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Individual Giving

Ten Years On: Are Donors Different? Were They Ever?

Despite years of claiming the contrary, donors still don’t really care about nonprofit performance or impact.

10th Anniversary Reflections

A series of reflective posts by regular Stanford Social Innovation Review bloggers in honor of SSIR’s 10th anniversary.

What if donors just don’t care about nonprofit performance? Why measure? These questions as relevant—and as unanswered—today as they were when Katie Cunningham and Marc Ricks posed them almost 10 years ago in their Stanford Social Innovation Review Summer 2004 article. I started blogging about philanthropy in 2006, and for quite some time I was taken in by a doubly untrue meme: “Today, donors care about impact.” It’s the meme that launched Cunningham’s and Ricks’ research project on what measures would be most useful to nonprofits and donors.

What the two authors found—and what I eventually learned all too painfully myself—was that donors didn’t really care about nonprofit performance or impact. The duo interviewed dozens of individual donors, working primarily in the finance industry, who gave large amounts. They found common beliefs: there wasn’t much difference between nonprofits, any giving was good, and performance measures were a waste of time and money. Most importantly, they found that the donors picked nonprofits based on personal relationships, not performance.

Same as it ever was. That’s the other side of the double-myth of the “donors care about impact” meme: that claims to care about impact are new or a distinguishing feature of the present. A decade after the original article, you still can’t read about philanthropy without encountering the claim that today’s donors are different. You can also find the same claim in stories about philanthropy from 1994—years earlier. The truth is that donors have always claimed to care about impact. If you care to look, you can easily find examples of donors making this claim in every era of American philanthropy.

Behind every era’s claims of being different, of caring about performance and impact, is a truly persistent attitude among donors: Other people (whether predecessors or contemporaries) are giving in the wrong way to the wrong nonprofits. Cunningham and Ricks cite a quintessential complaint from Andrew Carnegie: that other people give indiscriminately. This attitude is glaringly clear from the Money for Good and Money for Good II research conducted in the last few years, which I advised. I’ve called it the Lake Wobegon problem: the idea that all the nonprofits I give to are above average.

Here’s what seems to be happening in some donor’s heads: “Since I’m a smart person, I must have good reasons for giving to this nonprofit. So they must be good at what they do. So I care about impact. Since other people don’t give to my favored nonprofit, they must not care about impact. I’m different!”

The reason to point this out is not to say that no progress has been made, no donors care about impact, and no nonprofits are effectively using performance management. It’s to fight the persistent false perception of reality that leads to wrong-headed theories of change and ineffective actions.

So, what can we do to improve the quality of giving if today’s donors aren’t different and most don’t actually care about performance? I think there are three things:

The first is to recognize that the enemy is us. The problem is not a lack of information, or measurement or reporting systems. The problem is not ineffective nonprofits. The problem is people, specifically donors. That’s not to say that the solution is turning people into heartless calculating machines when it comes to charity. It means recognizing that we need to change what people want and shift deeply held beliefs. That takes time.

One way to change deeply held beliefs is to slowly habituate people to a “new normal.” That’s the second step and an important message of the More Money for More Good project that I worked on with Guidestar and Hope Consulting. There are donors who will use performance and effectiveness information if it is available—enough to make beginning steps by nonprofits in this direction worthwhile. Those beginning steps will begin to get donors used to the idea of seeing, understanding, and using performance data. The important thing is to recognize that you are in a habituation process, not an active-change process, something that by definition happens very slowly.

That’s the third piece of the puzzle. This will be a long, long, long-term process. If you’re expecting to see dramatic change in less than 10 years, you’re going to be disappointed. You may even be disappointed if you expect to see small changes in 10 years. I fully expect that in 2024 I’ll be reading news stories about how a new generation of donors is “different” and “expects results.” Maybe by 2034 those stories may at long last be true.

Read more stories by Timothy Ogden.

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COMMENTS

  • BY Paul Komarek

    ON April 1, 2013 12:36 PM

    Given that most nonprofit program evaluation protocols are not meaningful , scientific or statistically valid, it’s not surprising that people disregard so-called performance measures. In general, a wide range of pro-social efforts are inherently okay, and whoever does them is okay too. So if you have money to donate, donate to whomever you please, the smaller the group, and the most specific its efforts the better.

  • BY Becky Gitonga

    ON April 1, 2013 12:58 PM

    Non-profits can certainly can take blame for continually focusing to much to living up to donor’s expectations whether in terms of reporting or performance measures.

    I believe the motivation for actions such as performance measures should first and foremost should be an internal motivation; driven by the need to understand whether their (nonprofit orgs) programs are having the targeted/intended impact.  And if not, identify what can be done differently. Donor reporting makes more sense when when such a process is the guiding factor.

    Perhaps this research can help Non-profits to come to the realization not to live under the pressure of pleasing donors as opposed to the achievement of their goals, and the organization’s growth and development.

  • Perla Ni's avatar

    BY Perla Ni

    ON April 2, 2013 03:17 PM

    Thanks for this provocative piece, Tim!  While I am as impatient to see change as you do, I think that the tide will turn in the next 5 years.

    Why?  There are more websites listing nonprofits and asking nonprofits to answer questions like “What are your results? How do you measure your results?”

    There are nonprofits providing quarterly progress and results calls for their donors.

    There are nonprofits that do a great job of stewardship that report back to their donors about what was achieved with their donation. 

    There is the rise of the very hands-on, younger donor generation.  They give money and they also do site visits and volunteer so that they have better first hand understanding of the impact of the organization. 

    And we have seen increasing interest from donors who read GreatNonprofits community-sourced insights about nonprofits before they donate. 

