This project has been an independent initiative designed and run by volunteers interested in how best to donate to charity as an individual with limited discretionary income. While this donor group has not been recognised and served effectively at all up till now, we have reached a point where, having analysed the problem and showed a solution demonstrating the opportunities and benefits, we believe there are no further major conceptual obstacles to raising donor satisfaction.
Because of the limited context and resources available to us, we have preferred to make only recommendations likely to work independently and in isolation, but we present them together here in order to give a sense of the overall improvement we consider achievable.
Note: one-off donations are currently a major source of funding.151% of interviewed donors give “from time to time”, i.e. not regularly via direct debit.
Starting small could be making a 1-year personal giving plan, clubbing together with one other person, or getting a local community organisation to talk about donor representation. It is possible to do this easily and informally just starting with one or two friends and family – this is one approach the authors will be using after closing the prototype service. Note that the service worked with just 5 donors over several years, and improved outcomes for all of them.
You can also start small by adopting some principles that support the long-term, for example:
- Don’t give the same amount to everybody
- Don’t do all your giving by snap decisions
We would encourage individuals to improve their existing donation practices to reflect the novel aspects of our project, adopting planned long-term giving and group-giving. Planning a giving strategy that looks several years ahead allows an individual to see themselves more as a high-value philanthropist making important decisions about helping people substantially, which in turn gives them the confidence to remove themselves from more wasteful advertising-based discovery channels. Group-giving allows an individual to reduce waste and reach more causes overall by pooling donations, also reducing waste.
Independently of all our other points, increasing and improving representation carries a high likelihood of increasing donor engagement and donation volume. We recommend that all parties look at what they can do to achieve this. However, we note that increasing donor engagement at the individual project level and not at the sector level may have a detrimental impact on satisfaction overall for some donors.
We envisage services of the type we have described in our project comprising a “broker” layer in the sector that handles general causes. That is, a donor would not go directly to individual charities, but would work with a different type of organisation that can represent the donor’s general needs more directly. Public advertisements for general causes would be run by these brokers but not by individual charities, who would interact with brokers instead. This is immediately more efficient overall, and we would expect brokers to compete with each other by developing better methods for discovering projects and representing donors’ needs. Importantly for the donor, any broker offers a single point of opt-in, so that you know you’re already contributing when you find out about a new cause.
There are parallels with other markets where the introduction of a trusted brokering tier of organisations has brought substantial benefit to the service user – various market/price comparison services and financial investment/advisory services are two. These markets have very different characteristics, but the common idea is to separate the responsibility of representing users as a whole from delivering the individual services that meet part of their needs.
While we see challenges in implementing a service like ours at a larger scale, some of which we have discussed here, we expect such a service to be viable. A large-scale implementation may benefit from working with recipient charities more directly to establish expectations and new ways of working, especially where a significant change in finances might be anticipated. Such an implementation might come about from collaboration by larger charities within the sector or be created independently.
There is potential for providing other portfolio services, such as more advisory services to meet the problems around donors wanting access to expertise about specific issues and giving in general.
Next steps after our isolated analysis of what donors are looking for might include carrying out market analyses and exploring economic models, verifying the link between donor satisfaction and donation volume, exploring appropriate recommendations for how much donors should give based on their views and circumstances, and continuing to evaluate the effectiveness of different types of charitable activity in addressing longer-term and global problems. Note that all of these directions are motivated by supporting or questioning one or more of our dissatisfaction factors – it seems appropriate that research should be focused on improving the results of donating from the donor’s perspective, by improving efficiencies as well as enabling a more informed perspective.
We have mentioned “lifetime” giving previously, but regular and long-term giving are less important compared to giving as part of a more holistic big picture, which includes widespread and group giving. If you don’t often have the means to give, then make it count when you do.
