Confidence in nonprofits is high... and so are expectations

Do you find that some of your biggest advocates can also be your toughest critics?

Over the last year, we have been working in partnership with Bank of America Merrill Lynch on the third biennial study of high net worth* individuals.

We wanted to learn more about significant shifts as well as consistent trends in the attitudes and giving behaviors of wealthy donors, including:

• which nonprofit sectors they support,
• where they direct their largest gifts, 
• what motivates them to give and to discontinue support for a nonprofit organization,
• where and how often they volunteer, and
• who they turn to for advice about philanthropy.

Our research revealed a number of key findings, but a few stand out to us that confirm answers to some common questions among nonprofit practitioners and indicate some important trends that we’ll see more of in the future.

Confidence in nonprofits is high and so are expectations

We found that the vast majority (95 percent) of high net worth households have confidence in the work that nonprofits are doing. This is encouraging news at a time when nonprofits have made careful or tough decisions about limited resources during the recession.

We also found that while these donors’ commitment to nonprofits is high, their expectations are also high. Wealthy households reported that one of their top motivations for giving is when the organization is efficient in its use of donations (71 percent). In other words, when philanthropic resources are constrained, donors are interested in allocating their resources toward nonprofit organizations that they are committed to and will make effective use of their gifts, demonstrate sound business practices, send receipts for gifts, and keep donor information confidential.

Largest gifts focus on short-term needs

More than half of high net worth donors gave their largest gifts in 2009 toward general operating support at nonprofit organizations. This is a shift from what we have seen in the past. Significantly fewer households made their largest gift to support the growth of an organization (24 percent), for capital campaigns (14 percent) and for the long-term needs of the organization (11 percent) compared to 2007. This data confirms what we have heard from both donors and nonprofit leaders over the last year – that as resources became constrained, some funding priorities also shifted toward general operating needs. Moving forward, nonprofits will need to strike a balance between successfully engaging donors around both short- and long-term needs.

Get to know your donors’ wants and needs

We suspected that in 2009 giving by high net worth households decreased and confirmed that this was true through the research. But what we also asked is why donors stopped giving to a particular charity in 2009. Their responses speak to the importance of nonprofit professionals building trusting relationships with their donors. The number one reason why donors stopped giving to a particular organization was because the donor received too frequent solicitation or asked for an inappropriate amount. This serves as a reminder of one of the most important lessons in fund development: Build relationships with donors and get to know when and how they want to be asked to support your organization.

It’s exciting to have research in hand that proves that high net worth households believe in the nonprofit missions they support. There’s more information available including the summary and a video.

You can read the full report of our findings here.

*NOTE: High net worth households is defined as those with an income of greater than $200,000 and/or net worth of at least $1,000,000, excluding the value of their primary residence. Read more about the methodology in the study.

Guest Bloggers Una Osili and Reema Bhakta are the Director of Research and the Research Development Specialist, respectively, at The Center on Philanthropy at Indiana University.