Steve Mossop on Charitable Giving

(Appearing in the April 2013 edition of VUE, the MRIA magazine)

In the process of forming Insights West, following an 18-year career managing the Western Region at Ipsos, I determined that one of the core values of our new company would be giving back to the community in which we live. As one initiative to live up to this value, we developed our BC Charitable Giving Insights study, which was based on 919 interviews with BC adults in July, October and December 2012 covering 68 brands in the charitable space. The goals of the research were to provide non-profit/charitable organizations with insights into awareness and propensity to give to certain charitable brands, analyze giving behavior and understand the motivators and barriers to giving.

Some context first. In many respects, charities operate with the same business ground rules as the for-profit sector. As marketers, we understand what it takes to communicate with our customers, build relationships with them and keep them coming back. Regardless of whether you are a multi-national corporation or one of the brands we covered in this study, all operate with a common underlying goal: customer acquisition and retention.

Another thing people sometimes don’t realize is that charitable organizations and not-for-profits are marketers too. They have the same goals, operate under the same constraints and tackle the same issues as traditional for-profit companies. Much like for-profit companies battle for their share of consumers’ disposable income, charitable organizations must compete against one another in hopes of standing out and giving the most compelling reason for their customers to choose them over the competitor. Just as there is a limit on consumers’ willingness to purchase goods and services, there is also a limit on consumer’s willingness to give. The world of charitable organizations is a crowded place, and to some extent, it’s all about trying to get the greatest share possible of a finite set of “giving” dollars.

Given the relatively under-funded marketing budgets and scarce resources at their disposal, charitable organizations must carefully consider every marketing campaign in the context of its potential return on investment. In addition, they must be mindful of the public scrutiny that also comes with having marketing lumped together with other administrative costs, which form the dreaded”‘admin divided by dollars raised” ratio. For every campaign, charitable organizations must measure the level effectiveness in encouraging existing customers to donate further, as well as attracting new customers. They must find ways to build meaningful connections with their customers and develop a strong affinity towards the brand.

As a result of these similarities with for-profit industries, charitable organizations have one of the greatest needs for marketing research. However, though they share the same challenges as traditional marketers, for the most part these organizations don’t have the budgets to spend on sophisticated marketing research programs. To help fill this information gap, Insights West provided the BC Charitable Giving Insights report free of charge to organizations that requested a copy. [To view a pdf of the presentation, click here.]

One of the outcomes of the study was to create a brand health index score that we plotted on a three dimensional chart comprised of three variables: awareness of the charity, past donation behavior to that charity and propensity to give in the future. This brand health index was useful in showing charities where they scored in the consumer consciousness and which other charities were in their space. The top charitable brands in BC include the BC Cancer Foundation – with 95% aware of the brand, 52% who have given a donation to this brand in the past and 52% would donate to it in the future – BC Children’s Hospital (96% aware, 51% past donations, 46% future donations) and the Canadian Cancer Society (93%, 46%, 40%, respectively).

Charities that seemed to have significant potential were those who scored the highest on the gap between the people who were willing to make donations in the future vs. those who had made a donation in the past. Charitable organizations like the BC Firefighters Burn Fund, the Union Gospel Mission, Canuck Place, the Alzheimer Society of BC, Habitat for Humanity and the Make a Wish Foundation all scored highly among potential donors, with 10-15% more donors indicating a willingness to donate in the future relative to those who had donated in the past.

Established brands such as the United Way, Unicef, the Salvation Army and local churches faced the opposite challenge. Many more indicated they donated in the past relative to the number who said they would be willing to donate in the future, suggesting that their pool of future donations could be shrinking and that these brands were potentially “tired” in the marketplace and were suffering from some brand fatigue.

Other organizations such as SUCCESS BC, Kidsafe, Arts Umbrella, the Vancouver Foundation, the Western Canadian Wilderness Committee and about a dozen others suffer from a more traditional marketing challenge: awareness levels are low—less than a third of the population has heard of one of these charities.

Understanding motivators and barriers to giving was one of the key objectives of the study—so we asked donors to rate the importance of 11 different reasons for giving to charitable causes, and asked agreement or disagreement with 14 different barriers to giving.

Personal belief in the cause (80% very important), transparency in how funds are used (76%) and demonstrated positive outcomes from funding dollars (73%) are the most important factors when deciding whether to support a charity. Other factors rating highly include having low administration costs (60%) and the power of the brand (being well-known, well-established) by 51%.

On the flip-side, the list of 14 barriers was longer, with a significant number of donors agreeing to a large number of reasons for not donating. Number one on the list was administration costs of charities being too high, with 43% agreeing strongly that this is a barrier to donating to charities. Competition (too many charitable or non-profit organizations asking for money) was also a large barrier (38%) and a lack of transparency (knowledge on what the money donated is being used for) was also high on the list (32%). The full list of reasons outlines the significant marketing challenges charitable organizations face when asking for money.

Organizations who received this report were grateful for the contribution that Insights West made to the charitable giving community. We were happy to have been a part of it and pleased that our research expertise could be used in an area where it is so valued and needed. I’d like to encourage other marketing research companies to make use of their significant resources in contributing back to the communities in which they live and work by utilizing their knowledge and skills to give back.