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Important Research Insights about Donor Satisfaction and Community Foundation Value

The Center for Effective Philanthropy (CEP) recently released research, “What Donors Value: How Community Foundations Can Increase Donor Satisfaction, Referrals, and Future Giving,” comes at an opportune time for the nonprofit sector. (See my original guest post on CEP’s blog here.) As the community foundation sector celebrates its 100th anniversary, it is not only reflecting on its history but is more importantly, envisioning its future, and why sustainability and resilience of the community foundation sector matters. The CEP research begins with an introductory overview on the many diverse challenges the nonprofit sector is currently experiencing. Whether one agrees with some, none, or all of CEP’s donor satisfaction research findings, this research provides important and much-needed knowledge about donor value and is an important contribution to the field.

The CEP research finding that surprised me the most was the idea that “donor engagement” may not be the silver bullet for donor satisfaction. For the past decade, I have either worked for or with community foundations. I wonder if we, at some point, fell into a trap of romanticizing the term “donor engagement.” If so, we may have become biased and presumptive in what we wanted donor satisfaction to be versus employing our good listening skills for donor feedback.

For clarification, CEP’s research does not state that donor engagement results in no donor satisfaction, but that it is not a primary indicator of donor satisfaction. A possible application of this research finding is experimentation with the level of foundation staff invested in donor engagement. For example, is a Donor Engagement team appropriate, or should the team be renamed and redirected toward other predictors of donor satisfaction?

CEP’s finding that donor satisfaction is positively correlated to future giving plans is encouraging in that it supports the idea that most donors aspire to be active with their fund. Ideally, a donor continually makes contributions into his or her fund and is involved in grantmaking. Where and how charitable giving takes place can be challenging for community foundations, however. One of those challenges (and opportunities) is the increasing ease of online giving and now wide-spread availability of nonprofit information on the internet. As our world increasingly digitizes, on-line giving continues to increase at a double-digit pace.

Noland and Newton (Mazany & Perry, 2014) proposed that transforming community foundations into digital age foundations will not be easy, due to deeply rooted historical and cultural mindsets and barriers. A digital age foundation can create place-based engagement by using the power of the world-wide internet to help build local community. At the Council on Foundations 2011 Fall Conference, Will Ginsberg, President and CEO of Community Foundation for Greater New Haven, described how it was easier for donors in the Greater New Haven community to go online from the comfort of their offices or homes and learn about tsunami relief in Japan, hurricane relief in Haiti, or any other worthy cause than it was to learn about local needs. As Carson (Mazany & Perry, 2014) explained the world is “a keystroke away” (p. 51) and not only local nonprofits but communities compete for time, talent, and sources across the world.

The CEP research result stating that satisfied donors are more likely to recommend and refer others to the foundation is also very encouraging. While new donor acquisition is necessary, it is not only expensive, but it is also more challenging than ever before, due to significant changes in consumer and cultural behavior and expectations. Noland and Newton (Mazany & Perry, 2014) acknowledged that through digital media, culture has become participatory and as such, distrust in institutions, shifts in population, and civic activism are revolutionizing all types of media. Ultimately, this revolution changes where and how philanthropy happens. Furthermore, it changes where and how “good” happens, which may be outside of the traditional nonprofit sector as new socially minded, for-profit organizations are created.

I was not surprised that CEP reported a foundation’s level of responsiveness to donors as a strong predictor of donor satisfaction. This finding supports the research from Money for Good (MFG) and Money for Good II. The MFG reports indicated that although many donors do not thoroughly research nonprofits before making a donation, donors want to know that their selected nonprofits are legitimate and acceptable. MFG research also suggested an important opportunity for increasing donor interest and learning by presenting simple, clear communication about nonprofits in appealing ways to donors. Using select nonprofit data to provide meaningful information through storytelling and data visualization is one way to accomplish this opportunity. Noland and Newton (Mazany & Perry, 2014) suggested that different staff with different skill sets and talent must be employed to accomplish this transformation of becoming digital-age foundations. Several free and simple tools to learn about data visualization are here, here, and here.

