of  Civil Society media attests to this fact, as it carries news that the Make-A-Wish Foundation – which raised £4m last year – has received its largest-ever single donation of £702,158. This big donation is great news, yet the ability of charities to raise multi-million pound sums, year on year, in the absence of a major benefactor is surely one of the great, untold stories in UK fundraising. Many more examples abound. I recently met with fundraisers from two well-known charities – both amongst the 50 most popular fundraising charities – neither of which had had a donor giving £1m or more for many years.

Millionaire donors are genuinely – and quite rightly- shocked to learn that they are probably the only person giving at that level to their favourite cause. Knowing for sure they are the charity’s only 7-figure donor is empowering as it gives them permission to approach their friends, who they now know are not concealing a similarly-large donation through modesty. Being honest about the rarity of these gifts is also a powerful tool for retaining support as – assuming the million pound donor is pleased with how their money has been spent-  they are more likely to renew once they appreciate the unique significance of their gift.

Yet fundraisers appear reluctant to come clean about the size of their charity’s million pound supporter club. Perhaps they think it’s a sign of weakness to have attracted so few, or implies they cannot cope with donations of this size?

But the gasps of genuine surprise from millionaire donors tells a different story. They’ve been given a false impression that ‘people like them’ keep charities going, and are shocked that the burden of funding good causes is not in fact falling on the wealthiest shoulders. It’s time for fundraisers to swallow their pride and admit that major donors are rarer than four leaf clovers. It could help these exceptional donors to become a little less of an exception.

All kinds of charities have the X factor

Have you heard that this year’s beneficiary of the X Factor charity single is an organisation working with parents in prison, and that they were chosen after narrowly edging out competition from a befriending scheme for asylum seekers and a project that provides protection for female sex workers? No, of course you haven’t heard any such thing because it’s not true. This year’s X Factor charity single will raise funds for the Great Ormond Street Hospital (GOSH), the 150 year old London-based children’s hospital that provides world-class care for young patients and their families. GOSH is a great charity, it meets important needs and its successful fundraising is admired by many, including me. But isn’t there something wearily predictable about it being chosen as the beneficiary of this Autumn’s blockbusting celebrity fundraiser? What about other causes in greater need of a boost in funds and raised profile, including those that meet more complicated needs and can’t offer such appealing photo shoots?

Of course, the X Factor is not the only corporate behemoth to pick a less-than challenging recipient for its fundraising efforts. Many organisations look for charity partners that offer a ‘halo effect’ in which their positive connotations are transferred to the company, their staff and customers. But this approach results in the exclusion of many excellent charities from such fundraising opportunities because their ‘face’ does not fit the corporate image, their beneficiaries do not command widespread appeal or they fail to evoke a ‘feel good’ factor.

Particular obstacles lie in the way of charities whose clients are perceived to be in some way responsible for their situation. Research shows that donors tend to favour charities whose beneficiaries are perceived to be disadvantaged for reasons outside their control: the more ‘innocent’ the victim, the stronger our desire to help. So what chance do charities working with prisoners, substance abusers or other ‘unpopular’ causes have, when pitched against fluffy puppies and sick kids in head to head popularity contests?

There are tens of thousands of charities doing good work across the UK, helping all kinds of people and doing great work to support a much wider range of causes beyond the typical focus on ‘kids, kittens and cancer’.  Wouldn’t it be nice if Simon Cowell and co recognised they also have the X Factor?

When is it a bad idea to ask a billionaire for a donation?

It’s said that becoming rich means never eating another bad meal and never telling another unfunny joke. On the back of my experience this week, at an event with 2,000 fundraisers and a handful of rich philanthropists, I’d suggest it also means never being asked another decent question.

The star turn at this year’s ‘Raising Funds from the Rich’ conference, held in London on the 14th October, was Sir Richard Branson, founder of the Virgin business empire and a man with his thumbs in a lot of philanthropic pies. His current charitable interests range from climate change to health and education in Africa to ‘The Elders’ initiative, which harnesses the moral authority of global statespeople like Nelson Mandela, Kofi Annan and Mary Robinson to intervene in intractable conflicts.

By the time Branson arrived to give his speech, delegates had heard from a range of speakers addressing the central question: How to raise funds from the rich. The advice was pretty consistent and covered the same 3 good points: (1) do your research to identify people who are wealthy enough to give big sums and have an interest in your cause, (2) take your time to build mutually respectful relationships, and (3) don’t make the ask until the donor is engaged with your cause. Unfortunately, this advice was ignored by delegates during the Q&A following Branson’s speech, whose ‘questions’ were almost all variations on the theme of: “Please give my charity some money”.

In answer to the riddle posed at the top of this post: it’s clearly a bad idea to ask a billionaire for a donation when your only qualification for doing so is that you happen to have grabbed the microphone. But reader, they did. Three days later I am still utterly perplexed as to why anyone could have thought it a good idea to make a pitch for funds rather than seize the chance to ask a more searching question about Branson’s philanthropic journey. Wouldn’t it have been interesting to learn what got him started? how he decides what to support? how he decides how much to give? what’s been his biggest philanthropic mistake?

But worse than this missed opportunity is the terrible impression we must have made on a man who has the ability to pump, literally, billions into our sector should he follow the lead of Bill Gates and Warren Buffett by transferring almost all his fortune into philanthropy. We know that one barrier to giving is donors’ fears (however misplaced) that charities lack the nous to spend their money wisely. This fear is especially prevalent amongst businesspeople who suspect our sector of being full of nice-but-ineffective people. I doubt that Branson left that event impressed by what he heard or thinking he’d spent time with people who could be entrusted with his money.

Of course it’s in every fundraiser’s bones to seize opportunities to promote their cause. But I think we also have a responsibility to advance the reputation of the charity sector as a whole. Asking for money in this setting was not just unlikely to succeed, toe-curling to listen to and a missed opportunity to ask decent questions. It may even have spoilt the chance of encouraging Branson to gear up from being a good philanthropist to a great one.

Do fundraisers raise funds?

It sounds like a rhetorical – or even facetious – question, but I’ve been thinking recently about the role that fundraisers play in raising funds for good causes. I started my career as a fundraiser and I think it’s a fantastic profession full of dynamic, inspiring and hardworking people who are doing their best, often on minimal budgets, to keep great organisations afloat.But in my current role as a researcher I’ve been interviewing donors about why they choose to support charities, and they rarely mention any interventions by fundraisers. The stories donors tell about what attracted them to a cause and their reasons for sticking with it usually centre on internal impulses – their own passions, concerns, empathy etc – or the urging of loved ones and associates to make a donation.

Yesterday I was reminded of this disparity between the official role of fundraisers as the expediters of donations and donors’ accounts that write fundraisers out of the picture. I went online to make a donation to the emergency response to the recent series of disasters in the Asia Pacific region . At one stage in the donation process I was asked to select from a list of 16 options to conclude the statement ‘I am making this donation because…’. I looked in vain for an option that related to my vague desire to ‘do something’ in response to the scenes of misery filling the TV news. But 12 of the 16 options that appeared in the drop down list were variations on the theme of being asked by a fundraiser (eg. ‘I saw an advert’, ‘I read a leaflet’, ‘I spoke to a fundraiser’) and none of the other 4 options were accurate (I wasn’t memorialising a loved one/celebrating a birthday/participating in a workplace scheme).

