Much to-do (rightfully) these days about Hope Consulting’s report, Money for Good: The US Market Opportunity for Impact Investments and Charitable Gifts from Individual Donor and Investors.
Upshot of the report from the standpoint of Elie at GiveWell (quoting the report): “[F]ew donors do research before they give, and those that do look to the nonprofit itself to provide simple information about efficiency and effectiveness.”
So why do so comparatively few donors do research before they give? And why do donors who do in fact do research seem to place such comparatively little stock in it when they make their giving decisions?
The common reply is that giving is primarily an emotional decision for donors. But are our only two options that some few spectacular donors give rationally while most give irrationally?
Let’s consider for a moment Option C; namely, that giving is not construed primarily by donors as an investment but rather as an act of affiliation.
That is, it’s not that some donors think before they give while other donors just feel. It’s that most donors think about things other than efficiency, effectiveness, and emotion before they give.
They think about affiliation.
ASEA and the Center For Association Leadership first noted this several years ago in a distinct but related context, namely, in writing The Decision to Join: How Individuals Determine Value and Why They Choose to Belong, about how and why people choose to join boards and associations.
As you’ll see in the following quote from a killer August 2007 blog post of theirs, however, affliation is a sorely under-researched and little understood but highly relevant category as it relates to financial giving:
The decision to join an association is more accurately a decision to affiliate. The term “join” implies jumping in, like a party in a pool. “Affiliate” means more than that; it incorporates the notion of shared identity. When people affiliate, they let the world around them know that they share an important quality with a group. It’s not so much a purchase as it is an exchange that starts with identity but eventually evolves into a shared commitment to some common purpose.
It’s not so much a purchase–that’s an insight into this discussion on donor drivers that needs to be injected again and again.
After all, if donations are purchases, then it’s downright puzzling why more donors aren’t making better purchases by investing in efficiency and effectiveness.
But if donations are “exchange[s] that start with identity but eventually evolve into a shared commitment to some common purpose”, then not only does that cast an entirely different light on donor behavior and what donors are seeking to accomplish–quite rationally, we might note–but it also changes how nonprofits must appeal to donors.
When a nonprofit says, “We are efficient and effective and here’s why”, this will indeed prompt some donors to affiliate with the nonprofit. The Hope report can even help us estimate the percentage.
But to appeal to the lion’s share of donors–who start with identity and move to shared commitment–the “Why?” of the nonprofit’s approach is more important than the “How?” or the “What?”
As Simon Sinek notes in Start With Why, that’s not an abandonment of rationality in favor of emotion:
Any organization can explain what it does; some can explain how they do it; but very few can clearly articulate why. WHY is not money or profit– those are always results. WHY does your organization exist? WHY does it do the things it does? WHY do customers really buy from one company or another? WHY are people loyal to some leaders, but not others?
Efficiency and effectiveness are results. Giving, however, is driven by affiliation, and affiliation is driven by the “Why?” question–so much so, in fact, that given the choice between a “Weak Why/Strong What” and a “Strong Why/Weak What”, the Hope report suggests that donors will choose the latter, and in overwhelming numbers.