• April 18, 2014

New Study Sheds Light on What Wealthy Donors Care About; Many Say They Will Support Operating Costs

In deciding which charities to support, many wealthy donors do not judge nonprofit organizations by how much they spend on overhead costs — despite the popularity of that measure among watchdog groups and others, a study released today has found.

Interviews with 33 people who give away an average of $1.5-million annually, found that most had built businesses in finance, technology, pharmacology, and other fields. Several said they understood charities’ need for money to pay for overhead and other operating costs and were willing to provide it.

The survey, conducted by researchers at the University of Pennsylvania’s Center for High Impact Philanthropy, was aimed at providing insight into how the nation’s wealthiest donors choose the charities they support, how they obtain information on those organizations, how they assess the impact of their gifts, and the roles they see themselves playing in nonprofit organizations.

Social Contacts

In choosing the recipients of their contributions, some donors said that they make their largest gifts only after becoming personally involved with an organization. But most donors said they choose which charities to support by relying on information obtained from peers and other social contacts, rather than doing research or turning to watchdog organizations and sources such as Guidestar, the online database of charities in the United States.

“Knowing someone on the board or from your peer group that recommends the issue or organization” was rated as important or very important by 26 of the donors.

Several donors said that time constraints have prevented them from coming up with adequate criteria to decide which charities deserve large sums. As a result, those donors said they are not giving away as much as they could afford.

Many of the donors said they felt a need for better information on the causes they support, but most said that they do not actively seek out detailed information on the effectiveness of organizations to which they give or others involved in the issues they care about. Others said that the information they had seen on effectiveness was not helpful.

The researchers identified two reasons behind donors’ reluctance to ask for information: They did not want to create inappropriate expectations on the part of charities, or they feared unwanted solicitations.

“We were not surprised to discover an acute sense of charity inundation among participants,” the researchers wrote. “Many described receiving dozens of solicitations on a weekly basis.” In addition, most donors said that it is difficult to extricate themselves from relations with a charity they have supported for some time, even when they have decided it is time to stop giving.

Tangible Projects

Donors frequently reported that it is difficult to track the results of their gifts. Consequently, some said that they intentionally give to tangible or time-limited projects such as a new building or a scholarship with easy-to-observe results.

They also expressed some reluctance about asking for data to show an organization’s effectiveness: Many said that they did not want to burden the charities they support with additional demands for details, come across as a “high-maintenance” supporter, or imply a lack of trust in an organization’s work.

Asked about formal evaluations, some donors expressed ambivalence about their usefulness, saying that the data in evaluations are often poorly presented, do not provide the right information, or are unnecessary.

When asked about their role as donors, nine of the 33 donors stated that they do not think of themselves as “philanthropists,” despite giving far more money away every year than most Americans. They preferred to be known as a “community volunteer” or “community supporter.”

Most donors said that their roles at nonprofit organizations had grown from simply writing checks to more involvement as their experience, available time, and wealth grew. Many said that they aspired to help generate awareness of the causes and organizations they support, do advocacy work for those causes, and work with other donors on charitable projects.A report about the survey, “I’m Not Rockefeller”: 33 High Net Worth Philanthropists Discuss Their Approach to Giving,” is available on the Center for High Impact Philanthropy’s Web site.

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