It is clearly unfair and untrue to write fundraisers out of the picture, yet this list assumed that funds are only raised as a result of such prompts.

Perhaps it doesn’t matter much; so long as funds are raised who cares who gets the credit? But if we are serious about creating a culture of asking to complement our culture of giving, then I suspect the fundraising profession needs to take two seemingly contrary steps. Firstly, it needs to remind donors that their impulses are often inspired, nurtured and sustained by the efforts of people working in fundraising departments. And secondly, it needs to recognise that people can make a decision to give without having been on the receiving end of any specific appeal.

A new boost for the study of charity and giving in the UK

Hard to believe it is now July. The aspiration to submit my PhD thesis (on ‘More than Money: the social meaning of philanthropy in contemporary UK society’) by 31st July is looking increasingly daunting. So – much as I love being part of the online community discussing philanthropy and charitable giving – I’m going to have to cut out blogging and cut down on tweeting until the ‘big one’ is done.

But I am pleased to use this last (for now) post to share news of a very exciting development in the world of understanding charity and giving. Next March the first edition of a new UK-based academic journal, Voluntary Sector Review, will be published and the the call for papers is now open.

The new journal is an initiative from the friendliest group of academics that I know: the Voluntary Sector Studies Network. When I made my first tentative steps from fundraiser to researcher, the VSSN was a great source of information, contacts and encouragement and the value of membership continues to increase as I settle into my new career.

The academic study of charity and giving in the UK has enjoyed a lot of boosts recently – the launch of two research centres devoted to the Third Sector and to Giving and Philanthropy, the associated job opportunities for researchers wanting to specialise in these fields and a greater number of events and online forums for the exchange and dissemination of ideas (foremost amongst which is also a VSSN initiative – the annual conference, which is being held at the University of Warwick on 7-8 September 2009).

But an academic community needs more than research centres, job openings and meetings – it needs somewhere to publish peer-reviewed work. I really hope there’s a big response to the call for papers and I can’t wait to read the first edition next Spring.

Do Brits lie about their charitable giving?

This weekend I found myself having  a row with someone I’ve never met, in front of hundreds of people that I don’t know. The row occurred on Twitter with an American who disagreed with my take on some new research about whether or not Brits lie about their charitable giving.

Last Friday, the Chronicle of Philanthropy (@Philanthropy) tweeted a provocative message:  ‘Almost Half of Britons Have Lied About Giving’. As a Brit, and as someone whose job it is to understand giving, I was personally and professionally compelled to find out  more. The story behind the tweet can be found here on the Chronicle website, which itself contains a link to the original story posted here on the Channel 4 website, reporting on the findings of a survey of 2,000 Brits. Here’s the crucial extract that led to the inflammatory headline:

Almost half (47%) confessed they had lied about having change to donate

Ah, the relief of reading the story behind the headline. Half my fellow citizens are not going around pretending to have made donations when they haven’t, they’re just telling white lies when confronted with unprompted ‘asks’, to save the egos of all involved. That’s not deceit, that’s good manners!

I’m a big fan of face-to-face fundraising, it’s a tough and important job and I know it succeeds in recruiting new supporters who don’t respond to other fundraising techniques such as direct mail. But the rise of face-to-face, in addition to ubiquitous street collections, means that many of us are encountering more asks than ever before. We can’t respond to every ask with a donation, but nor do we wish to seem ungenerous to the cause or unkind to the person doing the asking.

Let’s assume my philanthropic preference is for tackling global poverty, that I make regular donations to a few international aid charities and am willing to hear more about charities working in that field. So when I emerge from the tube and walk straight into someone shaking a tin for ‘Save the Pet’ or hoping to sign me up for a direct debit to ‘Ballet for All’, how do I disengage with minimal time and fuss without causing offence to the fundraiser or their cause? Trapped by politeness, I excuse myself with a pragmatic rationale: “Sorry I’ve got no change” or “Sorry I’m in a rush, no time to talk”, and we go our separate ways, with everyone’s ego and sense of purpose in life still intact.

So let’s have no more intemperate headlines about duplicitous Brits. We’re not tight, we’re just well brought up.

Sugar-coated or cynical? More on books about philanthropy

Something odd happened after my last blog about my ‘best books’ on philanthropy. An American academic, whose work I admire, criticised my taste for being too sugar-coated. As someone who tends to fly home from philanthropy gatherings in the US feeling like a hard-nosed, cynical European amidst a sea of positive, high 5-ing Yanks, I rather enjoyed the compliment.

But to dispel the saccharine-taste left by my choices, I should point out this fuller Reading List that I maintain for Philanthropy UK, and I’d like to share the fave philanthropy-related books sent in by others in reply to my last blog:

1. Pink Ribbons, Inc.: Breast Cancer and the Politics of Philanthropy, by Samantha King

2. Dead Aid, by Dambisa Moyo

3. The Life You can Save, by Peter Singer

4. The Pollyanna Principles: Reinventing ‘Nonprofit Organisations’ to Create the Future of Our World, by Hildy Gottlieb

5. Sweet Charity? Emergency Food and the End of Entitlement, by Janet Poppendieck

6. What’s Love Got To Do With It? A Critical Look at American Charity, by David Wagner.

My former colleague at Kent University, Sarah Moore, wrote a similar book to King’s called: ‘Ribbon Culture: Charity, Compassion & Public Awareness’, which makes an interesting argument about the efficacy of symbolic acts such as ribbon wearing. I must admit the Singer and Moyo books are in my ‘to read’ pile and I wasn’t aware of Gottlieb and Poppendieck, but they’re now on my ‘to buy’ list.

But I must disagree about the Wagner book. It’s been a number of years since I read it but just a glimpse of the spine on my bookshelf brings back vivid recollections of the negativity contained within. The clue, of course, is in the title: What’s love got to do with it? is unlikely to be answered with a resounding “Lots!” and in the cover image, which is a sea of peanuts (subtle, huh?). Wagner is on a mission to reveal the selfish, guilt-ridden instincts that lie behind apparently innocent, compassionate acts and to prove that philanthropy is a big cover-up for the harshness of America’s free-market capitalism.

I’m a sociologist rather than a psychologist and I don’t pretend to know why people do what they do, but it seems as implausible to argue that philanthropy is entirely cynical and selfish as it is to argue that philanthropy is entirely selfless.

I think the ‘best books’ I chose in my last blog tread the line between these two extremes, acknowledging that one of the most distinctive features of philanthropy is its ability to meet the needs of both donors and recipients. Reductionist approaches that see philanthropy in black in white, the realm of only goodies or baddies, are misleading and harmful.

Ian Wilhelm of the Chronicle of Philanthropy also joined the debate about ‘best books’ and I fully concur with one of his choices – The Foundation: A Great American Secret by Joel Fleishman, which includes a great riposte to the cynics’ position:

“Large-scale charitable giving is not primarily the province of the robber barons racked by personal guilt over their depradations, no matter what amateur psychologists or historians with an anti-capitalist bent might assume”.

