Literature Review on some Fundraising Activities Finance Essay

Philanthropy is a subjective issue. It depends upon the value system of both the donor and the person who is trying to raise funds. Either way the quantum or effectiveness of the process of funding charity depends upon the subjective and incalculable factor of philanthropy. Fund raising by charitable institutions or organizations is more of a purposive process to accept gifts and grants from individuals, foundations and corporations. Institutions generally lack the human motive to provide charity but insisting or convincing them can make this daunting task happen (Kelly, 1991, p. 79, Courtney, 2002, p.163; Edwards, R., Yankey, J., & Altpeter, 1998, p.155). However the process can be made effective by right targeting, segmenting and timing the call for donation. With this report, an attempt has been made to analyze the prospects of raising funds through call centres and spread awareness of recycling of ink cartridges and mobile phones. How this will prove beneficial to both the fund raising organization and the call centre in terms of financial as well as social reputation is also looked at. The benefit to both the stake holder is important for the process to be successfully and carried out with high energy as that is important in seeking funds and motivating other people. Certain tools and a questionnaire is also prepared to determine what the call centre employees and executives think about this idea since these are the only people who would be interacting with the clients over phone to donate money for charity. There is also a questionnaire to know the reaction of people who would be approached for payment of credit card bills on a call for donation for a charity.

Background

Raising fund for the charitable organizations has always been difficult. Since many people are too busy in their lives they are ignorant of the pains and problems of the humanity at large. But they are sensitive and when they come across such an event or news they consider donating money as their token of involvement in making the world a better place. Then there are also the problems of making people believe that they are paying for the right cause and to the right people and they are not being duped but genuinely sought for to help people and do that in convenience of their everyday life. Working for the British Red Cross as an Area Fundraiser and also Santander Cards Ltd. in the collections department, the idea of raising through the collection team of a credit card company came up. Since nonprofits not good at maintain an organised tele marketing service or don't have enough fund to outsource the job to a willing contractor, its best to tie it up with an established tele service that can use the brand of the nonprofit like Red Cross to boost their brand through association.

Introduction

The overall research is focused on the fact finding of effectiveness of raising fund through call canters. Is it possible to raise funds through call centres for credit card collection department? The dissertation throws light upon a very common problem nowadays. People are busy in their lives working day and night. Helping hand is required by those who are deprived of basic amenities. Though the task is being fulfilled by charitable organizations working under this domain, yet they are also feeling helpless due to the ignorant attitude of public. Need of the hour is to contact and target people and try to convince them to lend some help to their brethren who do not get basic necessities of life (Grace, 2005, p.113; Hopkins & Blazek, 2009, p.30). With the help of British Red Cross and Santander Cards Ltd. a call center, an attempt has been made to devise a plan or rather a new fund raising source by talking to clients over phone to donate or grant through credit cards and promote recycling of mobile phones and ink cartridges (Hopkins, 2005, p.72; Hopkins, 2009, p.35). These two institutions have served as the research areas to gather sample and responses for further evaluation and findings.

Introduction

Modus-operandi of call centers Call centres can be characterized along many dimensions. They provide very wide-ranging functional benefits like customer service, help desk, and emergency response services, tele-marketing and order taking. They vary to a great extent in their size and dispersion, from small towns with a few operators who take local calls to large national or multinational centres in which hundreds or thousands of employees may be on the phone at any time. The difference in the organisations is also huge from acroos the spectrum of call centres. Highly skilled people are needed in certain types of call centers where the interaction with the client is more sophisticated than just exchanging information. A center may cross-train every employee to handle calls that might be for more than one purpose. Calls may be handled first come, first-served (FCFS). In various centers when one call requires an employees to be skilled in more than one skill set then the calls are routed to more than one person who have different skills and the system is called In settings that require more highlyskilled work, each agent may be trained to handle only a subset of the types of calls that the center serves, and "skills-based routing" may be used to route calls to appropriate agents.

