Wealthy Donors Want Sound Business Practices and a Connection to the Cause

Bank of America released a study in February on the giving behaviors of America’s wealthiest donors. They randomly surveyed over 20,000 households in high net-worth neighborhoods across the country, and their results represent the opinions of 700 donors with household income greater than $200,000 and/or net worth of at least $1,000,000 excluding their primary residence. You know – all those people we are always looking for on our prospect lists.

The study revealed important information on what donors expect from our organizations and why they sometimes stop giving.

What do the wealthiest donors expect from non-profits

• Sound business practices (93%)
• Spend appropriate amounts on overhead (88.3%)
• Acknowledgment of contributions (83.7%)
• Protection of personal information (82.7%)
• Full financial disclosure (77.7%)
  
  

Why do wealthy donors stop contributing to organizations?

• No longer feeling connected to an organization (57.7%)
• Deciding to support other causes (51.3%)
• Being solicited too often (42.3%)
  

The results aren’t earth-shattering. I don’t look at them and realize something I didn’t already know. What I do realize when I look at them is that often, in the chaos of the often under-staffed and overworked world of non-profits, is that these donor motivations are not always top of mind for me or for my clients. Following are a few simple pointers addressing the points raised in the Bank of America survey that you may want to put in place at your organization if they don’t already exist.

Sound Business Practices

• You have developed a budget based on realistic revenue projections, and you are reviewing your income and expenses on a monthly basis with senior staff and board members.
• With your team, you have set measurable objectives for each area of operations. Progress toward these objectives should also be reviewed on a regular basis with staff and board members.
• Ensure that staff understands their responsibilities and authority, that they are empowered to make decisions relevant to their level of responsibility, and that their duties are documented in job descriptions and key tasks are documented in procedures.
• Based on the Better Business Bureau’s Guidelines for Charitable Giving your board should be made up of a minimum of five individuals. Not more than one or 10% (whichever is greater) should be directly or indirectly compensated.

Spend an Appropriate Amount on Overhead

• Make sure that you take these percentages into account during the budgeting process. The Better Business Guidelines for Charitable Giving indicate that no more than 35% of expenses should be spent on fundraising and administrative costs. However, many foundations, United Way agencies, and the Combined Federal Campaign want to see this number at 25% or less.
• As you progress through the year, check regularly to see where your percentages are coming in. Rarely is the budget we start out with in January exactly the same as what we ended up with in December. If you realize less is being spent on programs than originally anticipated, there is time to do a course correction if you don’t realize this after the year is already over.

Acknowledgment of Contributions

• Determine what a major gift is for your organization. For some organizations it’s $10,000 for others it is $100. An acknowledgment letter should be sent out within 48 hours of receipt of a gift at this level. The donor should also receive a personal phone call from the appropriate person acknowledging the donation. I would suggest for most organizations that this is probably $1,000.
• All other acknowledgment letters should be sent out within 30 days of receipt of donation.

Protection of Personal Information

• All organizations should have a privacy policy on the website that tells visitors what information is being collected about them by the charity and how that information is being used as well as information on how to contact the charity to change their personal information. The privacy policy should also indicate what security measures the charity uses to protect their personal information.
• Donors should be given an easy and visible way to opt out of having their information shared with outside organizations.

Full Financial Disclosure

• Audited financial statements and 990s should be available on your organization’s website as well as provided to any donor who requests them via telephone or mail.