Hear hear, from both sides of the Atlantic.

Best Books on Philanthropy

I like being asked my opinion and I like books about philanthropy, so my day was well and truly made when the marvellous Martin Brooks of New Philanthropy Capital asked me to recommend some good books about philanthropy.

I like being asked this question so much that I actually have an online reading list which contains more information than even the pointiest headed of philanthropy wonks could possibly want. So here’s the diluted version of my top 3 essential reads about philanthropy, in ascending order:

3. Peter Frumkin (2006) ‘Strategic Giving: the art and science of philanthropy’. Frumkin sets out the functions of philanthropy and how to go about doing it well. Full review here (though you need to scroll down to the 5th book).

2. Robert Payton & Michael Moody (2008) ‘Understanding Philanthropy: It’s meaning and mission’. This book makes a strong argument that philanthropy is an important and interesting subject that deserves greater attention. Full review here

1. Matthew Bishop & Michael Green (2008) ‘Philanthropcapitalism‘. Despite the misleading title, this book is about so much more than an argument for a certain type of modern philanthropy that the authors have labelled ‘philanthrocapitalism’, it is an excellent review of the whole landscape. If you only read one book, this is the one to go for. Full review here and more on their own website

I reckon anyone reading these 3 books will gain a good understanding of the history and contemporary nature of philanthropy around the world, though if you want to dig deeper beyond UK/US experiences, I’d also suggest Warren Ilchman’s edited volume on ‘Philanthropy in the World’s Traditions’ (1998).

If you decide to take up these suggestions I’d love to know what you think of them, and if you disagree with my picks then do please suggest some alternatives

Ballot Box Benevolence

About 10 years ago I was asked to contribute to a London radio discussion about whether or not people who play the National Lottery should get any say in which charities benefit from lottery money. It was an interesting debate to be part of, because my natural instincts in favour of ‘people power’ conflict with a fear that going down that path would unfavourably affect charities that work with ‘unpopular’ causes and beneficiaries. Who would vote for organisations that work with prisoners or asylum seekers or do research into medical issues that affect only a tiny percentage of people, but are in no less need of lottery funds than more popular causes like animal welfare, children and cancer research? We chewed over the pros and cons of this approach on air, but the wind was already blowing in the direction of public participation.

In the subsequent years, a portion of lottery money has indeed been influenced by public votes, including funds for heritage causes allocated via the TV programme ‘Restoration’ and funds allocated to regional organisations as a result of the ‘Peoples Millions’ scheme, which has so far distributed £18 million.

Another type of fundraising that sometimes uses popularity contests to pick recipients is corporate ‘Charity of the Year’ partnerships. There are 3 reasons this is a sensible approach:

(1) The staff and customers will be asked to get involved in fundraising so it is reasonable that they help to choose the cause that will benefit from their efforts, rather than it being selected by the chairman or a director.

(2) A good ‘fit’ is a pre-requisite for success in corporate partnerships; they rely on a natural empathy between the charity and company. Employees and customers are more likely to be enthusiastic and generous to a cause they have chosen.

(3) Voting has benefits for the employer as it can engage staff and enhance customer loyalty, and it has benefits for the short-listed charities who may pick up new supporters during the pitching process, even if they are not ultimately chosen.

But I still have doubts about using democratic procedures to decide which charities get support. What about those excellent organisations that are effectively excluded because their face doesn’t fit the corporate image, their beneficiaries don’t appeal to a majority of the electorate or they fail to evoke a ‘feel good’ factor amongst enough customers? I’ve written more about this in the current edition of Professional Fundraising magazine which you can access here 

What do you think? Is it right to introduce democracy into fundraising or is ballot box benevolence fatally flawed?

How charities can get support from family businesses

Yesterday I blogged about the key conclusions of  ‘Natural Philanthropists’, the new report I’ve written on family business philanthropy. But as someone who started out as a fundraiser, I’m most excited about sharing the section of the report that contains ‘lessons for charities’ seeking support from this sector. Here’s a summary of what we found, for more details do have a look at the full report

1. Family business owners may be more ‘naturally philanthropic’ than non-family owners, but they are busy people, so do check the criteria to avoid a wasted application and ensure your proposition doesn’t make unreasonable expectations on their time. 

2. Family businesses respond positively to impressive individuals, they buy into the charity leadership as much as the charity’s mission.

3. Family businesses look for well-run charities that can prove their impact. The ‘ask’ needs to go beyond telling good stories to include evidence that the funds make a difference.

4. Do your research – family business owners have more discretion over philanthropic spending than non-family business, so look for family connections that enhance your appeal. 

5. Family businesses often support local sports teams, which combine doing good in the local community with publicity, for example by including company logos on kits; charities should think about ways they can offer similar promotional benefits.

6. Family businesses are predominantly small, and they have a tendency to work with similarly sized charities, preferably those that focus on the community in which the business is located. 

7. However, larger family businesses with increasingly globalised business arrangements may contribute to more strategic philanthropic approaches that disburse funds beyond the local community, as such businesses may feel less ‘rooted’ in their local neighbourhood and may feel less of an urge to ‘give something back’ to their community. 

8. Much family business decision making is informal – it happens around the kitchen table rather than at board meetings – so personal relationships with significant family members matter more than formal presentations to senior executives.

And finally – the family business owners who contributed to this research were clear that fundraisers should not be pessimistic about the impact of the recession: many family businesses would rather cut dividends than cut their charity budget and will avoid reneging on pledges, not least because of the reputational impact.

One told us: “Despite the current economic climate we will always see giving as a priority, none of the family members would think it was right to do less”

And another said: “I’m not saying our giving is untouchable but I can’t contemplate standing in front of close family members and saying ‘we’ll increase the dividend but we’re going to slash the charitable funds”. 

But fundraisers should expect to change their approach during the economic downturn, for example glamorous fundraising dinners are not attractive in this climate. As one owner said:

“The froth will be off, like taking a table at a glitzy, high-profile fundraising dinner that everybody’s got to bid daft prices for daft holidays, we’ll be avoiding those sorts of things”.

In conclusion, seeking support from family businesses involves a slightly different approach to traditional corporate fundraising – it’s more personal and a bit harder to get access to the decision makers. But the defining features of family businesses – values in the workplace and a commitment to stewardship – means that these firms are ‘naturally’ philanthropic and prefer continuity in their philanthropic acts. It may be harder to attract their initial support but the pay-off is a productive, meaningful, long-term relationship.

Natural Philanthropists: philanthropy in family businesses

I’ve just written a report on philanthropy in family businesses, it’s called ‘Natural Philanthropists’ and is free to download here

The report is based on focus groups and interviews with family business owners, and it argues that the unique features of family businesses – especially the presence of family values in the workplace, commitment to long-term stewardship and the necessity to transmit values to the next generation – all help to support a strong philanthropic culture within family firms.

I’ll blog another time about the lessons for charities who want to get support from family businesses and the overall recommendations addressed to government, charities and the family business sector itself. But here are the key conclusions:

1. Family business owners are ‘natural philanthropists’.  The presence of family values in the business setting appears to encourage a more responsible or ethical approach to business and creates an environment that encourages philanthropy. In family businesses there’s no distinction between an owner’s ‘real self’ and their ‘work self’, so values don’t get “checked at the door”.