In turn, the organizational structure may vary from the very flat - in which essentially all agents are exposed to external calls - to the multi-layered - in which a layer represents a level of expertise - and customers may be transferred through several layers before being served to satisfaction. Call centers and their contemporary successors, contact centers, have become a preferred and prevalent means for companies to communicate with their customers. Most organizations with customer contact - private companies, as well as government and emergency services - have reengineered their infrastructure to include from one to many call centers, either internally managed or outsourced. For many companies, such as airlines, hotels, retail banks, and credit card companies, call centers provide a primary link between customer and service provider. Advantages of Call centers in a fund raising The advantages of call center in raising funds are multiple. The cost of tele marketing by an non profit is huge and unaffordable. Because of that unfortunate handicap , the next best thing is to ride on an established telephone service with a network of client already. All the tele marketing services are trying to sell something and are considered nuisance than help by the customer. So its not unreasonable to chalk them out of the list. Then there are call centers which are service oriented where people call in themselves. But those call centers try to supplement or compliment their other product or service and have no interest in servicing other nonprofits call for donation. The third type of call centers that are in business are the collection team of a credit card company or a bank. These people call to ask payments for over draft on people's credit.

Since these people are already asking for money which the customer is supposed to pay, they can probably ask for a little bit more for a charitable cause, there by not completely hurting the customers perception about the collection of money and giving enough reason to them to donate to a charity. Fund raising for charity as an exercise Strategies Nonstop fund raising Never is the fund raised when the need for it comes. Normally the fund has to be raised in advance for any charitable activity to take place in time. Hence its critically important to have the fund raising activity all the time. Successful nonprofit inculcate the fund raising activity in their daily operations. A targeted method is used with timely supervision control and target revision to keep the activity on track. A bigger group may be divided in sub-groups in order to continuously raise fund and others might be able to use the fund to keep the organization going and achieving its target. Advertising The mistakes some nonprofits make while fund raising is to think that its easy to show up and ask for money for a justifiable cause and people will donate. The fact that people are of different value system and they are moved and attracted by the knowledge they have than just gullibly believing the other person, fund raising is not all that easy. Like selling a product in a private corporation the fund raising is a sales exercise. So it is also important to keep customers (or donors) involved, informed and in the loop. Advertising is important function with respect to keeping the donors in the loop. The advertising will vary from flyers to commercials depending upon the budget of the campaign to the amount of money that needs to be generated. Celebrity Power People are lured by the attraction of the glomor or a celebrity. If they find their favourite celebrity endorsing something they would not have a second thoughts over donating fund for that cause . Such donation is their way of identification with their favourite celebrity. They will gladly go to shows or follow it on television if the celebrity endorses or performs.

Celebrities on the other hand get their image a boost by associating themselves to the right cause. So it's a win win situation. Sizing it right Fund raising is very exciting for the prospect of working for a larger cause. However it's a very tedious activity also. If the size of the fund raising is too big for the shoe it migh be morale breaking and people start to lose gas in their pitch to convince people. That is the most dangerous situation. So its mighty important to size it right. To start ith it should be in small steps and then when it comes to the results the size should be inspirational. Timing It's very crucial to time it right in all the ways. The right moment to encourage people and the right moment ask for donation is of great relevance if you see the success rate of converting a prospect in to a donor. If you ask a person in financial distress to donate it will not only lead to refusal but complete antipathy for the fund raising organization.

A

Implication of charity association to a bank or credit card company The bank or the credit card company which will be a medium to pitch for the calls for donation will be an important stakeholder in the process. Its important to keep the interest of that stake holder in mind before making any process. Credit card collection teams are normally not the most loved people as they have to do the hard task to appropriate money from people which they have used on credit. However they can change their image from a greedy money demanding and extorting company to an organization devoted to social cause and there by ask for money without making and still has the right image. This might increase their credit card collection rate and improve their relationship with the customers. Not all credit card customers are inclined to donate money but some of them might think that when they are spending so much on themselves already they would rather also pay a fraction of it for what they think is morally right.

Literature Review 1000words

Overhead funding of nonprofit organizations is an important topic widely discussed in the study of nonprofit management. The research suggests that overhead funding of nonprofit organizations is crucial for their organizational effectiveness and ability to maintain operations. Some research implies that foundations play a major role in providing such funding to nonprofit organizations, while some suggests the role is minor. Wing, Pollak, and Rooney present a theory of nonprofits' fragile nature which states that weak factors in the nonprofit system include nonprofits' inability to acquire sufficient administrative funding to maintain effective and ongoing operations. Nonprofits face a distorted donor perception that high overhead costs are a sign of inefficiency (Wing et al, 2004). Research from the Nonprofit Overhead Cost Study found that many nonprofits, including those with substantial organizational budgets, have limited administrative funds from which to operate. In particular, the case studies indicated serious consequences for nonprofits, which were then hardpressed to fund overhead budgets from individual donations and other unrestricted sources. Significant misstatements and underreporting of administrative and fundraising costs by nonprofit organizations occurred.

