If just 5 percent of this year's charitable donations were given to high-performing nonprofits, some $15 billion would go to the organizations that are having the most impact.
The statement above is just one of the findings of Money for Good II (MFGII), a new study released November 30, 2011 (read the news release). Other MFGII findings include:
- Individual donors research only a third of their charitable donations, whereas persons who advise donors and foundation grantmakers research almost every donation they make.
Despite these different behaviors, the groups have similar preferences for research. Specifically:
- They want a broad range of information on nonprofits' impact, financials, and legitimacy.
- They want data made available in transparent formats that provide several pieces of information. They prefer these formats more than 2:1 to simple seals or ratings.
- They want this information from third-party portals that provide information on nonprofits. Specifically, 53 percent of donors want to use such sites, though few know of those that exist today.
- Of all the information they are looking for, each audience sees impact and effectiveness data as the greatest unmet need—and the most urgent need for the sector.
Why These Results Matter
Every day, almost every American is touched by a nonprofit organization in some way, whether a loved one is treated for a health concern or uses a service that is being offered in the community. Almost all Americans make a charitable contribution each year, and half of all Americans volunteer.
In this tough economic climate, people are struggling to make ends meet and nonprofits are dealing with declining funding even as demand for their services is growing. It's imperative that hard-earned dollars result in the most value. MFGII provides actionable information that nonprofits, information providers, and others who care about giving can use to provide Americans with the right information on nonprofits, where and how they want it.
Opportunities for Donors and Nonprofits Alike
These findings present a wonderful opportunity for nonprofits to connect more fully with donors by providing more—and more detailed—information about their organizations. At the same time, they provide an opportunity to educate donors about the need to research before donating. MFGII provides actionable recommendations, including:
- How individual donors can take a few easy steps to make better charitable gifts this giving season by reflecting, researching, and rebalancing.
- What high-performing nonprofits can do to increase their fundraising and operations through an intentional focus on impact, effectiveness, and efficiency.
- How nonprofit information portals can better address user needs and create a more efficient philanthropic market.
By acting on the MFGII findings, nonprofits and donors alike can ensure that charitable gifts are going to the organizations that truly are making a difference.
The Money for Good II project follows up on last year's Money for Good study conducted by Hope Consulting. MFGII was made possible through the generous support of the Bill & Melinda Gates Foundation, the William and Flora Hewlett Foundation, and Liquidnet. Both qualitative and quantitative research was examined across three audiences: individual donors, persons who advise donors on philanthropic decisions, and foundation grantmakers.
Specifically, the research included seven focus groups of approximately 10 people each, and a quantitative survey that included 5,227 individual donors, 873 advisors to donors, and 727 foundation grantmakers. The individual donors all had household incomes over $50,000 (wealthiest 50 percent of the U.S. population), with an oversample of 1,000 donors with household incomes over $300,000. The survey covered three main elements for each population group: their current giving/granting behavior; their preferences for different types of information, format, and channel; and how much money they would consider giving/granting differently if their preferences were met. The project also benefited from an industry-leading advisory council, including:
- Katya Andresen, Network for Good
- Laura McKnight, Greater Kansas City Community Foundation
- Katherina Rosqueta, Center for High Impact Philanthropy, University of Pennsylvania
- Cynthia Strauss, Fidelity Charitable Gift Fund
- Kim Wright-Violich, Schwab Charitable
The preceding post is by Lindsay Nichols and Suzanne Coffman. Lindsay is GuideStar's PR and social media manager. Suzanne is GuideStar's editorial director and editor of the GuideStar Newsletter.