 2. Family businesses are largely local heroes. They often tend to have strong roots in local areas and want to be (and be seen to be) a good neighbour. They also have a strong desire to give back to the communities in which their staff, suppliers and customers live, in recognition of the role they played in generating their wealth.

 3. Informality is the rule but some degree of formality is the ideal. Philanthropic activity in family businesses tends to be informal and ad hoc, particularly in smaller organisations. But those family businesses that take a more strategic and systematic approach, without letting bureaucracy squeeze out family values, appear to make more effective and impactful contributions. 

 4. Philanthropy strengthens family businesses and strengthens business families. Not all family members want to play a day-to-day role in the running of the business, but do want to be involved in some way with the family firm. Grant-making and other types of community involvement creates opportunities for family members to engage with non-operational aspects of the business. It also raises morale within the company, helps to recruit and retain the best staff and meets the need of those employees who demand more from the workplace than the pursuit of profit.

 5. The following factors can increase the chance of family business philanthropy being an effective and enjoyable experience:

·      Being clear about family and business values
·      Identifying experienced leadership within the family and the company
·      Seeking external advice from philanthropic advisers and intermediaries
·      Setting up proportionate governance arrangements
·      Involving teenagers, retirees & those not involved in running the business

There’s a lot more information and in this report, so do have a look at the full version here 


 

When America sneezes, we may have already had the jab

The newly released figures on charitable giving in the USA during 2008 make very interesting reading. The full press release from Giving USA is available here

Despite the onset of a well-heralded recession, giving only slipped from $314 billion to $307 billion, and the decline is dragged down by larger decreases in corporate and legacy giving – individuals only slipped by 2.7%.

I have long been arguing that there is no reason to assume that philanthropy will be dramatically affected by the economic crisis. Charitable giving is a very complex and personal decision that is not driven solely by how much spare money someone has.

On the whole, people don’t think: “I’ve got money so I can give” or “I’ve got less money so I can’t give”.  If the main reason that people made donations was because they could afford to, then every rich person would be a philanthropist, and every fundraiser who met a rich person would walk away with a big cheque. And if there were a direct, straightforward link between having money and making donations then people on low incomes would not be so generous, yet we know that the poorest 10% actually give away more as a percentage of their income than do the richest 10% 

So, giving is not just a function of our capacity to give. The fundraisers know it and the research shows it. What a few decades of research into philanthropy shows is that people give: 

• because they think the cause is important and their money can make a difference.
• because they feel good about supporting that cause or charity.
• because they care about others and the wider world.
• because they’ve been brought up to believe they have a duty to give something back.
• because they want to be part of a charity that they admire.
• because their family and friends support that charity, so they want to as well.
• because their religion encourages them to give away some of their wealth.
• because they enjoy attending the fundraising events and meeting new and interesting people.
• because they couldn’t live with themselves if they didn’t.
• because in so many different ways – and in different proportions depending on each individual donor – supporting charity enhances their life. 

So I’m relieved to see that the Giving USA figures do not show a terrible slump in donations, as many people predicted. And given that UK giving has consistently been less than half of that found in the US (usually below 1% of GDP versus over 2% in the US)  let’s hope any decline we have is similarly halved. In fact, given the low starting point for our giving, let’s not assume it has to decline at all.

Back to the Future: Who’s to blame when philanthropic support ebbs away?

Just back at work after a lovely break in North Yorkshire. Today I’m on my way to attend an ESRC seminar at Newcastle University on newly emerging roles and relationships between the VCS (voluntary & community sector), communities and the local state. I’m looking forward to hearing the papers and getting my brain back into gear.

But I did get some philanthropic food for thought during my hols. We visited Rievaulx Abbey, a Cistercian monastery founded in 1132 which at its peak housed 650 monks & lay brothers and was one of England’s wealthiest monasteries. The abbey’s income came from philanthropy and from trading: the monks received donations of land from patrons, money from visiting pilgrims and earnt income by mining lead and iron, rearing sheep and selling wool to buyers from all over Europe.

Henry VIII usually gets the blame for closing down these allegedly thriving centres, which also provided some health and welfare services to the local poor population, but in fact by the time of the Dissolution only a handful of monks and brothers were left. From being a thriving and rich community in the mid 12th century, Rievaulx’s fortunes fell dramatically as a result of bad management (debt incurred on building projects), bad luck (the Black Death and sheep scab) and changing social norms (rising individualism and declining attractiveness of monastic life).

The moral of the story? Organisations that rely on philanthropy and volunteering can only continue to exist if they are well-managed, have some luck and chime with the mood of the times. Every organisation that struggles to survive in 2009 will blame the recession, but like the monks blaming Henry VIII, that won’t necessarily be the whole story.

Philanthropists’ secret plans to save the world?

A number of different news outlets are reporting that a group of the most prominent US philanthropists met in secret earlier this month. The meeting was allegedly convened by Bill Gates and Warren Buffet, and attendees are repoted to have included pretty much all the top names in US philanthropy, including Ted Turner (the first billanthropist) George Soros, Oprha Winfrey, Michael Bloomberg and David Rockefeller. According to the Chronicle of Philanthropy, the attendees have collectively given away over $72 billion since 1996.

Everything about this meeting is fascinating for philanthropy-watchers. What ideas did they share? Might it lead to new collaborations? Might it lead to new recession-busting donations? And for UK based philanthropoids, the questions also include – could this happen here? Who’d attend? What would their collective donations amount to?

Perhaps the government’s new Philanthropy Ambassador, Dame Stephanie Shirley, is the woman who could repeat this exercise in the UK? Mind you, the US meeting was kept secret for weeks, wouldn’t it be nice if similar secrets were about to be spilled on this side of the pond?

The best donor is a living donor

Just read a nice story on the BBC News website about Northumberland millionaire Brian Burnie’s decision to sell his country pile and give all the proceeds to charity. Describing his decision to divest himself of his biggest asset whilst he and his wife still need a place to live, he says:  “We won’t exactly be selling the Big Issue but we will be downsizing.”

Burnie clearly understands the attractions of giving it all away whilst you’re alive rather than waiting ’til you’re dead and doing it in a legacy. He’s right of course, it’s more meaningful to donate whilst you’re still around and it’s more fun – charities can’t be nice to dead donors or show them what difference their support made. (Though as the Chair of the first organisation that I fundraised  for pointed out, you rarely get dissatisfied legacy donors!). But perhaps most crucially – and as others have pointed out – a charitable gift made in a legacy is really a gift from the descendants not the donor, who has no further use for that money.

‘Giving whilst living’ is a phrase you hear quite often in the US, but only a few UK donors have spoken openly about doing this, foremost amongst them being David Sainsbury, whose efforts to spend out the entire balance of his Gatsby Foundation have seen him become the UK’s first billanthropist

So well done to Brian Burnie, here’s hoping he inspires other UK donors to follow suit.

There’s no shortage of major donors…

Yesterday I got away from campus to visit Save the Children to share some of our latest research and find out what people on the front line of fundraising are thinking about. It was an excellent trip,  Save has a very impressive set-up – over 100 fundraisers in a big open plan office, energetic people as far as the eye could see.