The study found a circular dynamic where low overhead funding and spending created reduced organizational effectivenessAA¾ reduced effectiveness sectorwide generated additional pressure to underreport or misreport overhead. As a result, social norms for unrealistically low overhead levels became acceptable, which has caused low funding and spending on overhead (Hager et al, 2004). The study's case study organizations, both small and large, confronted significant organizational and budget challenges when largely funded by foundations, which paid either no or low overhead cost rates. The study found that some foundations rewarded organizations who reported low overhead costs even though, in some cases, it compromised fulfillment of their mission (Hager, et al, 2004). These research findings echo what many nonprofit practitioners believe: foundations do not offer sufficient funding to sustain core operations. At a gathering of nonprofit practitioners, the National Committee for Responsive Philanthropy documented the concerns of those gathered. Many noted that foundations resist offering unrestricted grants because such grants do not allow for a direct measurement of impact. In addition, those gathered noted that foundations fear that those nonprofits receiving continued funding will become dependent on the foundation for their existence, or at least the existence of certain programs (NCRP, 2003). Commentary by Paul Brest noted that the foundation grantmaking trend evokes a tension between grantor and grantee that is akin to the overhead cost issue-the strategy of providing general operating grants.

Brest goes on to state that the nonprofit organization is compromised when foundations that support specific projects do not cover overhead costs (Brest, 2003). In a study of nonprofit executives and the turnover in leadership, focus group participants noted their frustration with institutional funds and indicated how those funders make their job more difficult leading to an increase in stress and burnout. In a survey of executive directors, the 5 number one way funders could be helpful to them was to offer general operating/unrestricted grants and more multiyear support (Bell, et al, 2006). A study of newly formed HIV/AIDS organizations found that those who relied on private support failed at a much higher rate (61 percent) than those that received public funds (18 percent). The major reason why these new or adolescent groups closed was their inability to raise adequate funds. Further when foundations did spur rapid growth through funding they did not cover startup or overhead costs, but demanded strong fiscal systems frequently leading to organizational crisis (Chambre & Fitt, 2002). A study conducted by the Center for Effective Philanthropy found that most foundation grants are restricted, small, and shortterm program grants. The study found that while major foundations' chief executive officers view operating grants as positively impacting nonprofits, they have higher priorities for their foundations. In the Center for Effective Philanthropy's study of foundation grantees, they found that nonprofits prefer operating support and emphasized the need for larger and longerterm grants (Huang, Buchanan, and Buteau, 2006).

Some research suggests that foundations' overhead payment policies do not impact the nonprofit organization because nonprofits do not rely solely on foundations for revenue. In fact, foundation grants account for only 11.5 percent of nonprofit charitable contributions (Giving USA, 2006) and 2.9 percent of the nonprofit sectors' total revenue. 2 Data is also available about foundation policies and practices on unrestricted and overhead cost funding. The Foundation Center reports that in 2004 general support was 21 percent of all grant dollars (25.3 percent of all grants). If you also include support for equipment, computer systems/technology, land acquisition, and debt reduction, general support was 23 percent of all grant dollars (27.7 percent of all grants). 3 From 2001 to 2004 general support increased by 6.8 percent, while the other types of support such as program grants decreased (The Foundation Center, 2006). Researchers at the University of San Francisco found that larger California foundations are more likely to make general operating grants and multiyear grants.

However, when a small foundation provides general operating grants, they tend to devote a greater percentage of their grants and a greater total amount to operating support. Few foundations believe that foundations should serve as the primary means for nonprofits to finance general operations. The University of San Francisco's researchers found that general operating grants allow foundations to partner with nonprofits to advance a longterm agenda, support a select number of organizations that are key to their strategic priorities, and help new organizations gain the necessary capacity to be more self sufficient (Silverman, Rafter, Fletcher, 2006). 2 In 2004, Foundations gave over $31.8 billion in 2004. (Source: The Foundation Center: Foundation Yearbook,2005). Public charities reported $1.1 trillion in total revenues in 2004 (Source: The Urban Institute, National Center for Charitable Statistics, Core Files 2004). 3 Another 18.l percent of grant dollars were not specified. 6 Some of the research suggests that differences in overhead funding occur by organization type.

