Philanthropy’s Missing Middle Characteristics of MidLevel Donors (part 3)

The first two articles in my “Philanthropy’s Missing Middle” series on results from the Boston College Survey of MidLevel Donors focused on giving trends in relation to income levels and age for 1,200 respondents who gave between $2,000 and $20,000 in 2019.   In this article, we’ll analyze where the donations are going.

Each year, GivingUSA reports on the destination of American philanthropic dollars according to ten issue areas, such as religion, international affairs, or arts, culture & the humanities.  To highlight the specific giving patterns of MidLevel donors, we used somewhat different criteria, asking our respondents about the destination of the major part of their donations, both in 2019 and over the past five years. Here are the answers:

Universities or hospitals (7%)

International organizations (5% – GivingUSA reports 6%)

National charitable organizations (18%)

Small charitable organizations in their community (9%)

Religion (37%% – GivingUSA reports 29%)

An equal split among charitable organizations of different sizes or locations (23%)

Other than giving to international organizations, where our respondents mirrored the percentage announced in June 2020 by GivingUSA, all other responses differ from the American average.  The single digit allocation to universities and hospitals is not surprising as we know these donations come principally from wealthy donors, notably the multi-hundred million-dollar gifts that make regular headlines.  Thanks to large gifts, support for universities and hospitals has grown 44 percent since 2007 and they now account for half of America’s 100 largest 501(c)3 organizations.

We also know that half of all US donors give to the top 20 largest US charities – household names such as The United Way, Boys and Girls Clubs, or Doctors Without Borders.  Even the smallest on this list, Save The Children, received over $500 million in private support in 2019.  In fact, a third of American donors list just five charities among their favorites – The Salvation Army, St Jude’s Children Hospital/ALSAC, The American Cancer Society, UNICEF and The Red Cross.

Our survey of Midlevel Donors revealed that 18 percent devoted the major part of their giving to large, national organizations.  In order to dig deeper and compare our results with national averages, we conducted a smaller follow-up survey of 835 adults residing in the US, with a slightly broader demographic catchment  (age 18 and older, rather than over 35 as in our larger survey, and donating between $1 and $20,000 a year to charity, rather than $2,000 to $20,000 in our larger survey).  The responses well exceeded national statistics: Two-thirds of respondents gave to at least one of America’s top 20 favorite charities in 2019, and almost 80 percent gave to at least one in the past five years.  Even more dramatic, 40 percent gave to at least five of the top 20 charities in the past five years.  The most popular is St Jude’s Children’s Hospital/ALSAC (48% of respondents), followed by The American Red Cross (46%), The United Way (34%), The American Heart Association (34%) and Habitat for Humanity (32%).  While many respondents make small gifts (under $1,000) to these mega-charities, our follow-up survey showed a direct correlation between giving levels and a proclivity to support mega-charities.  Indeed, respondents who gave more than $5,000 to charities in 2019 were at least four times more likely to give to “Top-20” organizations than those who gave less than $2,000 that year.

One explanation for the popularity of mega charities is found in responses to the Boston College Survey of MidLevel Donors question “How much of your charitable giving is in response to disasters and other events that move you?”.  Two-thirds of respondents give to disaster relief – with 36 percent devoting “all” or “a lot” of their charitable dollars (only 8 percent of all respondents give nothing).  When disasters strike, the largest national and international charities are best equipped to advertise and collect donations.  Since the last five years have witnessed a high number of disasters, from hurricanes or shootings in the US to earthquakes abroad, these organizations have seen donations increase considerably.   Interestingly, giving to disaster relief rises considerably at each giving level of our survey – among the highest ($15,000 to $20,000) level donors, 78% give at least “a moderate amount” to disaster relief.  Conversely, half of those who do not respond to disaster appeals are in the lowest ($2,000-$5,000) group

Another explanation for the high level of support of mega charities by MidLevel donors is their tendency towards “reactive” giving.  Almost half (48%) respond to fundraising appeals – almost a quarter for “all” or “a lot of my giving.” Though one would imagine donors who give over $10,000 annually would proactively seek out high performing charities in their chosen cause area, our respondents at this giving level remain highly sensitive to fundraising appeals, with 37 percent admitting they give “all” or “a lot” reactively (conversely, 58 percent of donors at the lower $2,000 to $5,000 giving level said they give “none” or “a little” in response to appeals).  Mega charities may represent just one percent of all public charities, but their slick advertising and direct mail/email/social media campaigns are bearing fruit.

The fundraising success of mega charities also means that many donors then ignore smaller charities – only 5 percent of all US donors favor charities with budgets under $5 million (two-thirds of American public charities have budgets under $500,000).  Yet almost all arts, culture, humanities, animal, environmental and youth development charities have budgets under $10 million.  Almost all health and human services charities have budgets under $50 million.  Nevertheless, just 9 percent of the Midlevel Donor responding to our survey favor small charitable organizations in their community.

The final choice of destination offered to survey respondents (who do not split their giving among organizations of different sizes or locations) was “the major part went to my place of worship.” By far the greatest number of respondents, 37 percent, choose to focus their giving on America’s 300,000 religious institutions.  This high number contrasts with GivingUSA’s finding that in 2019, 29 percent of all giving went to religion (down from 47 percent in 2020). Our survey’s donors to religion appear more committed – 72 percent say they are aware “to a great extent” of the impact of the organization’s mission, compared to 59 percent for all other respondents – but spend less time on research before making their gift (46 percent spend less than 15 minutes, as opposed to 28 percent of donors who are not primarily giving to a place of worship).  Over half say no due diligence is required because they simply “know they want to support” the organization (a reason given by only 38 percent of those who do not focus their giving on religion) – a worrisome response as religious nonprofits are not required to file annual tax returns revealing how the donations they receive are spent.

When all our respondents were asked about their interest in learning “how to select the most effective nonprofits,” 68 percent reacted positively (“somewhat” or “very interested”).  However, 55 percent of those responding “not at all interested” are donors whose give primarily to their place of worship.  The respondents most interested in acquiring strategic skills are those who support international organizations – 83 are “somewhat” or “very interested” in learning how to be more effective.  They are followed by those giving to large, national organizations (79 percent), to universities and hospitals (75 percent), to small, local charities (66 percent) and finally to place of worship (56%).

In our next article, we will delve more deeply into the “best practices” of effective giving and analyze how our MidLevel Donor respondents measure up to these standards.

 

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