The main point of my talk was to share the findings of our first wave of research into Million Pound Donors, which is available online 

But it’s impossible to talk about major donor fundraising these days without acknowledging the elephant in the room that is the recession, so I spent a good bit of time debunking some of the more hysterical media headlines about ‘black holes’ in charity income and setting out my opinion that philanthropy can still thrive in a recession. Here’s why I think that:

(1) There’s no straightforward relationship between having wealth and giving it away.  As anyone who’s tried to raise funds knows – the capacity to give is not the same thing at all as the desire to give. 

(2) People don’t make donations just because they can afford to. If that were true then every rich person would be a philanthropist, and unfortunately, they’re not. Therefore, we make a mistake in assuming that the ups and downs of the wider economy will be directly translated into the ups and downs in giving.

(3) We shouldn’t under-estimate donors’ commitment to the causes they care about. All spending decisions involve prioritising and people can (and often do) choose to cut other things out of their budget before they touch their donations.

(4) There’s a danger in publicly panicking about potential falls in donations because it could become a self-fulfilling prophecy.  We know that social norms matter  – a lot of time and effort has been spent encouraging the British public that it’s ‘normal’ to give – and now we risk undoing that by giving the impression that everyone else is dropping their giving, so they should too!

Save staff seemed to concur with much of what I said, including the risk of us talking ourselves into a giving recession, and I gather their income is holding up despite the economic crisis. (In fact, I’ve yet to meet a fundraiser who says their voluntary income is collapsing – it’s either stable or projected to rise, in one case as steeply as 30%!)

A lot of people liked the sentiment in my last slide, so I said I’d put it in my blog. It’s from a book by Jerold Panas called Mega Gifts: Who gives them, who gets them?, and it has always inspired me when I’ve been trying to raise funds:

“Mega givers are captivated by the opportunity, the challenge, the magic of being able to do something special, something others may not be in a position to do… There is no such thing as a shortage of major donors. There is only a shortage of great ideas to raise money. A desperate need for visions and dreams”.

Is the 50% tax rate good or bad news for givers?

Since the Budget announcement that higher rate tax is rising to 50%, those of us who research giving have been bent over calculators trying to work out the implications for donors.

There’s been 2 types of response. Pessimists say, “people will feel poorer and pissed off at paying more tax so will donate less, aggravating any recessionary effect”. Optimists say, “giving just got cheaper – higher tax means higher tax relief, which could counter any recessionary effect.

So who’s right? In my experience – as both a fundraiser and a researcher – tax issues are not deal-makers or deal-breakers, but they are awfully handy for post-hoc rationalisations. Non-donors often say “I pay enough tax and have nothing to spare”, or “My tax is my donation to the greater good”. Some even blame the tax system for being too complicated:“I’d give more if I understood how the tax reliefs work”. 

I used to have no sympathy with that ‘tax breaks are complicated’ view. Under the Gift Aid scheme, so long as you’ve paid enough tax that year, all your donations are eligible for full relief. How complex is that? This proposition was once beautifully illustrated by an animal charity that sent supporters a leaflet showing a basket of 3 kittens that had benefited from their donation. The donor lifted a flap to reveal a 4th kitten which the donor could help simply by signing a Gift Aid form. But post-Budget, the depths of my innumeracy have been revealed and I too have struggled to calculate exactly how many kittens, or parts of kittens, will benefit when tax rates rise by 5 or 10%.

So I turned to the most financially astute person that I know, Professor Gareth Morgan of Sheffield Hallam University, who supplied these calculations and agreed I could share them:

Standard position for a 50% taxpayer – A £1000 net donation is worth £1250 to the charity with basic rate tax reclaimed but £1282 including the gift supplement (until 2011). The gross value of the gift is £1250 and the donor on 50% tax thus get an extra 30% personal relief = £375 (50% – 20%) . So the net cost to donor is £1000 – £375 = £625. So a gift which costs the donor £625 is worth £1282 to the charity – ie. the value to the charity is 205% of what it costs the donor!! Or conversely a donor who wants to fund a major item for a charity only has to sacrifice 48.75% of the final cost – i.e. £1m to the charity can be given at a cost of £487K to the donor.

Gareth concludes: This must be the best charity giving tax break anywhere in the world!

And if those figures didn’t make you dizzy enough, he adds:

If the donor is clobbered by the tax relief on pension contributions being limited to 20%, a donation to charity is much more tax efficient than a pension contribution – this is a completely new phenomenon. Also, however, the a large gift aid donation may have the effect of keeping the donor’s net taxable earnings closer to £150K and hence they may still get better relief on pension contribs than otherwise. Also for donors just over £100K taxable income in the band where the personal allowance is lost (£100K to £112K) the benefits of gift aid are phenominal.  The person is effectively on a marginal tax rate of 60% but a decent gift aid donation could keep them out of that.

Is it time to put the calculator back in the drawer and start spreading the good news to donors that pay higher rate tax?

It ‘aint how you give, it’s the way that you give it

There’s a new twist on the ‘what happens to giving in a recession’ debate, which is usually framed in terms of donations staying constant or declining. (Incidentally, I’ve yet to hear any commentator suggest they’ll go up, though I keep meeting fundraisers whose internal figures include projected increases – some as steep as 30%).

New data from the US suggests that recessionary impacts are not just about quantities but also about style. It makes sense that donors might be less keen on attending glitzy flash-the-cash gala dinners and more keen to write a simple cheque, but the Center on Philanthropy at Indiana University have found a 5-fold increase in anonymous giving, which they attribute to the current economic crisis. Ostentatious giving is clearly not a good look when friends, neighbours, employees and customers are finding it tough to pay the mortgage. But the rise in anonymous gifts has other drivers too. For example, a donor might not want previously favoured charities that have been given the chop to know that s/he still has money to give elsewhere. Or they might have sent their first ever cheque to a cause that is working on the front-line dealing with the fallout of the recession – like a homeless shelter or financial advice centre – and not wish to raise expectations that such a gift will be repeated.

Whatever the reasons behind this trend, it’s a good opportunity to raise the question of whether anonymous giving is a good or a bad thing. I tend to the latter view, partly because (as a former fundraiser) I know that identifiable donors are the backbone of fundraisers’ prospecting work, but more importantly, how can we build a culture of giving without identifiable role models?

Is Social Justice Philanthropy a tautology or an oxymoron?

After a break away over the Bank Holiday, I’ve been immersed in reading up on social justice philanthropy (SJP). There’s a lot of interest in this topic, but not a lot of agreement on exactly what it means. It’s too early for me to offer any definitive thoughts, but I have been struck by two polemic contributions to this debate:

Some argue that SJP is a contradiction in terms – philanthropy being (in their terms) a by-product of an unjust system or, as one critic defines it, “people getting credit for giving back what their ancestors should never have taken in the first place”.

Others suggest that philanthropy is, by definition, about social justice because  it redistributes resources from rich to poor and seeks to promote the public benefit.

Like most things, I suspect the truth lies somewhere in the middle, and I’m looking forward to continuing my education in SJP, and to working out how our research centre can help promote theory and practice in this important area.