The Nonprofit Overhead Cost Study found that measures of overhead and fundraising efficiency are greatly influenced by the organization's size, age, and subsector (Hager, et al, 2001). The Foundation Center reports that 23.4 percent of all grant dollars are given to educational organizations (20.3 percent of all grants). While human services organizations received only 13.9 percent of all grant dollars, but 25.5 percent of all grants (The Foundation Center, 2006). The fields of health and education overwhelmingly received more large grants ($250,000 or higher) than other types of organizations such as arts and culture. Human services organizations received more small grants than other types of organizations, although educational organizations also received many small grants (The Foundation Center, 2006).

Research Methodology

Objective of the research Research Philosophy Research questions Primary research Secondary research Sampling Qualitative research Discussion with the management of the card company Secondary data analysis Qualitative research

The Research Problem

Charitable organizations always find a dearth of grants and donations from individuals and organizations (Oster, 1995, p.86). They have to go door-to-door to beg for grants and have to satisfy themselves in what they get at the end (GrantSelect, 2004, p.9). However, if we try to target call centers which interact with hundreds of clients on a daily basis, chances are positive that the call center employees are able to convert at least half of the prospective clients into donors. Through this report, this problem of charitable organizations is highlighted and the likelihood of success of raising funds through call centers is researched upon. The major problems coming this way could be:

Attitude of call center employees

The attitude of the call center employees will be judgmental in deciding upon whether they are ready to carry on with an extra effort on their part. They have to ask each and every client over phone and convince them to donate through credit card. This would involve patience and an inner feeling to help the society. (Sand, 2005, p.277; Werther & Berman, 2001, p.203) The research would try to find out whether the employees are ready for a slight change in their job description, while carrying out with their routine tasks.

Effectiveness of fund raising through call center activities

Any fund raising activity implies certain costs to be incurred. The effectiveness of this novel concept has also to be measured to determine whether it is worth pursuing further or not, since if the costs exceed the revenues or the employees are not ready to move ahead with it, there is no point in carrying it over. (Young, 2003, p.129, Andreasen, A., & Kotler, 2003, p.296)

Application of concept to further more enterprises

If the entire process is found efficient and productive, does it have the caliber to be incorporated into other call center and charitable organizations, keeping in mind the scale of operations and the mind set of employees. (Futter, 2007, p.207; Sargeant, A., & Jay, 2004, p.202)

Research Methods

How are the fundraising efforts of an organization measured? Here I have made use of British Red Cross as the charitable organization making use of funds and grants as assets to provide public service. To test the new concept of fundraising through call centers, Santander Cards Ltd. has been chosen as the organization to apply the research methods and tools to judge the efficiency and effectiveness. (Kotler & Andreasen, 1991, p.51; Pynes, 2004, p.187) There is no one universal technique or tool to judge the effectiveness of fund raising process by a non-profit organization. Thus, effectiveness and efficiency in this case will be determined by the extent to which the purpose is being fulfilled (Greenfield, 1999, p.1; Hankin, Seidner, & Zietlow, 1998, p.109; Jegers, 2008, 298). First of all, a questionnaire was prepared to know about the human motives and philanthropist notions of people working at the call center. (Refer to Appendix 1 for the questionnaire) The questionnaire comprises of 10 questions determining what people think about the idea of fund raising through calls, recycling of ink cartridges and mobile phones. Would they feel comfortable in initiating this from their own side? This is being done to estimate the level of willingness to work for social benefit on the part of the private organizations. What do they expect in return out of this social service is also tried to be determined so that the motivational factors and levels of effectiveness can be judged. To measure the overall effectiveness, certain ratios have been used as follows (Passionate Fundraising 2009):

The growth rate

The growth rate here will be determined by the grants coming from new donors or recaptured ones. Profits will be determined if the grants exceed the previous year data while losses will be registered if the reverse happens. An annual growth rate of 10% can safely be said to be effective fund raising initiative.

