Why Do Donors Give? Even For The Ultra-Wealthy, It Is Not The Tax Write-Off.
The recent changes in tax law were a welcomed relief as development professionals for one reason: we could stop talking to most donors about their taxes in relation to their philanthropy. Of course, for some donors this is still a consideration, but for many it is not. We must then answer the question – if it is not for the tax write-off, why do donors give? If as development professionals, we cannot answer that question then we most certainly cannot secure the revenue our missions need to succeed.
Whether a donor is giving $5 or $500,000, they want to know their support is making a difference. Although donors may be incentivized to give to avoid taxes at critical times, telling philanthropists how their gift will make a difference and why there is an urgency is far more important than a tax write-off or any other logistical reason.
So, what should we include in our conversations with donors?
Legacy: Many donors, especially major donors, want to leave something behind; whether it’s a bonding experience for their family, or a mark on this world reflecting their intent to give back. In fact, many family foundations are started because the founding generation wants to ensure the family bonds over a project.
Social/Religious/Other Affinity Group: Why do donors give to hospitals, colleges, or other communities? Because they received something that they felt was invaluable; whether it be an education, a sense of belonging, or excellent health care. Donors in this group give as a way to repay a debt or with the ideal of paying it forward.
Recognition: Acknowledging that a donor has made a significant gift and publicizing that information can add to their feeling of accomplishment. Every person wants to know they matter and a short cut for acknowledgment is to tell them and their peers in an noticeable way, whether it be a naming opportunity or verbal recognition from the podium at an event.
Impact: The most altruistic of donors look at a problem and want to solve it. They want to create change and make a positive impact. Finding ways to demonstrate that their financial support made a difference in both quantitative and qualitative ways will be important.
So, what happens if you are having the right conversations with your donors, but they still haven’t committed support. The question then becomes why not? Most times, it’s not that an individual does not want to give, rather they do not feel compelled to give. So how can you motivate someone to give? To help you get there, let’s first talk about some common misunderstandings between nonprofits and potential donors.
- A belief that the funds won’t be allocated properly or wisely: Transparency matters more now than ever. Nonprofits are rated on this, and donors are paying attention. The most impactful donors want to see how their funding is being utilized. Speaking openly to donors about this is key to success.
- Lack of affinity to the organization/mission: Donors must feel connected to your mission or community to make a gift. If the connection is not there at the outset of a relationship, it is still possible to build one overtime with proper cultivation and stewardship: however, it must be done thoughtfully and strategically.
- Fear of being asked multiple times if they commit once: Setting clear intentions at the outset of a conversation about when they could be asked again, and future expectations is key. Building trust based on transparent and honest conversations is important to success.
So, what’s the advice for development professionals? When you’re talking with a prospective donor about philanthropy, leave the technical topics like tax benefits, planned giving vehicles or method of giving (stock vs. cash) to later in the conversation. Instead, start with their passions. Ask questions such as:
- What are some issues you care about?
- To what organizations do you feel an affinity?
- In what communities do you feel most at home and/or yourself?
- Should your family members also be involved in your philanthropy?
- After making a gift, how involved would you want to be?
As a development professional, you will always have to navigate changes in the financial climate. Your ability to effectively articulate your organization’s mission and impact will always directly correlate to your capacity to close a gift. This includes honing your mission statement and compelling case for support that clearly defines your priorities, providing both current and prospective donors with an understanding of why your cause matters now and why it requires action from donors of all levels.
Conversations around philanthropy can’t be effective if you don’t have them! Putting taxes and giving vehicles in the back seat for philanthropic discussions will lead to understanding your donor better and a more robust relationship. Personal topics like passions, values, strategy and impact will always be the drivers of philanthropic activity.