How rich is rich enough to give some away?

I’m just finishing a paper I’m writing with Dr Pamala Wiepking, an expert on charitable giving who works at Vrije University, Amsterdam. Our paper is called ‘Feeling Poor, Acting Stingy’ and is a study of how people’s feelings about money can affect their charitable giving. We had access to a survey that asked people about  both their money beliefs and  their giving behaviours and we found that people who have insecurities about their wealth – who feel they don’t have enough or are worried about losing what they have – make smaller donations than those who are confident about their money.

I think it’s fascinating that people who have exactly the same amount of wealth can either be relaxed and feel they have enough to spare to give a nice chunk away, or can feel uptight and worried about letting go of any of it. Of course how much money you think you need depends on a lot of factors, like how many dependants you have or the size of regular outgoings like mortgages. But an interesting study called ‘A Bit Rich’, written in 2002 by Laura Edwards and published by IPPR, contains quotes from rich Brits who felt totally strapped for cash and with ‘nothing to spare’. Memorably, one said, 

“Wealthy? It’s £50 million and upwards as far as I’m concerned. £50 million is the point at which you don’t have to panic anymore”

And another claimed,

“I think I’d need to have something like £4 million in the bank to feel wealthy” 

(both quotes from p.35 of the report, which is free to download)

Our paper concludes that people’s own perceptions of their wealth – however objectively curious – need to be taken into account in fundraising activities, because someone being targeted may not agree they have much to spare. 

But we also suggest that under-giving by the rich might be due to a lack of empathy, rather than meanness or financial illiteracy. As Rousseau suggested nearly three centuries ago, the lives of the rich are so far removed from the lives of the poor that they lack any common fount of shared experience:

“Why are kings without pity for their subjects? It is because they count on never being human beings. Why are the rich so harsh to the poor? It is because they do not have fear of becoming poor.” 

If accusations of lack of empathy seem harsh, a more sympathetic approach suggests that genuine money anxieties are evenly distributed across the spectrum of wealth. A psychological study of motivation by Dr Terri Apter of Cambridge University found it is not uncommon for even very rich donors to feel anxious each time they give. She writes,

‘Typically there’s the man who has a sinking feeling in his stomach every time he makes a large donation… It’s the split between the reality of being rich now – but still having that self-image or those impulses that a not-rich person has. [They think], “Maybe tomorrow, given the markets and the exchange rates and property prices, this is going to look very stupid.”‘

Given the current economic crisis, perhaps we can sympathise somewhat more convincingly with anxious billionaires, even whilst we use this research to shore up our efforts to encourage them to start, or expand, their philanthropic activities.

The Giving List matters more than the Rich List

Today’s newly published Sunday Times Rich List 2009 is getting lots of press interest for all the wrong reasons. Widespread schadenfreude at the news that the 1,000 members have collectively lost £155 billion in the last year means there’s been no media space left to talk about what really matters: that despite the dramatic falls in wealth, the amount they are giving away continues to rise. To be precise, the 37.5% fall in wealth of the list members was accompanied by an 8% rise in giving.

Now admittedly there’s one methodological glitch in the otherwise admirable Giving List, which is the annual account of the philanthropic activities of our society’s richest members. For some reason, the compilers include pledges as well as donations that have been actually made. So, in 2008, Tom Hunter found himself at 3rd place on the Giving List due to his pledge to give away £1 billion in his lifetime. The figure £1,050,000,000 even appeared in the ‘recent donations’ column of the Giving List table – but that pre credit-crunch pledge means it’ll take an awful lot longer to hit the admirable £1 billion target.

So it seemed reasonable to anticipate the Rich List compilers would have quietly changed tack and not counted pledges anymore, when this one blew up so quickly. But in the new list, there in the no. 2 spot, is Lord Ashcroft, on the basis that he has pledged to leave 80% of his £1.1 billion fortune to charity upon his death. At least Hunter is still planning to give away his billion during his lifetime. Making your biggest financial donation after your death is surely more of a gift from your descendants than one that affects your own lifestyle?

But, without the Giving List we’d know next to nothing about the charitable acts of the wealthiest, so it is still very much three cheers for compiler Alastair McCall. It’s just a shame we’re more interested in luxury lifestyles and falling fortunes than in generous givers.

Which UK newspaper has the best philanthropy coverage?

Today’s Financial Times carries a letter from me , responding to a column they published last weekend, expressing a pessimistic outlook for philanthropy in the recession. So of course I’m momentarily biased. But for as long as I’ve paid attention to these things, I reckon the FT has provided the most extensive and thoughtful coverage of philanthropic issues.

It pains me to say that, because I’m a Guardian girl myself, but my favourite paper lets me down in this respect. They either assume philanthropy is a necessary evil due to an under-funded welfare state or is a plaything of ego-centric millionaires, both views being regularly espoused by star columnist Polly Toynbee. Indeed, in her book ‘Unjust Rewards’ (co-written with David Walker) philanthropy is described as ‘mere ostentation’, ‘a passport to the in-crowd’ and ‘another way of exerting power and control’.

The most jaw-dropping example of negative media coverage also appeared in the Guardian, courtesy of columnist Michelle Hanson who responded to the news that Bill Gates had committed over $30 billion to tackle global health problems, by writing on 28/11/06:

“Bill Gates is giving millions to charity. So? Why not? What else could he possibly do with all his money except coat himself in treacle and roll in banknotes?”

One of the reasons I’m drawn to studying philanthropy is because of this gulf between public opinion and donors’ own account of their actions. In essence, it seems that, whilst philanthropists tend to emphasise the altruistic, selfless and public nature of their acts, the media tend to emphasise the egoistic, self-serving and private benefits of their acts.

But this weekend – which brings news that David Sainsbury is the first Brit to donate £1 billion to good causes – wouldn’t it be nice if both the left-wing and right-wing press could focus on the positives, that people are willing to use their private wealth to fund public goods, and leave the negative stereotypes behind for once?

 

Will the 50% tax rate attract or deter rich donors?

Inevitably – it being the day after the Budget – we’re now fielding calls from journalists asking what difference it all makes to donors. One common question is: “will the new 50% tax rate attract or deter rich people from making donations?”.

The reason it could be construed as attractive is because all donations are eligible for tax relief, so the more tax you pay the ‘cheaper’ it becomes to give. A non-tax payer has to spend £1 to give £1, a standard rate payer only needs to give 80p for their chosen charity to receive £1 (the donation + the 20% tax relief), and the new highest rate tax payers will only have to pay 50p to give £1. In effect, the public purse will match-fund the donations of the richest.

The reason it could be construed as a deterrent is that someone paying 50p in the pound on tax, may feel they’ve contributed enough to the common good and be less willing to consider giving away a portion of what they have left.

The research says that neither outcome is inevitable, because tax relief is not a particularly significant factor in people’s decision to give, though it can affect how much they give. Hearing that it is now 5% cheaper to make a donation, will not turn a scrooge into Mother Theresa overnight. But when donors understand the tax breaks that are on offer, it can encourage them to raise the value of their gift. Someone planning to donate a few hundred thousand pounds might be tempted to go as high as £500k once they understand it could turn into £1m with a flick of the chancellor’s wand.

