Philanthropy’s Missing Middle Characteristics of MidLevel Donors (part 4)

In this fourth article of the “Philanthropy’s Missing Middle” series on the Boston College Survey of MidLevel Donors, we will focus on the giving habits of 1,200 respondents who gave between $2,000 and $20,000 in 2019.

Based on best practices in effective philanthropy, a midsize donor should spend at least an hour conducting research before making a significant donation, seeking a basic understanding of the issues at stake and comparing charities to select those that are really making a difference and are well run.  To our surprise and concern, only 4 percent of respondents fit our “ideal donor” profile (worse, if we remove “spend over an hour,” the number only increases to 7 percent, and if we remove “comparing organizations,” the number only rises to 8 percent).  We found our respondents to be contented but apathetic, basing their giving on relationships rather than results.

90 percent of respondents claimed they donate to causes about which they are passionate, and 72 percent said their principal donation in 2019 went to an issue they care about strongly, yet only 19 percent researched all the organizations they supported to ensure these were “best in class.”  48 percent of respondents did “moderate, little or no” such research.

The majority of the “no research” answers (56 percent) came from the smallest donors (gifts totaling $2,000 to $5,000 in 2019), with only 4 percent of the largest donors (gifts totaling $15,000 to $20,000 in 2019) saying they did no research at all.  As we have already repeatedly seen, it was at $10,000 in annual giving that the majority of donors (60 percent) sought out “best in class” charities for “a lot” or “all” of their gifts.

Thus, it is not surprising that a third of respondents spent less than 15 minutes researching organizations before donating (another third spent 15 minutes to an hour, and the last third spent over an hour).  Also unsurprising, half of those who spent no time were in the smallest donor category, whereas 43 percent of those who spent over an hour were in the highest donor category.

As a result of this lack of research, only 64 percent of respondents were “very aware” of the impact of the charities they supported (this number rises to 83 percent among respondents who directed all their giving to “best in class” charities).  Yet even among the most diligent donors, only 48 percent spent more than an hour researching their donations.

Respondents were asked about the tools they used to conduct research:

— The organization’s website 60%

— An online search 48%

— Information from family or friends 43%

— A charity evaluation website (Charity Navigator, Guidestar/Candid…) 38%

— A professional advisor 14%

— Somewhere else 8%

There was a close correlation between respondents who used several tools and the time they spent on research: 60 percent of those who used four tools spent over an hour on research; 60 percent of those who used only one tool spent less than 15 minutes researching their donation.  Almost two-thirds of donors did not contact organizations directly (except among the largest donors, 61 percent of whom were in direct contact with their beneficiaries).

While 60 percent of respondents checked a charity’s website, only a shockingly low 34 percent compared charities before donating.  Among donors who claimed to seek out “best in class” organizations for all or a lot of their giving, only 42 percent compared charities.  Even among donors who spent over an hour on research, only 45 percent comparison shopped before making a donation.  Almost a quarter of respondents said they “had no time,” “didn’t know how,” or “didn’t think to do it.”  And 43 percent said they did not conduct research as they “knew they wanted to support the organization because of recommendations or a personal relationship” (among this particular group of respondents, 44 percent give principally to their place of worship; however, only 19% donors who focus on international charities used this excuse for not conducting research).

Indeed, personal relationships are key.  51 percent of respondents said “a lot” or “all” their giving went to charities with which they had a personal relationship.  As would be expected, 61 percent of donors who favored places of worship, 58 percent of donors who focused on universities and hospitals, and 57 percent of donors who primarily support small local organizations are driven by personal relationships.

In contrast, only 36 percent of donors who gave primarily to a large, national organization stated their giving was based on personal relationships.

Despite spending so little time and effort researching their donation, respondents gave the organizations they support extremely high approval ratings (the criteria we chose were based on best practices in effective philanthropy).  There was little variation in these numbers between the largest and smallest donor groups.

Would you say the charitable organization…                                                                Yes

— Does a good job demonstrating its effectiveness?                                                    93%

— Has good leadership?                                                                                                89%

— Meaningfully engages with the individuals and communities it serves?                   90%

— Has identified real opportunities to make change?                                                   89%

Therefore, it not surprising that 45 percent of respondents gave a ten out of ten score when asked about their satisfaction with their giving – 87 percent gave a score between eight and ten.  And while already extremely happy about their giving, 88 percent of respondents said they would give more if their satisfaction levels further increased.

When asked about their most significant gift of 2019, 68 percent of respondents said they had been supporting the organization for over five years.  82 percent have never stopped or decreased their giving due to feeling dissatisfied.  Though the pool of dissatisfied respondents willing to drop a charity was small, it represented donors who conducted more research (70% spent more than 15 minutes) than the sample average.  34 percent of the dissatisfied donors favored places of worship and 20 percent gave principally to large, national charities.

Slightly more (a quarter) of respondents admitted to stopping or decreasing a donation because they felt it was not making a difference (the number drops to 16 percent among smaller donors) – yet only 55 percent of this group said they were “very aware” of the organization’s impact!

We also probed one of the most common – and destructive – myths in the philanthropic sector: judging an organization by its overhead ratio.

How important is it to…                                                                                                     Very Important

— Know that the smallest possible portion of my donation is going to overhead                          57%

— Know that staff is not being overpaid                                                                                         50%

— Know that staff is being paid a fair wage                                                                                   49%

This focus on overhead rather than impact is highly damaging to the non-profit sector.

Given the extremely high general satisfaction of our respondents with their charitable giving, we were expecting similar enthusiastic responses – in the 80 to 90 percent range – when we asked what factors (based on best practices of effective philanthropy) gave rise to these feelings of satisfaction.  To our great surprise, most responses were only in the 50 to 60 percent range….

Very Important

— Knowing how to tell if an organization is legitimate                                                              71%

— Knowing how to tell if a charitable organization is really making a difference                      62%

— Knowing how to tell if a charitable organization is well run                                                   57%

— Understanding the issues I care most about                                                                         51%

— Having a personal relationship with the organization                                                            39%

Most philanthropy advisors would consider these criteria fundamental to thoughtful and effective giving – and to the feeling of satisfaction that comes from knowing your donation is making a difference.  Yet it appears that a high level of “contented apathy” reigns among the Midlevel Donors we surveyed.

 

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