People are charitable for many reasons — to “make a difference” or “give back,” to reduce their tax burden and even to impress their peers. These many motivations can be frustrating for not-for-profits looking for a magic formula. In the absence of one, you need to keep your eyes and ears open and be prepared to act on information as it becomes available.
Dollars and Tax Sense
Asset protection and capital preservation traditionally have motivated many wealthy individuals to make charitable donations. And certain strategies — such as gifting appreciated stock or real estate — may be particularly appealing to donors who make charitable giving a piece of their larger financial and tax minimization plans.
But high-income donors sometimes have less-obvious financial motivations, such as a wish to limit the amount their children inherit to prevent a “burden of wealth.” Bill Gates and Melinda French Gates, for example, plan to leave the vast majority of their wealth to their charitable foundation rather than to their children. To appeal to these kinds of donors, you may want to offer to work with the entire family — possibly through a family office — so that they can begin a multigenerational tradition of giving.
Recent focus groups assembled by the Indiana University Lilly Family School of Philanthropy have yielded valuable information about what motivates charitable donors. For example, donors say they give more to charities with which they have personal connections. They’re also more motivated to give when they clearly understand the charitable impact of their donations. These responses highlight the importance of setting meaningful and measurable objectives and educating donors about how you’re achieving them.
Since the start of the COVID-19 pandemic and social justice protests of 2020, donors are more likely to give to “change the world” — or at least the country. One participant in the Lilly study told researchers that she seeks “authenticity and understanding in the organizations that [she] support[s], with a big emphasis on social injustice, diversity, equity and inclusion.”
Of course, various past research has indicated that people may also be motivated by less lofty ambitions. They might, say, want to make an altruistic impression or seek the prestige of being connected with a well-established and admired nonprofit “brand.” These individuals are more likely to buy pricey tickets to annual galas or join a nonprofit’s board to meet and socialize with others in their socioeconomic group or business community.
More Than One Factor
Donor motivation clearly isn’t simple. In fact, you can probably safely assume that most of your organization’s donors are motivated by more than one factor. So perhaps the best way to get inside their heads is to conduct your own focus groups. Contact us for help with fundraising and other revenue-boosting initiatives.
To learn more about how PKF Texas serves not-for-profit organizations, visit www.PKFTexas.com/NotForProfit.