Donor profile

The defining characteristics of the donor we consider are that they have sympathy for a range of charitable causes far wider than the number they actually donate to, they care about how effective a charitable service is and will take this into account when deciding how much to give, and in addition they care that any contribution they make is consistent with the “bigger picture” of a healthy socio-economic system.

Donors of any earning level and giving potential may fit this profile.  Here it is worth making two points explicit. First, that individuals who give a small amount regularly over their working lifetime will contribute in total a substantial sum of thousands or tens of thousands of pounds.¹40 years of giving the median of around £5 per week amounts to a personal total of over £10,000.  Second, that if we could aggregate a large population of people who each give a miniscule amount, then the total amount is enough to keep a medium service running, or many small services.²10 million people giving 1p a month gives an annual income of approximately £1m.  Enabling a satisfactory way to achieve this might mean that a donor giving the median amount supported 2000-50000 charities regularly, and this would be a primary income stream for most of them.  There’s no practical need to set a minimum here – someone contributing £5 as a one-off has every right to care about the bigger picture.

Donors may feel dissatisfied or frustrated by particular things that may indicate significant omissions or inefficiencies in the bigger picture.  Two examples of this are encountering serious levels of suffering such as homelessness (indicating major gaps in provision), and being exposed to large volumes of charity advertising (also indicating major gaps in provision, and the inefficiencies of a kind of “infighting”).

Donors may or may not be aware of country-level initiatives such as the Sustainable Development Goals, or additional or supplementary strategic goals by major organisations.  They will prefer a balance between strategic progress and immediate relief. It may be more important to them to ensure that everybody in need always has some provision, for example, than to eradicate the world’s biggest problems.  We expect most people to fall between these two extremes but closer to the first.

Donors may or may not wish to be closely involved with or informed about the individual projects they support, and may or may not wish to alter their level of support in response to a charity’s performance or behaviour.  Some donors may contribute in additional ways, which may for example include volunteering or being employed by a charity they support, or organising a collective of small donors to act as a more effective stakeholder. Other donors may prefer a “give and forget” approach that they can rely on.

A donor may or may not value what we call “single-impact matching”, which is when a charity advertises precisely how a small donation might be used (for example, “£X will feed a child for a week”.  See Appendix A for more details). Whether they do or not, their overriding concern will be for efficiency and impact in the big picture.

Donors may care about the amount of their donation that is used abroad.

Dissatisfaction factors

Having given a general impression of the donor mindset, we consider seven specific areas where such donors are likely to experience some dissatisfaction.

Waste

We don’t like inefficiencies that result in less money reaching the beneficiaries.

Some aspects of waste are well-recognised in the sector: it is common for charities to say what fraction of a donation will reach the beneficiary, and how the remainder is spent.  Additionally, many charities try to make effective use of volunteers, reducing the number and cost of permanent staff needed. It has been widely acknowledged that both points when taken to extremes can be counter-productive.³https://www.vox.com/future-perfect/2018/11/26/18103372/overhead-charities-effectiveness-donations-giving-tuesday

There is less conversation around advertising, but it is clear to donors that a lot of money goes into grabbing attention and competing with other charities.  We appreciate that advertising usually pays for itself from the perspective of the charity doing it, we know that it brings in donations that otherwise wouldn’t reach the sector at all, and we acknowledge that this has most likely come about as a compromise in good faith in the absence of more strategic thinking at the whole-sector level.  We also acknowledge that most charities now communicate openly how they spend their funds. However, having thousands of charities all advertising to the general public rather than more specific audiences is inherently wasteful, and we need wasteful systems not to get in the way of more holistic solutions.

Beyond advertising, there are leaders and experts from charities who contribute to charity debate in the national media.  While the promotion of this debate is healthy at its core, this can also be a source of self-serving and partisan criticism undermining other organisations in the sector, or the sector as a whole through communicating a sense of frustration and lack of improvement.  From a public standpoint, these can also be seen as causes of waste.

We find it likely that this focus on waste, because it is simple to find evidence of and describe but cautioned against by experts, often masks deeper and more complex concerns including the others in this list.  An immediate consequence of this is that addressing waste in isolation will not be enough to meet donor needs.

Lack of representation

We don’t like our donations being spent in a way that takes little account of what we care about.

Most donors donate a large amount of money over their lifetime.  One of the practical benefits of donating a large amount of money in one go is that the donor can measure out funding between different projects and aspects of projects with some precision.  This precision represents a direct communication of the donor’s detailed wishes to the sector. This precision is limited even for a major donor, but is usually lost entirely when an individual makes a small donation.

There are practical reasons for this, but we can see ways around them, and believe it is a reasonable goal for an individual to be able to specify how they would like to see the sector use its money, and to have their own donations however small used in a manner sympathetic to this.

We see sub-par solutions arising in the absence of tackling this problem directly.  One is single-impact matching, where a charity explains how they use a typical £3 donation.  While there are aspects of this to be appreciated, we think that people intuitively understand that this cheapens their actual value, and we have more to offer them.

This is an example of bias – where a donor is persuaded to make a decision based on the exaggeration of relatively unimportant details or needless constraints.  The consequence of all bias is to widen the gap between what a donor believes should happen, and how their contributions are used.

Lack of coverage

We don’t like having to say no to causes we think are worthwhile.