If you have a lot to give, we hope to have given you some new ways to think about the effectiveness of your contribution. There is a balance to be struck between inspirational projects that show tangibly how one person can change the world, and joining others in more widespread giving. When you contribute towards making it easier for others to join you, you enable a much larger impact overall. Our main advice is that you find (or develop) ways to delegate a substantial part of your giving – this is the important signal to send to people with lower disposable wealth.
Roughly 75% of the charitable sector’s income comes from individuals and government (the remainder comes from commercial activity and investment profit), and major donors account for under 10% of the contribution from individuals.2NCVO income sources report – Coutts Million Pound Donors Report 2017
While people often expect government to take on more responsibility in the charitable sector, including ensuring adequate funding levels for all, this is complicated by government having many other responsibilities, and we expect such complication to lead frequently to conflicts of interest, lack of focus, and unsatisfactory compromises. Additionally, from the government perspective, increasing donor satisfaction isn’t associated with increased government revenue, so increases in total charitable funding could only be achieved by finding additional income – possibly through taxation – or rerouting funding from elsewhere.
By contrast, our assertion is that donors would release more funding from their disposable income if the sector’s mechanics were improved. The key point here is that the biggest source of sector funding also has significant unused potential, and most of this potential lives in a large number of small decisions.
As discussed earlier, where we do see potential for positive government involvement is in strategic and representative decision-making.
While we might expect government to take an active interest ultimately, in the current economic and political climate we think it more likely that we will see early service providers operating at a large scale before any government-led initiative, and we particularly encourage private enterprise and existing sector providers to consider this space.
In theory, overpaying taxes could be an effective way for individuals to contribute more to the areas that are heavily dominated by tax-funded work. This would require the Treasury to treat such overpayments as restricted funds, and additionally would depend heavily on an individual’s views around what the scope of government responsibility should be. We have excluded this from the scope of our project, which aims to provide a viable route independent of government.
One of our objectives has been to open up philanthropy as wide as possible. Not everyone has a lot to give, even over time. If you can give anything, then you can set an example by giving in a considered way – give in a way that shows what you care about, and that you will work with other people in order to help more – and by starting now.
Charities and charitable services can play a strong role in supporting this and reinforce the concept that every individual’s small decisions are important and can be accounted for, remembering that a minimum transaction amount does not have to mean a minimum donation amount.
We have not talked about the social phenomena of sponsorship or annual or one-off events like Comic Relief and Live Aid. Our view is that these are positive and worthy of support, but their role and impact are minor compared to the scope we are considering.3Live Aid is said to have raised £150 million.
Comic Relief raises donations of the order of £100 million annually.
The annual sector budget is of the order of £50 billion annually. The main benefits are raising awareness and celebrating our culture of giving, providing an appropriately regular nudge that brings people together and elicits donations that otherwise would not have been made at all. These are beneficial but of secondary impact in a model that encourages long-term, regular and delegated giving. Our recommendation to most donors is to support these but to expect to have more impact elsewhere.
Had we taken our own service further, we would have looked for the following outcomes:
- Measure the satisfaction of our donors;
- Establish dialogue with representative charities of different sizes;
- Maintain communication channels with donors and the general public, and build processes to work with their feedback;
- Explore additional funding models such as service contracts and incubator funding in addition to grants;
- Seek separate funding to expand the scale of operation;
- Establish high-level targets for fair geographical and other coverage;
- Enter the “government-owned” spaces of welfare benefits, health, and international aid;
- Support expert communities in all cause categories;
- Start a research programme centralised on donor and beneficiary experience across all suffering areas;
- Engage with economics research communities, with a particular focus on the macro-economic modeling of different giving strategies, to provide credible budgeting recommendations to the donors who ask for them.
References [ + ]
|1.||↑||51% of interviewed donors give “from time to time”, i.e. not regularly via direct debit.|
|2.||↑||NCVO income sources report – Coutts Million Pound Donors Report 2017|
|3.||↑||Live Aid is said to have raised £150 million.|
Comic Relief raises donations of the order of £100 million annually.
The annual sector budget is of the order of £50 billion annually.