Perry Haan: Lots of research devoted to finding out why people give to charity
Americans are very charitable. Last year, U.S. giving reached $484.85 billion, 4% more than 2020. The South Dakota Community Foundation reported $800 million in donations in the same year.
Marketers spend time and money on marketing research to determine why people buy their products. Charities use the similar marketing methods to determine why donations are given and attempting to retain donors but often have smaller marketing budgets than a for profit business.
There are many reasons people give. Most studies suggest that first and foremost is an altruistic impulse that people want to help. The fulfillment of religious obligations, including the biblical concept of tithing, is a major motive.
Other reasons after that are less-altruistic, like engaging in virtue signaling or a “warm-glow altruism.” This suggests that giving fulfills altruistic and selfish motives while showing off how kind and generous they are.
Another reason is self-centered quid pro quo. Contributing to non-profits can create a tax deduction. Donors may receive a gift from the charitable organization. No goods or services may be received in return for a donation but nonprofits do thank donors with small gifts or recognition to show appreciation.
Once someone has given there is a good chance they will be met with more requests to give again to the same organization. As with other types of businesses, someone who has already given to a charity is a good prospect to give again.
There is a much higher return on investment to keep asking past donors than to look for new ones. “The cost to find and secure a new donor is $85 and to retain a donor is $12” according to Laura Hoiten, Executive Director of the Watertown Area United Way.
One of the methods organizations use to find people to solicit is by buying mailing lists from mailing companies. Other organizations’ annual reports can also be helpful. If a donor is giving to an organization with similar objectives then they are more likely to be asked again.
Postal mail requests for giving are usually more effective than email requests. The sheer volume of emails most people receive today makes them a less successful tool for raising funds. Postal mail can also be used to send small gifts like return address stickers that hopefully create a feeling of obligation that will motivate the recipient to give to the organization.
Donors need to be careful about the legitimacy of charities they donate to. Charity Navigator and Candid are organizations that provide information on charities’ transparency. A general rule of thumb is to look for organizations that direct less than 30% of their total costs to administration and fundraising expenses.
Nonprofits and charities sometimes combat the stigma that they should “spend almost nothing on operations and money only goes to programming” Hoiten explains. “As nice as that would be it takes money to raise money just as businesses have to spend money to make money. To run a nonprofit most need to spend money on basic expenses like a phone, website, facility, audit, and supplies to make the mission possible.”
Another credible source for checking on charities is the IRS. To receive a tax deduction for a donation, the charity must be a qualified 501(c)(3) tax-exempt organization with the IRS.
Finally, the Better Business Bureau tracks complaints about potentially fraudulent charities. A list of these complaints can be found at www.Give.org.
Hoiten concluded “the nonprofit sector and charitable efforts are a much bigger industry than most people believe.” Nonprofit advocates, donors, volunteers, board members, and staff have a wider view.
Perry Haan is Watertown native. He is Professor of Marketing and Entrepreneurship at Tiffin University in Ohio. He can be reached at haanpc@tiffin.edu.
This article originally appeared on Watertown Public Opinion: Research devoted to finding out why people give to charity