The average grant size

This ratio will be calculated by dividing the total amount of grant by the total number of responses received. The variables used in this method will be limited to the call center group to compare it with other soliciting groups and check out its feasibility and viability also.

The reliance ratio

This ratio will measure the effectiveness of British Red Cross in using multiple or varied sources of fund raising. Here, the particular source is divided by the total of that source. It helps in determining whether the organization is over-dependent on a particular source or has distributed its earnings over a variety of methods. The risks which are encountered while allocating a pre-determined budget to one source can be monitored and judged by this ratio.

Cost of fundraising

This is perhaps the most relied upon tool or method in examining the profitability of the fund raising activity. Here, the fund raising expenses are divided by the fund raising revenues to come up with a percentage that can be compared with other sources, previous years and even with other organizations. For instance, if there is $1 spent on per call made by the call center asking for donation and it was targeted to 300 clients, the total expense comes out to be $300. If on an average, each call provided revenue of $1.25, the total revenue comes out to be $375 and so the efficiency is 80%.

Average cost per grant

This ratio is a trade-off between costs incurred to receive grants. Here, the total expenses or costs incurred are divided by the total number of responses or the grants received. This helps in ascertaining the efficiency of a smallest as well as the largest grant from a single source. Through this ratio, future costs which are anticipated to be incurred can be determined based on the responses.

Qualitative Research 1000 words

Quantitative Research 1000 words

Primary Data 1000 words

Secondary Data 1000 words

Research Approach 1000 words

Research Questions

Hypothesis Formulation

Research Techniques

Findings

Conclusions 1000 words

Analysis and Findings

On the basis of the drafted questionnaire, the inherent willingness to help and donate to charitable organizations would be revealed. This is important to judge as quantitative measurement of effectiveness will follow only after qualitative judgment of the involved characters. The five ratios will help determine the costs incurred and the revenues or grants received as a result of the initiative through the call center. It will also help in chalking out future plans of securing grants and donations from the call center source and its profitability aspect. If it comes out to be successful in Santander Cards Ltd. this concept can be applied well to other call centers and charitable organizations as well. The ratios mentioned above will be calculated every month to know the progress of the procedure and comparison between successive months to carefully know about the returns accruing against the expenses. This would help determine any short comings in the process and respective corrective measure could be taken.

Conclusion

After conducting the test ratios and analyzing the questionnaire, the research topic can provide productive and eye opening results for the benefit of charitable organizations which are striving hard to gain grants and donations. It could also prove to be a qualitative analysis in judging about the social and human aspects of people and their capacity and willingness to help when demanded or required. Thus, some light could also be thrown upon the nature of working professionals and their attitudes. If found suitable, the favorable results of this study could be well applied to other organizations seeking financial help to carry out their activities and operations.

Appendix 1

Questionnaire

Have you ever initiated in any charity or donation programme? Yes. No.. Do you think charity or donation should be exercised by each individual and organization? Yes. No.. If you are given an opportunity to make someone's living better, would you give a helping hand? Yes. No.. If you are required to build upon your skills to capture more grants, are you ready? Yes. No.. Out of the following ideas of raising funds, which one do you think would be best suited to your organization and your job profile? Asking for grants from call customers Recycling of mobile phones and ink cartridge. Do you expect returns for your charitable initiative? Yes. No.. Do you think this fund raising initiative will result in building a social image of your organization? Yes. No.. Do you think this could be an efficient method of raising funds by your organization? Yes. No.. Would you like to expand this initiative to your family or other similar organizations? Yes. No.. Would you like to provide any comments or suggestions on this initiative? Yes No.. For many years customer survey has been an important source of market study or research by the organised profit making businesses in markets. Such kind of market study of potential, target segment, conversion ratio, preliminary study , dip test etc can be crucial for nonprofits sector also. Awareness of the Organization