But the key finding from the research is that people give in order to make something that they think is  important happen, to get satisfaction and enjoyment, to bring meaning and significance to their life, and to create a lasting impact and legacy that they and their loved ones can be proud of. So any fundraiser thinking that 5% here or there is going to suddenly attract or repel hordes of donors is probably mistaken – but offering a vision that is 5% more exciting, or promising 5% better outcomes, might well do the trick.

Gift enclosures in fundraising appeals – the debate rages on

One of the projects I’m doing for the new ESRC Centre for Charitable Giving and Philanthropy involves interviewing donors about how they select charities to support. Even though I don’t ask any questions about the fundraising techniques they encounter, almost every interviewee makes unprompted complaints about the methods that charities use in their appeals. Top amongst the grumbles is the use of ‘free gifts’ to prompt donations – you know the kind of thing: a pen, a set of peronalised address lables, even big freebies like umbrellas get sent out to potential donors.

So I was intrigued to read a defence of this technique, in the latest newsletter produced by the direct fundraising company csdm. You have to sign up for their newsletter (FR Strategy at www.csdm.co.uk) to read the article, but in essence it reports that the principle of reciprocity (giving-taking-giving back) remains a powerful force that can be harnessed to increase response rates. Anthropologists have long documented gift giving processes in non-Western societies – the exchange of shells, beads, cattle etc being a kind of currency to conduct economic and social relationships. And some sociologists argue that gift-giving propels life in Western societies too. Witness the power of being bought a drink in a pub – social norms make it almost impossible to head home without returning the gesture. And the nature of the tit-for-tat exchange takes no account of the monetary value, what matters is standing your round, not whether the coke someone bought you costs less than the G&T they ask for in return.

csdm reckon that gift enclosures can raise response rates by 100-200%, which is quite a claim. As I blogged on 21 April:

https://blogs.kent.ac.uk/philanthropy/2009/04/21/do-honest-oaks-grow-from-small-acorns/ 

I wonder if there’s any way of factoring in the negative affect on those who are put off by such methods, and really object to receiving gifts from charities who, they feel, should be spending their money on the beneficiaries not on prospective donors?

Do gloomy economists encourage people to stop giving?

Media coverage of philanthropy matters because it sends a message that the topic is important and worthy of national debate. The Financial Times has long been one of the best papers to cover philanthropy, and last Saturday they had a piece cheerfully entitled: ‘Even in a recession, giving can go up as well as down’:

http://www.ft.com/cms/s/2/141f425e-27d4-11de-9b77-00144feabdc0.html

But the piece goes on to describe 3 different types of motivation: ‘pure altruism’, social pressure and those who do it to feel good and get a ‘warm glow’ – and argues that only altruistic givers will increase their donations during a recession. Despite the cheery headline, it gloomily concludes, “All the economists I spoke to were pessimistic about the outlook for charitable giving in a recession”.

Glad as I was to see the piece in print, it seems to me the FT focuses on individual donor motivations at the expense of recognising other significant  factors, especially the norms that we hold as a society about giving. Since the year 2000, a huge amount of effort and public money has been spent on building a ‘culture of giving’ in the UK. The central thrust of government policy is encouraging people to think of supporting charity as a perfectly normal, even obligatory, part of life, as it is in the USA. Living in a society in which giving is “what everyone does” and is a simple, routine habit, can counter-balance, or even outweigh individual motivations.

But the opposite is also true – a society that’s pessimistic about the outlook for charitable giving and insists that donations will inevitably decline risks promote the opposite norm: “everyone else is cutting their donations, so I will too”. 

As I’ve said before, the current economic situation is clearly dire, but publicly panicking risks creating a self-fulfilling prophecy and even talking ourselves into a giving recession.

Of course charities worry about not having the resources they need to do their good work. But the research shows that there isn’t a straightforward relationship between economic conditions and the amount of philanthropic spending that takes place. People don’t make donations just because they can afford to do so; if they did then every rich person would be a philanthropist, and unfortunately they’re not!

Contrary to the reductionist approach taken by many economists, as depicted in the FT, philanthropy is not simply a financial transaction. It is first and foremost a social act that enables individuals to create and communicate a positive identity, whilst meeting their own need to live a successful, significant and meaningful life that is affirmed by others.

Despite the tough times we are in, people still have a need to look good, feel good and do good, so there is no reason to assume that the new age of philanthropy will not persist.

What kind of oaks grow from small acorns?

I worked as an in-house fundraiser before moving into researching giving, so never had much to do with fundraising agencies, though I was aware of the big names and gurus that populate that world. One agency I just can’t seem to avoid these days is Bluefrog – good name, sticks in the memory – and they also seem to have a very energetic staff team who pop up everywhere.

This morning I read a blog by one Bluefrogger (http://parkeslife.blogspot.com/2009/04/from-1-pack-to-25m-legacy.html) advocating for ‘poundpacks’ – the device whereby a charity requests a tiny donation, eg £1, and then encourages the toe-dipping donor to plunge right in. Two amazing examples are given, where poundland donors left a £2.5m legacy and a £0.5m legacy, despite no other interaction with the charity between these mini and major gifts.

I’m currently doing telephone interviews with committed donors about how they choose which charities to support. Almost every interviewee makes unprompted comments on charity fundraising techniques – donors clearly worry about overheads and ‘waste’, but they also question the honesty of appeals that say “give us £2 to save the X”, and then when they respond to what sounds like an altruistic bargain, they get an immediate follow-up letter or call saying, “actually we need a lot more than £2, and on a regular basis, and can you please leave us your earthly belongings too”.

Perhaps my interviewees are atypical, and clearly they are not aware that the techniques are tested and (hopefully) cost-effective. But – as cleverer people than me have pointed out before – even a 12% response rate to an appeal means that 88% of people rejected the request, and we have no way of knowing what underlying harm is being done both by the normalisation of rejecting requests for help and to the general trust in charities when we keep shifting the goal posts for those that do respond: “Did I say give us a quid? Sorry, I meant to say a million”.

Britain’s got Billanthropy

If sneak previews of the forthcoming Sunday Times Rich list are to be believed, this coming Sunday will confirm that (Lord) David Sainsbury has become the first Brit to give away a billion pounds to charity.

Ted Turner started the billanthropy ball rollling in 1997, when he pledged $1 billion to support the United Nations. Since then, the US has seen a number of billion dollar donors, notably Bill Gates and Warren Buffet who each committed over $30 billion to the mammoth Bill & Melinda Gates Foundation. So why has it taken this long for a Brit to join the billanthropy club?

It’s true that a million pounds sterling still goes a bit further than a million dollars, but once you reach this level of giving, it does seem that the idea of ‘a million’ or ‘a billion’ has a cultural significance of it’s own, that defies exchange rates. There’s some sort of resonance involved in giving those sums that £990,000 or $990,000,000 just don’t have.