Because so many charities advertise to the general public, at face value it is unavoidable that we see adverts for causes we sympathise with but don’t support (“I’m not rich enough to be able to support every cause that I approve of.”)⁴Taken from How donors choose charities – Beth Breeze, Centre for Charitable Giving and Philanthropy

There are two reasons for this being unavoidable, both of which we will be challenging.  One is the perception that there is a practical minimum size for a single donation; the second is that an individual can only interact with a relatively small number of charities.

This raises the question of whether we are really “doing our bit”, and it’s not a question that an individual donor is in an informed position to answer today.  Donors can reasonably feel some responsibility for funding gaps in the sector, and individual charities being forced to close their doors.

Deficiencies in the big picture

We don’t like participating in a system that isn’t working or leaves people out.

Most people are painfully aware of the large scale of suffering, both internationally and domestically, and our collective failure to meet the most basic needs of a large proportion of the global population, and it is far from clear whether the situation is improving reliably, even with a long-term view.  This awareness is visible in the readiness with which we can encounter people discontent with incumbent political and economic systems, in everyday life and in the media. The suffering itself is also visible in news media and in locally visible problems such as homelessness, mental illness, and addiction.

This is important because individuals’ priorities can change based on whether or not we are on a credible path to resolving some of the biggest problems in the world in a reasonable timeframe.  In particular, if we are not, then higher priorities might be ensuring no one is completely neglected, or that what we do spend is spent effectively, or to begin with fixing problems in our own neighbourhoods.

Put another way, every donor is potentially affected personally by under-addressed suffering in the world, and has a natural claim (because they care and provide funding) to a say in:

1. How we make the best of bad situations;
2. How we try to improve the overall situation over time;
3. How we balance these two.

Lack of accountability

We don’t like having little control over organisations that spend our money.

There are two relevant strands to accountability – the visibility into what the organisation is doing, and the ability to influence what it is doing.  This can range from telling a cancer charity that you think it should be focusing more on research into cures and less on palliative care, to demanding that a scandal-hit executive is dismissed.

On the one hand, there have been improvements in accountability following changes in how people communicate and coordinate collective action, particularly making use of recent internet technologies.  This can be effective when a charity behaves unethically. On the other hand, the sector has been built to depend on charities acting in good faith – most regulatory safeguards are either advisory or apply after the fact.  Collective action may be able to build a relationship between charity and donor deeper than that between charity and regulator, but it doesn’t appear to be there yet. For now, if a charity has engaged in unacceptable behaviour, reacting by reducing or cancelling donations – a decision donors can be uncomfortable with – is one of few available options.  We are aware of some charities including donors as a represented stakeholder when setting and assessing organisational and project goals, and see this as a positive attempt to address this issue.

Over-reliance on expertise

We don’t like that we have to keep on top of current issues to know whether we’re giving responsibly.

Many people like to get to know the areas that they support well, but those wanting to put in enough effort that they can call themselves experts are a tiny minority.  For almost everybody, relying on existing expertise would be preferable to making this investment. If the expertise is absent or unreliable, many will turn to less reliable alternatives instead of trying to develop their own knowledge.

For example, people want to help the homeless, but when they are told that giving money directly – as often requested by the homeless – is likely to do more harm than good, exasperation is a common reaction.  There are three outcomes:

1. People give anyway, preferring the surface-level good of responding to a direct request for help (especially when there is no consensus on the reasons not to);
2. People don’t give, not wanting to take responsibility for the longer-term harm they might be contributing to or facilitating;
3. People do carry out their own research into the issue, and they find that it is a complex issue that neither government nor other well-placed organisations are willing to provide advice on.

All three outcomes have the same effect that people have less confidence, they give less money, and they feel that not enough is being done by them or by society.

What is needed in this example is authoritative organisations to decide, publish, justify, and continually review their positions on the issue.  It matters less that there might be several such positions, and more that there are clear positions supported by a process that manages expertise.  This allows donors to delegate in good faith.

Beyond this example, while in theory people with different political views might prefer too broad a range of actions that mutually exclude each other, we suggest that the demand for special treatment for particularly nuanced views is generally outweighed by people just wanting to help, and that it is therefore appropriate to provide donors with a service allowing them to delegate certain choices to independent experts.

In particular, we consider that the number of examples that are sufficiently divisive as to produce a national split, while they certainly exist, is low enough that they can be managed by presenting choices to the donor.

Lack of appreciation

We don’t like being treated as less important than we are.

While any single charity will depend on maybe thousands of individual donors, most of whom will give small amounts regularly that are each a tiny proportion of the aggregate, this characterisation misses something important.

Giving regularly, the median donor (£20/month) contributes around £10,000 over their working life.  Every such donor is essentially a significant philanthropist in their own right, and if they choose to give up the chance to put their name in stone by supporting one major project, in order to give – as we encourage – smaller amounts to many different charities over a longer period of time, then it is sensible that we help them to feel that this is at least as worthwhile.

We help donors to feel that giving more widely is worthwhile by treating each small donation with the same care as if we had received the full amount in a single payment.  In practice, this means asking how they want you to spend your budget, and accounting for every penny.

Overall, failing to satisfy donors carries the risk that donors will move somewhere else – particularly if someone else can satisfy them, and as their ability to make use of collective action improves.  We suggest that it is only because inertia on these problems is prevalent throughout the sector that charities are not seeing this with clarity today, and that it manifests instead as a lower contribution volume sector-wide – some people are spending less on charity than they would like.

Continue: our methodology