1.  Degree to which donors can recall your organization vs. the names of other similar organizations without aid.
2.  Degree to which donors can recall the vision/mission of your organization.
3.  Degree to which donors feel they understand the vision/mission of the organization. Priorities and Motivation for Giving
4.  Degree to which donors give to your organization compared with other similar organizations and to non-profits in general.
5.  When deciding to donate to an organization, what characteristics do donors look for? What information do they seek?
6.  What is the most important factor that motivates donors to give to your organization? What is the second, third, etc.?
7.  What circumstance/appeal first motivated donors to give to your organization? How did they feel about this experience? Perception of Organization
8.  How effective is your organization perceived in fulfilling the goals of its mission?
9.  How satisfied are donors with the way your organization spends its funds?
10.  What concerns might donors have about how your organization spends its funds?
11.  What do donors like best/least about your organization?
12.  How do donors rate your organization overall? (This and other questions can be used in shorter, intermittent surveys to determine how donor satisfaction and related variables are changing.) Communications
13.  How much do donors feel they know about your organization?
14.  What aspects of your organization would donors like to learn more about?
15.  How satisfied are donors with the communications they receive from your organization overall and specifically regarding:

The progress of the work.

The use of donor gifts.

The magazine.

The appeals.

Other topics.

The American Express Charitable Gift Survey is the first nationally representative study to address two "Frequently Asked Questions" in the charity world:

1) How much do people give at any one time to types of charitable recipients? and

2) Do online and offline donations differ in size?

The study also asked people about why they give online or why they don't. By collecting information about gift amount-not total giving, as prior studies have done-this research demonstrates the importance of relatively small contributions. The results of this research are surprising and contradict some "conventional wisdom" about charitable giving. We asked a random sample of Americans in the last two weeks of September 2007 about their most recent gift. Unlike prior studies of giving, this research seeks to ascertain how much people give at any one time to different types of charities and the methods they use (Internet or not, and whether by cash, check, or credit card). About two-thirds (65 percent) of Americans in this study gave to charity in the past year, and 6 percent gave online. This means one in every 10 donors gives online. The median charitable donation, whether online or not, is $50. Two-thirds of donations were $100 or less. These averages take into account all gifts, except outliers,1 including donations to churches or other houses of worship. Just under one-quarter (22.9 percent) of the most recent donations went to religious organizations.

These religious gifts averaged $284, and the median gift amount was $75. There are too few online religious gifts to draw conclusions when comparing online and offline religious giving amounts using statistical procedures. When considering only secular (non-religious) giving, online and offline secular gift amounts are not different when using statistical tests. The median gift size for secular gifts is $50. A¢â‚¬A¢ The secular gift average is $138, with online and offline averaged together. A¢â‚¬A¢ The secular offline gift average is $137. A¢â‚¬A¢ The secular online gift average is $144. The large number of gifts less than $100 demonstrates clearly that nonprofit organizations rely on many low dollar donations to fund their vital work. 1 Twelve gifts were excluded as outliers. We defined an outlier as a gift amount that is three or more standard deviations from the mean. A separate outlier analysis is in Appendix 1. Of the outlier gifts, eight were to religious organizations.

All outliers were $7,000 or more (up to $49,000). This study examined more than 900 online and offline gifts. Overall, the average gift amount is $172. When looking at the online amount ($165) compared to the offline amount ($174), there is no statistically significant difference. 2 American Express Charitable Gift Survey November 2007 Fifty percent of online donors are aged 35 to 54. One-tenth of donors in this age group make online gifts, but that 10 percent come from an age range of people who are more likely to be donors (68 percent) when compared with people younger than 35 years old (45 percent of whom give to charity). Though the younger group is somewhat more likely to use the Internet in their giving (15 percent said they do), the fact that a relatively low share give to charity explains why they are not the largest number of online donors. Convenience or speed is the top reason for giving online (64 percent of online donors). Not having a computer is the top reason for NOT giving online (24 percent of offline-only donors).

The next most-frequent reasons show that charities' online presence is important for whether or not donors of all ages and all income groups give online. Regardless of income, the single largest reason- after not having a computer-that people offered when asked why they did not give online is being unaware of online contribution options. More than one quarter (28 percent) of offline-only donors said that they did not give online because they couldn't find an online giving site; they didn't know they could make a gift online, or they didn't think of giving online. Looking at gift mechanisms used, offline-only donors who contributed using a credit card made larger gifts (averaging $297) than online donors giving by credit card (an average of $267). Offline-only donors using check or cash had average gifts of $197 and $160, respectively. Differences are not statistically significant. The median amounts were all $50. Nearly 6 in 10 donors said they gave about the same during the holidays as during the rest of the year. However, among all donors, on average, 24 percent of donated dollars are given between Thanksgiving and New Year's. The most frequent reason for giving more is the emotion/spirit of the season (38 percent of those who give more). The next most common reason is an appeal made by a charity (30 percent of those who give more).