This is why we decided to launch our research centre with a study of Million Pound Donors, collating and analysing data on every UK donation worth £1 million or more. That report is still available at http://www.kent.ac.uk/sspssr/cphsj/research/couttsmilliondonor.html 

In the charity sector people easily understand why we picked £1m as the figure on which to base our study, but in academic circles we risk being accused of picking an arbitrary figure – “what’s the methodological defence for excluding donations of £999k and including those of £1m and 1p?”. This is a good example of ivory tower-itis (every fundraiser knows the difference between a big donor and a million pound donor), but we do have an argument up our sleeve. We are replicating the very successful ‘Million Dollar Donor’ list run by Indiana University in the US for many years. Building on established research is, apparently, more ok than building on fundraising common sense. But mention of the million dollar list reminds us that in the year covered by our first report (2006/07), when we found 193 donations worth £1m or in the UK, our colleagues in Indiana found thousands of $1m+ donations.

So we should definitely cheer the news that UK philanthropy has it’s first member of the billanthropy club, but we shouldn’t expect anyone across the pond to be especially impressed.

The sky is bright, not falling in

Made the wrong meteorological call today. As wind and rain constitute no excuse for cancelling a promised beach trip to a toddler, I waved off husband and child and settled down to catch up on some work – only for the sun to pop out minutes later and shine with continued brilliance over north Kent all afternoon.

The only bright spot I’ve enjoyed is an email from the director of Philanthropy UK, Susan Mackenzie, who sends this link to the China Philanthropy blog http://chinaphilanthropy.typepad.com/ which suggest we’re living in a ‘Chicken Little society’ that is over-egging the scale of the recessionary impact on philanthropy and charitable giving.

Citing research that first appeared in Philanthropy UK’s bi-weekly news bulletin, it notes the lack of empirical evidence for media headlines that suggest the sky is about to fall in. Indeed, one survey cited (the Skoll World Forum Quick Survey on Delegate Economic Outlook) found that only 5.3% of respondents reported feeling “vulnerable” , and 63.2% said they were “able to adapt to the downturn” .

I edit the publications section of the Philanthropy UK newsletter, and am happy to spread the word that you can subscribe for free to both the quarterly newsletter and bi-weekly newsletter at http://www.philanthropyuk.org

The China Philanthropy blog also has a post dated 14 April (‘Grrr – Giving in a Bear Market’) which makes a good point about the downturn having a more worrying effect in societies that have a much younger philanthropic market than that found in the US and the UK, where most of the research on any ‘recessionary effect’ is taking place. As they say,

“For nascent philanthropic markets like China, the effect of the downturn could significantly stilt the forward movement of NGOs already short on resources. Continued support from international and local philanthropists is imperative for the health of these organizations”.

A timely reminder for those of us working to strengthen and support the philanthropic sector to remember that our sector is global, and to bear in mind the impact of current events beyond our own doorstep.

Measured media coverage and time for smaller charities to thrive?

Delighted that the Radio Devon discussion was more balanced than much media reporting of the effect of the recession on giving. The host, Pippa Quelch, gave fair airtime to both the doom ‘n’ gloom charities and the more measured approach that says, let’s not panic but keep fundraising hard and creatively. I argued strongly that we shouldn’t under-estimate donors’ commitment to their favoured causes, and that it’s a mistake to assume they’ll drop their donations before making other adjustments to their household spending.

The representative from the RSPCA was generous in her concern for the less well-known animal charities, who lack the brand recognition that her charity enjoys and – she felt -would suffer even more in a recession. But in my research I speak to many donors who prefer the smaller, local causes where they know the people involved and can see for themselves what good they’re doing. Some make a conscious decision to boycott the big brands because they assume they are particularly wasteful in terms of overheads or simply don’t need their money. So perhaps increasing goodwill towards local charitable organisations can help them keep afloat during these difficult times.

Donkeys and Downturns in Devon

Just had a call from BBC Radio Devon asking me to join a live discussion tomorrow morning about the effect of the recession on animal charities. The famous Donkey Sanctuary is based in Devon, it employs a lot of people and brings in tourists, so it’s undoubtedly a big issue in that area.

I’ve spoken and written quite often recently about the need for charities to avoid publicly panicking, as we risk talking ourselves into a giving recession. There’s no reason to assume that donations will be the first thing to be cut when times get tough, but that becomes more likely if the sector unintentionally sends out a message that it’s perfectly normal to do so. Norms really matter in giving: we’ve spent years trying to build a ‘culture of giving’ in the UK and we risk undoing it in a matter of weeks, with careless talk of donations falling off a cliff and financial black holes in charity budgets.

Anyway, back to the animals. Earlier this week I saw some new data from the US, based on 36 million donations made to 75 of the country’s biggest charities . Interestingly the research (conducted by Target Analytics the research division of software company Blackbaud) showed that individual giving has been in decline since 2005, ie well before the current economic turmoil began. It also finds that two types of charity have bucked the trend: international relief organisations and animal welfare charities. Last year, animal charities in the US reported an increase of 3.1% in their donor base and a 5.1% increase in contributions.

Apparently the debate on Radio Devon will feature the RSPCA, the Donkey Sanctuary and a small animal shelter all describing a double whammy of increased demand and falling donations. Then it’s my job to explain that the research doesn’t necessarily fit that picture. If I’m feeling brave I’ll also make the point that brinkmanship can be a successful tool in fundraising – “if you don’t donate, we might have to close”. As a new report from NCVO and the University of Southampton shows, ‘crying wolf’ is a risky tactic. This study, written by Karl Wilding and Professor John Mohan, concludes that charitable giving remains generally constant, despite occasional economic downturns, because the underlying picture is one of long-term stability, even if there is some short-term turbulence: http://www.historyandpolicy.org/papers/policy-paper-85.html

Obama helps to launch Kent Philanthropy Centre blog

To mark the launch of the Kent Philanthropy Centre blog, the White House has revealed details of Barack Obama’s charitable giving http://www.whitehouse.gov/blog/09/04/15/Release-of-the-President-and-Vice-Presidents-Tax-Returns/

In the last tax year, when the Obamas’ joint income was $2.7m, the president gave away $172,050. At 6.5% of his income, that’s far higher than the average American donor, who gives about 2% of their income, and nearly ten times as high as the average UK donor, who gives nearer 0.7% of their income.

But philanthropy is not just a numbers game. The spotlight on presidential giving may explain the higher amounts involved, but just like Joe & Josie Donor, Barack Obama has to pick which causes to support out of the more than a million charitable organisations in the US that would love to receive his endorsement. It turns out that 37 lucky charities won the president’s greenbacks as well as his backing. His two biggest gifts, of $25,000 each, went to global humanitarian agency CARE and to the United College Negro Fund. Interesting to see that this prominent US donor fits the pattern we identified in our ‘Million Pound Donors Report’, available at http://www.kent.ac.uk/sspssr/cphsj/research/couttsmilliondonor.html where we found that the richest givers and major donors prefer giving to higher education and international development, as well as to health causes and their own foundations. Obama’s choice of causes that bear upon his own life experience is also typical, as philanthropy research shows that (contrary to popular assumption) giving is led more by donor interests than by beneficiary needs.

Wouldn’t it be nice to know if our own political leaders fit the profile of major givers? Any chance that No.10 will tell us how much Gordon Brown gives and to which causes? I’m sure 166,000 UK charities would like to know if they receive his personal backing, as well as his regular warm words of support.