    These signs all point to the fact that donors are recalibrating what it means to “do good”.  We donate for many reasons, some which will may never change - feeling good about ourselves, going to a great party, or because a friend asked us to give.  But ultimately, those tend to be smaller one-offs.  If philanthropy will ever rise above 2% of GDP, it will be because the strongest motivation is that donors want impact.  Donors will want to give, and give generously and again and again because they know they are having an impact. 

    There’s still much to be done, but I’m optimistic about the rise of donors who want to “do good” by having making a difference in a person’s life or on a community - whether that’s measured short term or long term.

     

     

  • Ted Flack's avatar

    BY Ted Flack

    ON April 2, 2013 07:53 PM

    Perhaps we are missing the point. Just maybe, the reason most people give is that they want to help. They get their satisfaction from the act of helping - not whether the help they gave was effective or not.

    There are many parallels in other aspects of our lives. We help an old lady across the road because it is the kind and helpful thing to do. We feel a warm inner glow as a result. Do we then enquire where she was going? Whether she was wise to cross the road? Whether when she crossed the road she used the “other side” wisely? No. We know we helped and that’s enough for most of us.

    Consider the generosity of donors to religious causes. Few would attempt to measure the impact of their gifts. Far more would be happy in the knowledge that they had just helped.

  • Timothy Ogden's avatar

    BY Timothy Ogden

    ON April 3, 2013 09:19 AM

    Perla,

    I’m glad you’re optimistic and I hope you’re right. I’ll keep my expectations low for now though!

    Tim

  • BY Dick Walker

    ON April 4, 2013 05:56 PM

    Individual donors may not care about impact but increasingly institutional donors such as foundations and corporations DO care about results and are looking to their grantees to provide evidence of impact.  In the long run, perhaps the influence of these institutions will bring about the change posited in the article.

    The other sentence in this article that I find fascinating is that individual donors “pick nonprofits based on personal relationships.”  This “relational” rather than “transactional” approach underscores the fact that major donors still require the kind of TLC that great development professionals have always preached and practiced.  Our obsession with a charity’s low overhead cost as a measure of effectiveness goes against this finding and nonprofits hoping to garner more major donors would do well to beef up stewardship programs and work to build lasting relationships with those who support them most generously.  If part of this relationshop building is the demonstration of greater impact as a result of a gift that we have a win-win result.

  • Prentice Zinn's avatar

    BY Prentice Zinn

    ON April 5, 2013 08:20 AM

    You remind us yet again, that effectiveness blather is a cottage industry in philanthropy and nonprofits. 

    We all need to be more skeptical about the latest hype about what donors want or don’t want.  I don’t see it in the research.  I don’t see it in practice. 

    If you dig beneath the nonprofit effectiveness hyperbole, two issues pop up like whack-a-mole at a carnival:

    1) We don’t know jack about what donors want, how they make decisions, or what informs their decisions.  Be skeptical about anyone who claims that donors want X, Y, or Z.  The research is paltry (but getting better).

    2) What constitutes effectiveness and how we operationalize it in decisions is a slippery, messy, and ambiguous construct fraught with a tangle of contradictions.

    But you are also right that these challenges should not keep us from figuring out how to give better.

  • Timothy Ogden's avatar

    BY Timothy Ogden

    ON April 5, 2013 02:43 PM

    Prentice

    I very much agree with No. 2, but I think we know more about what donors want than you acknowledge in No. 1. The Money for Good studies are high quality and comprehensive for the types of donors they studied. Innovations for Poverty Action (Full disclosure: also a client) has been doing some RCTs on donor behavior (early results of which were discussed here on SSIR and the Freakonomics blog).

    The bottom line of that work is not that we don’t know what donors want, but that we do know what donors want and for very few of them, even “today’s donors” impact is not the top of the list.

    In that sense, I think we do agree that more skepticism is needed to make sure any claims are backed up by research at least as good as that done for Money for Good; and secondly, that those findings shouldn’t discourage us from continuing to find ways to help donors give better. 

    Tim

  • Timothy Ogden's avatar

    BY Timothy Ogden

    ON April 5, 2013 02:46 PM

    Dick

    I’m open to actual evidence that institutional donors care more about impact than they used to but I don’t see it. Ask any program officer who was employed in the sector in the 1970s and I guarantee you they will say that they did their best to assess impact back then. And you certainly see a commitment to impact in the words of Rockefeller, Carnegie, Ford and other original founders of institutional philanthropy in America.

    Tim

  • BY Steve Wright

    ON April 15, 2013 01:01 PM

    Tim,  I believe you are missing a huge piece of the puzzle.  Impact is not for donors. Impact is for our beneficiaries/clients/customers and the reason why we measure has nothing to do with donors.  Nothing.  Nada.  Nix. Nein.  Norwood.  Motivate donors however you want but the answer to the question “Why measure?” is to know if you are any good.

  • BY Glen Macdonald

    ON April 19, 2013 04:44 AM

    Givers (I prefer to donors) have changed in many ways.  As Paul Schervish has noted, the trend toward discerned giving continues to gain momentum and concomitantly, fewer wait to be solicited.  And when they are solicited, they more informed, and are ready to screen requests based on a cause they care about and a strategy they have established.  Givers are not only more strategic, they are more engaged with the causes and organization they support. And more givers are looking at their investment portfolios to align them, at least in part, with their values, giving and / or grant-making.  And I agree with Steve Wright that most givers I know will continue giving, and experiment and innovate with it, once they care, once their hearts are guiding them,  They don’t ask for the measures, unless of course they are a board member or trustee. They see and feel the impact of their gifts in the connections they have with the recipients of their largess, that is enough for most. Like Perla, I am hopeful,

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