How to capture donor trends – and why that’s important

Europe is a diverse continent. There are marked differences in the way that people view giving and the role of charities, particularly between Southern and Western Europe, and from Eastern Europe to the UK, so it’s difficult to draw any kind of meaningful trend or comparison. And yet, it’s extremely valuable when we can do so.  Barry Hoolwerf, executive director at the European Research Network On Philanthropy, explains why.

If we understand more about who is giving and why, how they are going about it and what makes them keep at it, charitable organisations have the opportunity to better appeal to their own donor market. Of course, if we broaden that understanding out to encompass a sector-wide perspective at a national or even European basis, that can be even more beneficial.

For example, recognising the signs for when a donor market is growing or has become saturated, as is the case in the UK, the Netherlands and other mature markets, where we’re seeing signs of a decline in the proportion of people donating to charity. Fundraising at either end of this spectrum will inevitably involve a different approach and campaign messaging. That’s also why it is important that research into charitable giving includes donor-based studies, not just information about the money received by charities.

Third, and perhaps most important, let’s not forget that the greater understanding we have of our sector, how and why people give, the stronger the case for support for the philanthropy sector. Like donors, ultimately, if we can’t tell politicians what we do, how can we expect them to give their support or to develop policies that won’t restrict charities’ work? The same can be said of the media, the public and grant-makers too. European philanthropy has to deal with the US-based image that philanthropy is failing democracy and that it should do better. Without reliable data to prove otherwise, it will be hard to get out of the defence mode.

So what are the most important factors to consider when researching donor trends and collating information that can be compared across the sector and national borders?

Establish a clear purpose for the study – Set some clear goals for what the project aims to cover and some boundaries to help determine what you will and won’t include. A simple way of formulating a research question is by using the 7 W’s and 2 H’s. Let’s start with four. Rephrase: Who gives what to which charitable causes? Then follows when, how, how much and ultimately: why?

Agree on the same definitions for charitable giving – One of the biggest challenges with collating and comparing donor research on trends is that our descriptions or understanding of what constitutes charitable giving or a charitable organisation isn’t uniform.

Giving is deeply embedded in many faiths and yet some individuals and politicians do not consider gifts to church to be charitable. Research is considered to be charitable in one country, but profitable in another. Foundation giving in sometimes includes expenditure of fundraising foundations and corporate giving, while others only giving from endowment only.  And what about charity lotteries, organisations whose main purpose is to raise funds for charitable causes? And percentage philanthropy, where people can designate a percentage of their income tax to charitable organisations?

Right from the outset, it’s important to agree on what is being included and what is not. Otherwise, we will keep on comparing with apples and pears. This is an important task for umbrella organisations and European researchers on philanthropy, like ERNOP. Standardised classifications are for example the Giving USA list of charitable goals or the International Classification of Non-Profit Organisations (ICNPO). For the first overall mapping of Giving in Europe, ERNOP used a combination of these classifications.

Identify your research measures and methodology – Of course, there is fundraisers’ behaviour (i.e. who gives, how much, how often and in what way), but what about trust and other related factors? Every organisation has a certain ‘typical’ donor.

To understand your donor market, who gives and what matters to them, you will need to measure a range of factors. This might include identifying not only their giving patterns, but a supporter’s age, educational background, financial standing, whether they are religious, in a relationship and more.  Many organisations or causes will appeal to certain donors over and above others.

Understanding these background variables enable fundraising orgs to better identify with and engage their donor population. This is even more important as the classic donor population in saturated markets is declining (see this overview of 20-years of giving to charitable organisations in the Netherlands).

Significant effects show that people that are more religious, higher educated and are confident about their financial situation tend to give often and more. Also people that have been asked more, have higher altruistic values, own their own house, are married, and have a higher level of trust in others and institutions tend to give more and often.

We also know from academic studies that people give more (often) when they are more aware of the needs, when costs are lower and benefits are higher, when they experience social or psychological rewards, when they care about the cause, when an organisation matches their own values and when the perceived impact of a donation is large. Further research must show how these variables are related to each other and vary from organisations and from country to country but data is limited….

Take a long-term approach – If we aim to measure a complete picture of donations in a specific country, we should start measuring at the donor level instead of at the recipient level. This means asking households, corporations and endowed foundations what they have been giving to different charitable goals in the past year. Donations through legacies can be more problematic to record, with actual data only retrievable from the recipient side.

Another approach is to take, for example, the largest 50 recipient organisations in a country and display their income sources. The latter has the advantage that it is relatively easy to manage and displays actual donations, but of course the disadvantage that it only covers the largest organisations and does not show what is happing ‘under the radar’. Also, a huge disadvantage is that it does not offer a possibility to measure underlying donation trends that we know are influential to giving behaviour. Whatever method is being used, if we are really to go for measuring trends and comparability, we should stick to using the same methodology as much as we can.

In an ideal world, you would track donations behaviour from the same people for multiple years. This would mean that representative population would receive the same list of questions, enabling the philanthropic community to track the donor journey, their views, behaviour and impact of any key events in their lives. Then we would be able to see what the key pivotal moments are and how they influence philanthropy. Unfortunately, this approach can be labour-intensive, and should be done by experts. Like fundraising, data collection and analysis is an (academic) skill and not feasible for many charities. But that does not mean it cannot be done!

Collaborate to share and build knowledge – By working collectively and with a unified approach, we can develop a clear understanding of the potential donor marketplace. Yes this means stepping beyond the interests of your day-to-day business and beyond the goals of your organisation only. But by sharing relevant data with umbrella bodies and researchers, the picture becomes that much more complete. Researchers would love to work together with philanthropy professionals to ask the right questions. In all, if research output does not find its way to the professional field, much publicly available and valuable information gets lost.

For further information and an opportunity to join researchers in debating philanthropic trends, attend ERNOP’s conference (04-05 July 2019) at the University of Basel in Switzerland. 

About Barry Hoolwerf

Barry Hoolwerf is executive director at the European Research Network On Philanthropy (ERNOP) and is responsible for developing the Giving in Europe study. With 250 (academic) members, ERNOP aims to advance, coordinate and promote excellence in philanthropic research in Europe.