Donating To Charity

The craze of summer 2014 was people dumping buckets of ice water on their heads while being filmed. Facebook newsfeeds were filled with videos of friends and family voluntarily drenching themselves for all to see. This viral campaign was sparked by the ALS Association’s Ice Bucket Challenge, a brilliant fundraising effort created to increase awareness and support research on amyotrophic lateral sclerosis (a.k.a Lou Gehrig’s Disease). In one month alone, the ALS Association raised more than $100 million. How can other not-for-profits recreate this success to benefit their organizations?

Giving Center, like other nonprofit charities, often reach out to their donor community to find out what works for them. However, even though what motivates donors has been researched, the results are not as straightforward as some might think. What donors say may not always be consistent with what donors do.

Some people donate to support the fundraising efforts of family members, friends or neighbors. Others may make charitable donations to create a philanthropic image for themselves or their company. Still others feel guilty saying no to someone expressing a need. These reasons for giving often are understated and under-reported. So, while this article presents helpful statistics on primary donor motivations, keep in mind that unspoken factors can come into play.

Key Factors Driving DonationsThe 2016 U.S. Trust Study of High Net Worth Philanthropywhich was conducted in partnership with the Indiana University Lilly Family School of Philanthropy, looked at factors driving charitable donation among wealthy households. This study found that donors’ primary motivations for giving were as follows:

  • Believing in the mission of the organization (54%)
  • Believing that their donation can make a difference (44%)
  • Personal satisfaction, enjoyment or fulfillment (39%)
  • Supporting the same causes annually (36%)
  • Giving back to their community (27%)
  • Adhering to religious beliefs (23%)

Matching donation contributions are also listed as a motivating factor, but the amount of the match is not as significant. According to a recent study, offering a matching contribution increased giving by 20%, however doubling or even tripling the match had virtually no additional impact on increased giving.

It Pays Not to Be PushyDrs. James Andreoni and Marta Serra-Garcia published a study in 2013 related to research on soliciting pledges for contributions. They designed a test to solicit contributions using three different approaches:

  1. Request an immediate contribution
  2. Request a pledge now and contribution later
  3. Request a nonbinding pledge, which would be followed by an immediate “thank you” email and a second “thank you” email one week before the pledge fulfillment request

People who made the nonbinding pledges made the highest level of donations in the study — 35%. The researchers concluded: “if donors feel there is a context of mutual trust and respect, many individuals will stick to their promises.”

One out of five wealthy donors (17%) stopped giving to at least one organization last year. The top-cited reason donors stopped giving to charities (41%) was because they received too-frequent solicitations from the nonprofit organization.

Taxes: The Understated ImpetusOnly 18% of wealthy donors in the same study said they donated primarily because of the tax benefits, compared with 34% of those who stated this as a primary motivation in 2014. Based on previous tax research, people don’t always admit how important tax considerations are to their charitable giving. In 2010, with the discussions surrounding the fate of charitable deductions, 67% of people said they would somewhat or dramatically decrease their charitable donations if the deduction was eliminated.
People in higher tax brackets are usually willing to give more. This is because higher tax rates favor individuals who make large contributions because it gives them larger tax deductions. Wealthy individuals and their advisers recognize this advantage. The idea of donating appreciated stocks and negating taxation on the gains altogether is even more compelling to the informed donors and their financial advisers.

Know Your DonorsThere are many reasons why donors give. Some are spoken out load, some are not. Through our contributions as volunteers and benefactors, holds the power to change the course of society for the better. We can leave an impact on this world with the time and resources that we dedicate to others.
Getting to know what motivates your donors is the key. Your solicitations will be easier to develop and more fruitful once you’ve grasped that.

As those results come in, make sure you have adequate systems in place to track your donations. Remember, timely and accurate recordkeeping is essential for financial accounting purposes, and for donor relations as well.

The Giving Center is here to help you on your journey. Weather it is deciding how to make and impact, or guiding you on making a large or small charitable donation. For a list of ways you can make an impact on your community, please visit our donation page today!

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