Today’s Major Donors: Preferences and Behaviors

The unusual mass of financial capital produced in the late 20th century, complemented by the creative thinking of innovative philanthropists, engendered new ideas for philanthropy. An entrepreneurial focus; greater emphasis on partnerships among business, government and nonprofit sectors; and new wealth as well as new social innovation dramatically affected the philanthropic scene and therefore nonprofit organizations and fundraising.

Various definitions began to be applied to major donors, whose philanthropic practices and behaviors were gradually changing. There was talk of the “new” donor, or the “social entrepreneur,” a donor who was focused on social issues and opportunities to create and sustain social values. “Venture philanthropist” was also a frequently-used term and this type of donor, akin to the venture capitalist, valued innovation and had high demands for accountability.

Over the ensuing years, into the 21st century, high-engagement philanthropists were no longer content to write a check and let the money be invested and distributed by others. They wanted to be involved in the decision making and were looking for charitable organizations that satisfied their sense of values and need to make a difference—one of the most-cited motivations for making a major gift. They became hands-on donors, did much research about the cause to which they intended to give, and demanded accountability and results. In short, this evolution in major donor behavior resulted in today’s wealthy seeking out causes for which their dollars can truly make a discernable difference. Donors to the Seed company, as described by author Mike Toupin (2015), certainly reflect this major donor metamorphosis. Alignment with mission and vision, meeting urgent needs with lasting impact, and direct requests—these are key findings described by Toupin and are congruent with what fundraising professionals have observed and researched since the mid- to late-1990s.

Many of today’s major donors are under 40 and are not waiting to distribute their wealth. However, unlike traditional philanthropic practices, they don’t give to just any idea that comes along or respond to an unresearched plea. They make sure (as much as possible) that their money tackles a problem which can be solved. And these preferences and behaviors are not unique to just younger philanthropists; rather, this has become a general trend in giving, particularly among major donors.

Peter deCourcy Hero (2001), writing about the emerging patterns of new philanthropy, summarized the characteristics of new donors. They select a small number or perhaps even one charitable venture; they focus on prevention and not just symptoms; they donate not just money but also time, involvement, connections and other resources; they stay involved over time; they build organizational capacity; they provide sustainability in funding; they expect agreed-upon performance measures; and they plan an exit strategy at a point when they feel they can withdraw. Toupin’s (2015) research, conducted almost a decade and a half later, verifies that Hero’s (2001) observations and predictions have become true.

For today’s major donor, focusing on outcomes is paramount because this kind of donor doesn’t “write a check and walk away.” That type of charity is not appealing. He or she is interested in the potential for great changes. While “where and how I can make a difference” is a universal motivation for any donor, today’s major donor puts a greater emphasis on this. Therefore it is understandable that donor behavior as researched by Toupin (2015) indicates a desire to actually see the results, to participate in mission trips and have hands-on experiences.

In mainstream philanthropy, the donor/grantee relationship often takes on a form of compliance; the nonprofit partner feels it must jump through hoops to meet certain requirements and qualify for certain funds. Of course, a great deal of today’s philanthropic action continues this type of activity. However, now there is another layer to major donor behavior, one that can be observed in addition to the traditional ways of giving. Now the relationship is based on a funder’s philosophy of “I will help you succeed.” There is a commitment to strategic partnership. today’s major donors contribute not only their money and expertise but also their networks. They plan for maximized growth. They believe in quantitative performance assessment, investment in organizations and not just projects, significant long-term capitalization (as opposed to short-term or start-up funding), and hands-on management participation (direct participation in operating decisions and probably a seat on the nonprofit’s board).

Expectations on the part of major donors are high indeed. They are motivated to give not just by their own financial ability but because they seek a cause consistent with personal values. If they don’t find such a cause and the organization that embodies it, they might simply begin another nonprofit of their own, one which truly can exemplify their personal value system. Major donors are similarly concerned about and interested in the organization’s reputation and the organization’s performance—hence the development of projects like Fundraising Effectives Project (FEP) or the Fundraising Fitness Test, developed by Philanthropic Service for institutions and based on the FEP (information available upon request). They focus grants in a specific field, and since religion or faith guide a significant portion of philanthropy (research evidence available upon request), it isn’t surprising that major donors would be interested in the Seed company. Some look at “sector investments,” such as healthcare or the environment, and therefore it is logical to conclude that a faith-based project, regardless of the specific denomination, would be successful in seeking and finding major donor support.

