The Why of Philanthropists

on in Fundraising

A $1 million commitment to scaling a promising youth entrepreneurship program. $500,000 to fund mentoring for those recently released from prison. A $75,000 grant – one of 10 – awarded for scholarships to a summer science education institute.

These are the kinds of initiatives appealing to new philanthropists – those termed “high and ultra-high net worth donors.”

It’s easy enough to research the “what” of these donors – what they give to. But that’s after the fact. How can we figure out the “why” – and from that, understand how to position our nonprofits in this sphere?

A new study released in late November by The Philanthropy Workshop gives some clues.

Based on research of over 200 individuals in this category, the study not only breaks down the issues these philanthropists fund (not surprisingly, education and health are at the top - but peace and security, and human rights/social justice are also included); but also how they make their decisions. A few of the relevant conclusions:

· Donors tend to focus on just a few causes. So while overall giving was all over the map, each individual philanthropist had picked their causes. 45% funded locally, 48% internationally, and 20% reported no geographic preference.

· 60% of high net worth donors depended heavily on their social and professional networks to identify opportunities for giving. Respondents also tended to rely on relationship-based approaches when conducting due diligence on potential grantees.

· A whopping 88% of philanthropists reported volunteering, including board service. Proving the old adage, seeing is believing (and thus supporting).

· Interestingly enough, there seemed to be a lack of risk appetite for funding new organizations and lower interest in funding proven ideas. Most respondents gravitated towards a middle ground of not too risky but not too mature.

· Of those who provide general operating support, 84% invest in growing or mature organizations.

· While only 55% require grantees to submit reports and 9% use third party validation of results, 78% felt they held a clear understanding of the impact of their philanthropy on social change.

The overall take-away for those of us in the field? What we’ve always known – that fundraising starts with relationship-building, continues with first-hand exposure to the impact, and that funders are most interested in initiatives that clearly need their support to get to the next level.

And that funding is about social values, not $. No matter how large the check.

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