This survey reached 1,300 households in a nationally representative sample and contacted another 205 to obtain responses from 300 online donor households (an oversample of online donors). Donors were asked about their most recent charitable gift, and online donors were asked about their most recent online gift. Responses were weighted to match U.S. Census Bureau data about population distribution (race, age, income, and region of residence) to ensure that the results are nationally representative. With the weights applied, the total sample (including oversample) is 1,428 usable responses, and there are 996 donor households. American Express sponsored the research. Innovative Research Group fielded the telephone survey; the Center on Philanthropy at Indiana University did the analysis and wrote the report; and Hart Philanthropic Services Group/tedhart.com managed the project. Among those who contributed online, one in five (20 percent) said the primary reason for the online gift related to the charity's own online initiative. Donors in this group received an appeal from the charity with a link or easily found an online giving option. 24 percent of total dollars given in a year are estimated to be contributed in a six-week period, or about twice as much as one would expect if all donations were evenly spaced during the year. 3 American Express Charitable Gift Survey November 2007

INTRODUCTION

In September 2007, the American Express Charitable Gift Survey of households sought to identify amounts, recipient types, and methods of making charitable contributions. In addition to asking about the most recent gift, the survey asked households about online and offline giving, typical gift amounts for their charitable donations, and whether or not they give more during the holiday season than at other times of the year. This study fills major gaps in the knowledge of how households contribute and provides useful benchmark findings of importance to nonprofit organization managers, donors, and financial advisors working with nonprofit organizations.

Background

The American Express Charitable Gift Survey examines how much Americans contribute at any one time in a single gift transaction. This study uses a nationally representative telephone survey with an oversample of online donors, and asks how much donors are giving online and offline so that baseline data to track fundraising success can be generated. It also presents a picture of the gift "market" by examining what donors do, how they make their contributions, and what percentages are contributing to specific types of charities. Nonprofit organizations track average gift size as one measure of fundraising effectiveness, yet the only available benchmark is typically their own organization's historical performance. There are only a few national studies that situated gift sizes into a broader context.

It is this context that the American Express Charitable Gift Survey seeks to provide, by looking at the other side of the fundraising experience information about: how much the donors contributed most recently; the size of a "typical gift;" and a view of fundraising occurring at one time by all types of charities. A 1982 report summarized average gift information from 125 participating health, welfare, and educational institutions.2 That study, part of the Average Gift Size Project of INDEPENDENT SECTOR, found that 40 percent of the number of gifts received were less than $100 (equivalent to $253 in 2007 terms). This suggests that 25 years ago, 60 percent of the number of gifts received came from contributions of $250 or more (in today's dollars). That analysis studied the funding going to particular charities, rather than looking at how donors make their contributions. The American Express Charitable Gift Survey examines donors and how they make their gifts.

The primary contemporary analysis of charitable gift size is released quarterly by Target Analysis Group and relates to direct-mail/direct-response fundraising results from participating charities (about 70 organizations, as of March 2007). While this information is presented by type of recipient, it applies only to one fundraising method and cannot be generalized to all fundraising techniques. 2 W. Levis and A. New, Report on the Average Gift Size Study, Philanthropy Monthly, June 1982, found at https://nccsdataweb.urban.org/PubApps/levis/gift_s.html. See Table 1 for the gift size table (which also includes cost of fundraising information). 4 American Express Charitable Gift Survey November 2007 $172 $284 $138 $174 $280 $137 $165 $334 $144 All (religion and secular) Religion Secular Both giving avenues Offline Online by online, offline, and both giving avenues together

All gifts, religion gifts, and secular gifts

GIFT SIZE: MOST GIFTS ARE RELATIVELY SMALL

The American Express Charitable Gift Survey examines all gifts reported by donors and includes all types of recipients reported by donors. Most contributions are less than $100, no matter the type of recipient or method of donation.

Average Gift Size is $172

The American Express Charitable Gift Survey collected data about a total of 948 gifts (weighted result including outliers and excluding donor households that did not report a specific gift amount). Taking all gifts together (and excluding 12 gifts that were outliers), the average gift size is $172. The median gift amount is $50 for all giving and for both online and offline secular giving. Gifts to religion had a median of $75. Figure 1 summarizes average gift size for all giving, religion gifts, and secular gifts. The table following the figure also shows the median gift amounts.