This leads to another interesting aspect that underlies and also enhances Toupin’s research. One of the most familiar texts in the Bible, one we not only remember from our childhood efforts to memorize key texts but also one that has taken on the air of an aphorism, is the one in Acts 20:35, where Jesus is quoted as saying that “It is more blessed to give than to receive.” Keeping in mind this basic biblical concept, along with numerous other texts along the same theme, we can now point to research that proves this biblical injunction.

1. Altruism is a basic human motivation. If it feels good to be good, it might only be natural. Neuroscientists at the National Institutes of Health Scanned Brains of Volunteers who were asked to think about scenarios involving donating money vs. keeping it for themselves; they found that altruism is not a superior moral faculty that suppresses basic selfish urges but rather fundamental to the brain, hard-wired and pleasurable (Vedantam, 2007). So major donor satisfaction in giving to the Seed company would not be a surprising outcome.
2. Generosity rather than acquisition promotes A survey of 30,000 American households indicated that those who gave were 43% more likely to say they were “very happy” about their lives. The conclusion was that when people begin to give, they free themselves from the acquisitive treadmill and find new meaning (Singer, 2009). Along these same lines, The World Giving Index, produced by the Charities Aid Foundation in the United Kingdom, reported on the strong link between the giving of money and happiness. Happy people, studies indicate, are more likely than wealthy people to give to charity (“giving tied More to happiness than Wealth,” 2010). Therefore the story with which Toupin (2015) opens his article rings true for many fundraising professionals who have had similar and highly satisfactory experiences in making it possible for donors to give and realize happiness.
3. Generosity results in better health. Human beings appear to be genetically disposed to be happiest when they are selflessly giving to others, according to research conducted at the University of North One conclusion reached was that humans tend to be unhealthy when they are devoted to self-gratification, while people who emphasize service to others and connection to community show a pattern of gene expression that results in less inflammation and stronger immunity (“A genetic guide to true happiness,” 2013).
4. Giving time has benefits similar to giving money. The Harvard Business Review told of a research study conducted by Cassie Mogilner at the University of Pennsylvania’s Wharton School which showed that people who give time away feel happier and more effective, once again underscoring the physical and mental benefits of generosity (“You’ll Feel Less Rushed If You Give Time Away,” 2012). This would be congruent with Toupin’s (2015) observation that donors like to be involved with the Seed company and its work, a trend that has been growing both in volunteering and in giving during this century. In summary, the concepts that drive today’s major donor are not necessarily a new creation but a variation or perhaps additional layer of major donor behavior and way of functioning. Today’s philanthropist who gives significant amounts is likely in a process of evolution shaped by current events, personal growth and development, a definition of personal values, and economy. However, characteristics which today’s major donor prefers and exhibits, while probably not revolutionary and often recognizable as standard operating procedure, put increasing emphasis and focus on credibility and accountability of nonprofit organizations, and on providing the experiences and information that produce the satisfaction and fulfillment of values which the major donor seeks.

References

1. (A) genetic guide to true happiness. (2013, September 13). The Week, 24.
2. Giving tied more to happiness than wealth. (2010, September 13). Philanthropy Journal [no page number].
3. Hero, P. D. (2001). Giving back the Silicon Valley way: Emerging patterns of a new philanthropy. In E. R. Tempel (Ed.), Understanding donor dynamics: The organizational side of charitable giving (pp. 47-58). San Francisco, CA: Jossey-Bass. (New Directions for Philanthropic Fundraising, 32, Summer 2001.)
4. Singer, P. (2009, March 9). The science behind our generosity: how psychology affects what we give charities. Newsweek, 153(10), 48.
5. Toupin, M. (2015). characteristics of major donors for Bible translation. Journal of Applied Christian Leadership, 9(1), 41-55.
6. Vedantam, S. (2007, May 28). If it feels good to be good, it might only be natural. The Washington Post, pp. A1, A9.
7. You’ll feel less rushed if you give time away. (2012, September). Harvard Business Review, 28-29.

Dr. Lilya Wagner is Director of Philanthropic Service for Institutions, a department of the North America Division of the Seventh-day Adventist Church, and also is affiliated with the School of Philanthropy at Indiana University. She is a frequent speaker and workshop presenter in North America and also internationally. Her many published writings include articles and book chapters on philanthropy, fundraising and the nonprofit sector.