Individual donations are the lifeblood of many nonprofits and, thus, not-for-profit leaders should have a good handle on why people dip into their pockets and donate money or other gifts. Some of the reasons may surprise you.
Mixed financial motivations
Tax savings traditionally have motivated wealthy individuals to make charitable donations. After all, charitable donations generally provide an income tax deduction and avoid gift and estate taxes. And certain strategies — such as gifting appreciated assets or setting up a charitable remainder trust — provide donors with “more bang for the buck.”
But high-net-worth donors may have less-obvious financial motivations, too. For example, they may wish to limit the amount their children inherit to prevent a “burden of wealth.” Warren Buffett, for example, plans to leave the vast majority of his wealth to charity rather than to his children because, as he told Fortune, wealthy parents should leave their children “enough money so that they would feel they could do anything, but not so much that they could do nothing.” To appeal to these kinds of donors, you may want to offer to work with the entire family so that they can begin a multigenerational tradition of giving.
Making a difference
According to a survey conducted by the Center on Philanthropy at Indiana University, younger donors — those between ages 20 and 45 — as well as wealthier and better-educated individuals are more likely to want to “make a difference” with their gifts. Those with lower incomes and a high school degree or less often donate to meet basic needs in their communities or to “help the poor help themselves.”
Alan Clayton of London’s Good Agency has made similar findings, with younger donors more likely to be motivated by what Clayton calls “outer- and inner-directed needs.” Outer-directed donors give to “make the world a better place” and improve conditions for those with whom they have no direct connection. They tend to support international human rights and environmental groups.
Inner-directed donors, on the other hand, are motivated by such desires as making their life “count.” They’re more likely to respond to charities that appeal to their sense of moral or ethical purpose and allow them to actively direct the use of their donation.
Creating a good impression
Donors are often motivated by the perceived social effects of giving. At least one study has reported that donors typically give more when their gifts will be announced publicly. A perhaps more surprising finding is that charities offering incentives or gifts for donations are less likely to be successful when the donor desires to “look good” to his or her peers. Similarly, numerous studies have found that people are more likely to give — and to give in greater amounts — if asked personally, particularly if they know the person making the appeal. It’s safe to say that these donors are concerned about making an altruistic impression.
Social factors can also affect which organizations receive charitable gifts. Donors may, for instance, prefer to donate to organizations that offer them a collaborative role in the charity’s mission and that host social gatherings at which they can connect with like-minded people.
Do your own study
Knowing the trends that motivate donors to give to charities is one thing — knowing why your donors give to your organization is even better, because there may be some variances. Once you’ve secured a donation, make it a habit to collect donor information on the impetus behind the gift.