Community foundations have a unique opportunity from their nonprofit community knowledge to satisfy donor inquiries. Mazany and Perry (2014) explained the importance of community foundation expertise in nonprofit and community knowledge and responsiveness to community issues. Patten (2009) stated that the integrated relationships and activities between community foundations, donors, grantees and other community advocates create unique value and local community knowledge. One of the first community foundations to strategically move deeper into the nonprofit knowledge arena was the Greater Kansas City Community Foundation (GKCCF). Kreamer and Bradford (2001) described the process at GKCCF, where one of the primary changes was renaming and repositioning the grantmaking team as the community investment team. This new team was tasked with taking ownership of knowledge and expertise of Greater Kansas City’s nonprofit sector.

The topic of impact and positive social change is on most of our minds these days. It was especially optimistic that CEP found that donor perception of the foundation’s impact on the community was the other strong predictor of donor satisfaction. I believe this affirms the uniqueness and value proposition of community foundations; however, I also believe it is a challenge for community foundations to balance time and attention to individual donors and to community issues and impact. Slutsky and Hurwitz (Mazany & Perry, 2014) stated that in striving to build foundation assets to support operations and grantmaking through fees, foundations may have become too individually, donor focused. Ultimately, foundations should create a balance that includes room for individual identity and preference in charitable giving strategies, as well as collective charitable giving for community building and improving the quality of life.

The connection between donor satisfaction and foundation impact also provides an opportunity to inform donors about the Foundation’s nonprofit and community knowledge by discussing the Overhead Myth. For example, foundation staff can explain to donors the criteria used to select nonprofits for community initiatives and grants. These types of conversations have the potential to advance donor understanding and more effective giving. These conversations, nevertheless, must generally be initiated by foundation communication. The research section, “Foundation Profiles: Impact on the Community” emphasized the importance of effective and meaningful communication with donors.

I encourage you to take the time to read through the full research report as it also discussed the critical role of foundation leadership, foundation investment performance and fees, and generational differences in giving. (Note that interestingly, CEP reported no significant difference in donor satisfaction by demographics.)

It is imperative to continue this dialogue and collect more data to build upon CEP’s research. More knowledge is needed for the philanthropic sector and, more specifically, more evidenced-based, know-how for community foundation sustainability, resilience, and why it matters. The sector’s challenges and weaknesses are also its greatest opportunities for creating new value. On that note, a colleague recently emailed a quote from Mark Twain, which sums up nicely the importance of continuing research and data-driven decisions:

"It ain't what you don't know that gets you into trouble, it's what you know for sure that simply ain't so."

GuideStar is committed to supporting the important work of the community foundation sector and the many variations of each foundation’s challenges and opportunities. Our commitment is evidenced in our existing products and community foundation network of the DonorEdge Learning Community. I am also very excited about GuideStar’s new, soon-to-be-debuted, philanthropic solutions that are designed to efficiently and effectively help more community foundations and other types of organizations provide informed data for charitable giving purposes and build community capacity.

If you would like more information about these products or how GuideStar may benefit your organization, please contact me at llarson@guidestar.org.

 

Lori LarsonLori Larson is senior director of GuideStar DonorEdge and responsible for GuideStar’s market and product strategy, business development and customer relations for community philanthropy products. Prior to joining GuideStar, Lori worked for the Greater Kansas City Community Foundation, leading teams including knowledge development, nonprofit outreach, and donor relations. Previous to her foundation work, Lori was the operations manager of a multi-entity oil and gas corporation in Houston, Texas, and was assistant publisher of a software company in Shreveport, Louisiana. Lori holds a B.A. in Economics, With Distinction, from the University of Missouri-Kansas City, and an MBA in Finance from Baker College Center for Graduate Studies. Lori holds a Ph.D. (ABD) in Leadership and Organizational Change from Walden University. Her dissertation, “Adaptive Business Models for Community Foundation Resilience,” is in progress with anticipated full doctorate graduation in 2014. You may reach Lori directly at llarson@guidestar.org.

Topics: Communications