Figure 1: Mean gift size

Data table for Figure 1

Mean and median gift amounts by type of gift

All Religion Secular

Mean Median Mean Median Mean Median

Both $172 $50 $284 $75 $138 $50 Online $165 $50 $334 $50 $144 $50 Offline $174 $50 $280 $75 $137 $50 Online religion donations are shown, but the number of donations is fewer than 30. No firm conclusions can be drawn comparing online religion giving to any other type of donation. There is no statistically significant difference between online and offline giving for All and Secular gifts. Analysis cannot be done for religion because there are too few online religion gifts to use in statistical comparison. 5 American Express Charitable Gift Survey November 2007 45% 21% 16% 10% 3% 2% 1% 0.5% < $50 $50 - $100 $100 - $199 $200 - $499 $500 - $999 $1,000 - $1999 $2,000 - $4,999 $5,000+

Amount of Gift

Most Gifts are Less Than $100

Giving, both online and offline, is very likely to be in small amounts. Two-thirds (66 percent) of the gift amounts in this study were below $100, and 45 percent were below $50. These findings are based on the gifts reported by a representative sample of households, but these gifts will not be a complete sample of all giving in the United States because it includes only the most recent gifts from those households. Some households may make larger (or smaller) gifts at other times of the year that could shift this distribution. Figure 2 summarizes the gift sizes found in this study.

Figure 2: Percentage of gifts by gift amount

Data table for Figure 2

Percentage of gifts by gift amount

Gift size Percentage of gifts in this study Percentage of gifts not including outliers Percentage of all dollars in this study Percentage of dollars not including outliers < $50 43% 44% 3% 5% $ 50 - $ 99 21% 21% 4% 6% $100 - $199 16% 16% 5% 9% $200 - $499 11% 11% 9% 15% $500 - $999 4% 4% 7% 12% $1,000 - $1,999 2% 2% 7% 12% $2,000 - $4,999 2% 2% 14% 26% $5,000+ <1% <1% 8% 13% Outliers, > $7,000 1% 44% - Total* 100% 100% 100% 100% * Total may not equal 100.0 percent due to rounding. Of the number of gifts, two-thirds (66 percent) are below $100. These gifts accounted for 7 percent of the dollars (when the outlier-size gifts are included in the dollar total) or one-tenth 6 American Express Charitable Gift Survey November 2007 (11 percent) of the dollars excluding the dozen gifts of $7,000 or more. This distribution of gifts most likely reflects "annual giving" for operations, and the outliers are likely to be major donations for special purposes, such as a capital campaign. Donors of less than $100 at a time often give more than one gift in a year to the same organization, especially their churches. Research has shown that nonprofit organizations with successful long-term fundraising programs may receive relatively small amounts at any one time.3 For the nonprofit charity, the fundraising cycle emphasizes attracting donors, who often make small gifts and then give again, perhaps over many years, as the charity demonstrates effective work and good stewardship. As long ago as 1992, research confirmed the practical experiences of nonprofit organization managers: donors who start giving to an organization frequently continue to give, and often increase gift amounts over time.4

Average Gift Amount Varies by Type of Recipient

All gifts in this survey averaged $172, or about 8 percent of the estimated average total household contribution of $2,065 for a year.5 Prior research has shown that in the United States, when totaling annual donations, more than half of household charitable giving is directed to religion, and about 45 percent of households make at least one gift to religion during a year. The annual household total giving to religion by donors who give to religion is $1,887.6 In this study, nearly 23 percent of the most recent gifts were gifts to churches and for other religious purposes (media ministries, Bible translation societies, and missionary work). These donations averaged $284, which is nearly $150 more than the average gift to other causes. Nationally, 55 percent of households contribute in a year to secular causes, and the average secular contribution in a year is $940 by donors who give to secular causes.7 In this study, all secular gifts (non-religious activities, even if faith-based) averaged $138. Secular charities include the following: A‚A Arts and cultural organizations. A‚A Educational institutions (including public or parochial schools). A‚A Organizations engaged in work to preserve the environment or to care for animals. A‚A Health care and health research charities.

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