Why high earners give – evidencing decisions

March 18, 2013 at 18:58

The question of why people give is much-debated amongst those with an interest in charity funding – is it intrinsic altruism, a connection to a cause, a sense of duty? While personal experience and past successes are often the basis of fundraising decisions, there’s nothing like evidence and insight to provide comfort that a judgement is right. As charities struggle financially, understanding and tapping into people’s reasons for giving, particularly of those who can most afford to do so, can ensure continuity of service to those beneficiaries most in need.  That’s why last week’s research by New Philanthropy Capital into donor motivation and behaviour, ‘Money for Good UK’ (here) couldn’t be more timely.

Money for Good reiterated the importance of high income (>£150,000 / year) donors (people who have donated >£50 to charity in the last year) to the charity sector. This much we already know, as we demonstrated when we avidly defended attempts to cap the tax breaks for high earners this time last year.   High income donors give four times more on average than mainstream donors, with an average annual donation of £1,282 compared to £303.

What is interesting about this research is what it tells us about people’s rationale for giving, and how that might inform fundraising strategies. The research found that high-income donors are considerably more strongly influenced than mainstream donors by personal connections to a charity’s cause, suggesting that it may be highly worthwhile for charities to encourage their high-income donors to increase awareness of the charity among the their family, friends and colleagues. A considerably higher proportion of high income donors also donate through ad hoc methods such as social events (61% versus 37% of mainstream donors) and sponsorship (79% versus 52%), alongside direct debit donations, which are the preferred giving method in all donors. Encouraging high-income donors, who on average are likely to live, work and socialise with similar individuals, to take part in a sponsored event, could therefore be particularly worthwhile in both directly attracting sponsorship donations and in raising awareness of the charity to a highly receptive group of people.

High-income donors are also responsive to communication from a charity with which they have existing connections, suggesting that whilst charities should remain aware of the risks of over-communication with supporters, donors may be more accepting of this than we might think. Specifically, communicating to high-income donors the charity’s impact and exactly how donations are used was shown to be highly worthwhile in attracting further donations. Providing this kind of information plays an important role in alleviating distrust of charities, which was found to be the main barrier to high income donors donating more; 64% said they might give more if they believed their donation would make a real difference.

In contrast to those from mainstream donors, donations from high income donors were found not to increase with age, in fact, high-income donors aged 18-34 were the most generous, giving over twice as much (£2,301) on average as those aged 35-44 (£1,140) and 45-54 (£1,078), although the 18-34 figure here was influenced significantly by a few very high individual donations. Following CAF’s recent ‘Mind the Gap’ research into changing patterns of generational giving, this suggests that lower levels of giving among young people today could be influenced more by a lack of disposable income than a lack of charitable conviction. Young high income donors were found to respond particularly well to a visit to a charity, so arranging opportunities for this could be worthwhile, and as expected, they are more responsive to online campaigns than their older counterparts, again highlighting the importance of tailoring marketing campaigns to different audiences.

High income individuals are clearly an important potential funding source for many charities, but as potential donors they are also often the hardest to satisfy. Working to develop and maintain a strong relationship with these individuals, recognising what motivates them and makes them tick, and tailoring communication to sub-groups of high-income donors (e.g. by age, gender and location), could prove highly worthwhile.

 

Douglas Hull    Post by Douglas Hull, policy and membership officer at CFG