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3 Studies Explore, Document The Donor/NPO Relationship

Donors want to put their dollars to work and will support nonprofits with a demonstrated focus on affecting systemic change. Results of multiple new research projects at Indiana University Lilly Family School of Philanthropy at IUPUI in Indianapolis underscore the need for fundraisers to demonstrate impact and cultivate empathic responses from donors without inducing feelings of guilt or distress.

IUPUI released three new components of research in its The Giving Environment series. This second body of research within the series includes results of donor focus groups, a donor communication experiment and a donor survey, providing new insights about demonstrating donor impact, fostering empathy and the relative strength of competing donor communications channels. 

The findings build on the initial phase of research which documented an historic decline in donor participation rates in the United States. The percentage of American households making charitable contributions has dropped significantly since 2008, falling to 50% for the first time in 2018 — the latest year for which comprehensive donor participation data is available. 

The initial report and the three new reports are based on research funded by the Bill & Melinda Gates Foundation.

“Our newest findings make it unmistakably clear that donors not only want to understand the impact of their gifts, but value organizations that intentionally foster meaningful relationships with their donors,” Una Osili, Ph.D., associate dean for research and international programs at the school, said via a statement. “While such donor expectations are not new, our research suggests donors have increasing expectations for how organizations build connections with them and communicate the scope of their impact.”

The findings also suggest that donors are looking to support organizations with a demonstrated focus on affecting systemic change within the donors’ communities. Taken together, our findings begin to outline a new framework for best practices in donor engagement and cultivation, according to Osili via the statement.

Findings from 16 focus groups reinforced the importance of meaningful donor connections with nonprofit organizations as a pivotal factor in determining giving patterns. Focus group participants indicated that they are more likely to give to organizations to which they have a prior relationship or familiarity based on community and personal connections.  

Donors also reported that they intend to keep their giving rates consistent in the years ahead but are evaluating where their money would maximize their impact – especially in their local communities. Against the backdrop of both the COVID-19 pandemic and movements for racial justice, participant responses suggest that donors may prioritize giving to organizations focused on addressing the root causes of systemic and societal issues. 

Additionally, focus group participants expressed a greater desire for nonprofit organizations to communicate the impact of programs and services and to leverage images and video as a means of demonstrating impact. 

Against the backdrop of these focus group findings, researchers also conducted an experiment designed to explore donor responses to specific donor communications channels – with findings regarding donor communication that echoed those of the focus groups. The experiment was conducted to determine whether different types of fundraising messages cause people to connect with a nonprofit and why. The study randomly assigned more than 1,500 participants to receive one of two fundraising messages – a video or an email – or a third brief, three sentence narrative description of the work done by the nonprofit.

The experiment results showed that the video was the most effective of the channels tested. When compared to the control group who read the narrative language, the video generated a 43% increase in the connection rate among its viewers. Evidence also suggests that the video’s effectiveness stemmed from its ability to induce an empathic and/or moral response without also inducing strong negative feelings of sadness or guilt. 

“These findings highlight the importance of intentionality in fundraising communication,” said Mark Ottoni-Wilhelm, Ph.D., who led that study. “The experiment suggests that it’s not enough to highlight needs, but that the most effective donor communication also evokes a positive sense of connection.” 

The third report in this series featured a survey of 259 participants conducted in partnership with Network for Good. Conducted over a two-month period from November to December of 2021, the survey sought input from donors of nonprofit organizations within Network for Good’s pilot study on subscription giving — a recurring giving program that offers participating donors access to exclusive and personalized content and communication. The subscription giving model aims to apply best practices from modern subscription-based purchasing to the nonprofit sector. It is intended to help nonprofits better engage occasional donors through constant stewardship. Survey participants included both subscription donors (SDs) and non-subscription donors (NSDs).

Designed to explore insights that may help address donor retention and cultivate recurring donors, the survey’s findings suggested that exclusive content featuring stories and experiences from the people benefiting from donor philanthropy is highly valued by all donors, and especially subscription donors. 

Other findings note that subscription donors reported higher adoption of new tools of giving, such as giving via social media or crowdfunding sites, and a stronger preference for communicating via social media. Donors reported that a nonprofit’s mission was the top factor influencing them to sign up for subscription giving. Personal relationships with staff at nonprofits also matter greatly in shaping the decision to become a subscription donor.

 The full reports for the three new studies, as well as the initial study, infographics for the first two studies, and an annotated bibliography are available at: https://bit.ly/3GhaCmt

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