Six Reasons Donors Give Away Their Money

Ask a group of average people why wealthy people donate their money and the number one reason you are likely to hear is that the donors receive a tax write-off.  You hear this answer despite the fact that rarely does someone receive a net financial gain from giving money away.  Even if you get half of a donation back in tax saving, giving usually costs money.  Given that people are not donating with an expectation to make money, clearly there are other reasons for philanthropy.  Everyone has a reason for giving when supporting a cause, even the anonymous donor.  When you understand these motivations, you can tailor your fundraising pitch to increase interest in your organization.

The reasons that donors give can be broadly classified into the following six motivations each of which drives people to varying degrees.

1. Impact

A key reason that donors give is that they want to make a positive difference in the world. Saving lives, reducing suffering, feeding the hungry, eliminating disease are at the heart of the original definition of a charity; and many are still motivated first and foremost by this most philanthropic of reasons for giving.  Even when a donor says they want nothing in return, they want to know they are making a contribution for good.

For the donor motivated by impact, you want to show the difference your organization is making. Regular reporting is typically highly valued by the impact donor. When an issue is too large for any one donation to make a dent, you want to break the issue down into small parts you are improving. This is why sponsoring a single child in Africa or adopting a single endangered animal are popular.  You can also counter a feeling that one gift does not have an impact by showing donors how far you have come, and not just how far you have to go on the issues you address.  For example, the Bill and Melinda Gates Foundation launched their Living Proof Campaign to remind people about the incredible number of lives that have already been saved in the developing world thanks to vaccines, clean drinking water and other measures.  Sometimes causes get so focused on their needs, they forget to celebrate their accomplishments. It’s these accomplishments that the impact donor wants to see.

2. Appreciation

The grateful hospital patient and the successful university alumnus are two examples of the type of people who give because they wish to show their appreciation to an organization.  Appreciation can come from something an organization did for us directly, for someone we care about or simply from gratitude for good work being done.

A key strategy with those who feel appreciation for a cause is to convert them from roles such as student and patient into participants such as volunteers and members.  If you build a new relationship on the foundation of original one you will find such individuals stepping forward to donate.

3. Mission

When people have a vested interest in the work of a charity, they give because they share the same mission. Cancer patients who raise money for the cause whether to support research for their own illness or that of others do so because of a sense of common purpose or mission.  Engineering companies provides scholarships to colleges in hopes that more students will pursue a technical education.

Mission donors can be the most motivated givers because of a sense of stake in the outcome.  To appeal to the mission donor, you want to empower them and treat them like a partner in your effort as much as possible.  Build on the concept of working together to achieve results.

4. Impulse

Sometimes, people give even when there money is beyond what was sought. A $5,000 campaign for a bullied women on a bus raises $700,000.  When the Red Cross said it was going to direct some 9-11 money to projects that could save lives, people were enraged. So instead, some widows of victims received as much as $7-million with the wealthiest families receiving the most money. It’s not that these people are undeserving.  However, if your spouse was killed on September 10th or 12th or your being bullied did not go viral online, you may not have gotten anything from anyone. Certain issues just have an emotional effect that causes people to give even when that gift could have greater impact elsewhere.

If you are fundraising, instead of being frustrated by this, you need to consider how to increase the emotional impact of your cause.   Prospects always need to hear from those you serve. Testimonials and quotes are important tools. Photographs and videos can help you tell the story.  Some of the most effective pitches from Humane Societies have been those written in the first person (canine) as if from a dog in need.  If one death, and therefore one story, is a tragedy, but one million is a statistic, make sure you pick one story to tell.

5. Recognition

Some donors simply like the attention that comes from donating. This can be a company seeking exposure, but it can also be an individual that likes the events, project naming and publicity that can come from making a donation.  Some donors simply like the positive feeling they receive from being appreciated.

When a large donor gets his or her name on a high-profile building, the recognition is obvious, but even smaller donors can value recognition. To some, a donor wall or plaque might not matter at all, but to others, it might be the most important part of their contribution.  Recognition can also be more personal and even private. For example, many donors especially like the personal touch of being recognized at an event or receiving a behind-the-scenes tour.

Do not be afraid to ask donors or prospects how they would like to recognized.  In particular, ask them what they most appreciated from past donations they made to other organizations. You can even ask this sort of question of direct mail donors on the pledge card they return with contributions.  You can then use this information to tailor pitches to  different groups.  The key is to identify which of your prospects are most motivated by recognition and what type of recognition matters most to them.

6. Benefit

Perhaps the most controversial motivation for donating to a cause is for personal benefit. Tax law says if you receive something of tangible benefit for a contribution, the transaction was not a donation.  When attending a fundraising dinner, participants might receive tax receipts for the difference between their contributions and the value of the meal.  In effect, they are making two transactions in one — purchasing dinner and donating. In this case, the donation portion might be provided for philanthropic reason, but it could also be provided to procure non-tangible benefits such as the opportunity to meet a politician or celebrity.

Some types of benefits are generally considered inappropriate such as the right to dictate what is taught in a classroom or performed on a stage because of a donation.  Other types of benefits derived from donations though can be perfectly fine. For example, the owner of a software company gave a major personal donation to an arts centre not to sell more product, but so that developers would be more interested in working for the company.

When talking to potential donors, you want to ask if there are ways you can help them.  Just remember they will not always know, but this does not mean, there is nothing you can do.  For example, through conversation with a prospect, an arts centre learned that the woman loved Steinway pianos.  When asked if she would like a Steinway used for the productions at the Centre, she indicated she would be delighted if that were the case. So, she was asked if she would like to fund a Steinway and go to the New York headquarters for Steinway and help select one for the Centre.  A $100,000 donation resulted.

Ask Prospects What Motivates Them

One of the most powerful questions that you can ask a potential donor is, “What do you want to get out of donating?”  Do not let them protest with false modesty. Tell them that even the anonymous donor has a reason for giving. You simply want to determine this motivation whenever you can.  In this way, you can better serve your donors; and when you better serve them, you will raise more money.