Charity Impact 2021 Give.org Donor Trust Special Report 2021 Give.org Donor Trust Special Report : Charity Impact 1 Table of Contents Summary of Results 3 Results and Figures What Does Charity Impact Mean to Individual Donors? 10 How Important is Impact in the Giving Process? 12 How Do Donors Feel About Competing Priorities? 14 How Do Charities Fit Into Individual’s Desires to Make 22 a Difference? How Do Canadian Donor Expectations Regarding 25 Charity Impact Compare? Conclusion 30 How BBB Standards for Charity Accountability Address 33 Charity Impact Methodology 35 Authors/Contributors 38 References 38 2021Give.org Give.org Donor Donor Trust TrustReport: Special Charity Report: Impact Charity Impact 2 Summary of Results Charities depend on supporters to pursue their mission, and supporters – whether they are private foundations, corporations, or individual donors – want to know that their contributions This report make a difference. delves into In a data-driven society, some funders (particularly corporations how individual and foundations) seek to identify impactful organizations in donors perceive a quantifiable way. How individual donors perceive the issue of charity impact is less understood.1 Adding to the charitable charity impact sector’s understanding of individual donor perceptions related and how to charity impact is this report’s core objective. important Broadly speaking, charity impact refers to how these charity impact organizations make a difference. Still, finding uniform ways for charities to quantify or communicate their “impact” is in their giving is complicated. Given that the term “charity impact” has decisions. momentum but is also fluid and unspecific, we explore how the donating public understands the term. We start by simply asking whether survey takers feel they understand the term and later offer alternative choices based on our observations of how the term is used in charity appeals. Sometimes the term “charity impact” is taken to be synonymous for achievement numbers (for example, a charity reached X number of people with Y service last year); other times the term is used in reference to the quality of the organization’s programs (for example, the people receiving assistance are satisfied with the services provided by the charity). “Charity impact” is also used in the context of the efficiency of the charity’s spending (for example, X dollars provide vaccines for Y number of people); finally, it may be used as a way of tracking progress towards defined goals (for example, an animal shelter accomplished the goal of having all animals adopted). BBB’s Give.org is also concerned that over-emphasizing impact metrics may have negative consequences. Specifically, excessive focus on charity impact might pressure charities to (a) prioritize short-term metrics at the expense of long-term goals, (b) prioritize program reach at the 1 An academic study found that “people do not reward exceptionally positive charitable impact, but they do punish charities that admit their programs were ineffective. Charities are only rewarded for revealing information about their impact when the results are unrealistic and unattainable.” Mulesky, S., The Demand (or Lack Thereof) for Honest, Rigorous Impact information in Charity (unpublished manuscript, 2020), https://www.researchgate.net/ publication/340463860_The_Demand_or_Lack_Thereof_for_Honest_Rigorous_Impact_Information_in_Charity. 2021 Give.org Donor Trust Special Report : Charity Impact 3 expense of depth, and (c) focus on the program of people who donated between $201 and accomplishments of donor-specific dollars at $1,000, and to 71.5% of people who donated the expense of organizational capacity or overall more than $5,000. accomplishments. When asked to consider possible definitions Our Give.org Donor Trust Special Report on for the term “charity impact,” survey Charity Impact delves into how individual respondents were split about how to best donors perceive charity impact and how describes the term. Overall, 25.7% chose important charity impact is in their giving “organizations reaching defined goals” as the decisions. The survey also seeks to shed light alternative that best describes “charity impact.” on how donors feel about competing priorities. Other descriptions were similarly popular, with Finally, we take a step back and look at how 22.0% selecting “how efficient the organization individual donors think about their own ability was in its spending”; 19.9% saying they were to make a difference and how charities fit into “not sure”; 18.3% choosing “the quality of the that puzzle. organization’s programs”; and 14.0% picking “achievement numbers.” To explore individual donors’ perceptions about charity impact, BBB’s Give.org commissioned an • The different views on how to best describe electronic panel survey of more than 2,100 adults “charity impact” held across generations. across the United States, and more than 1,000 Having said that, Gen Zers were significantly adults in Canada. Below are our key findings, first more likely to select “organizations reaching for the United States and later for Canada. defined goals” (39.9%); Millennials were relatively more likely to select “how efficient What does charity impact mean to the organization was in its spending” individual donors? (26.7%); and “the quality of programs” was most popular among Matures (26.1%) and Only 53.3% of survey participants report Boomers (23.6%). knowing what a charity means when talking about “impact.” The remaining respondents • The different views on how to best describe (46.7%) said they do not know (19.1%) or are not “charity impact” also held across giving levels. sure (27.6%) about what charity impact means. Organizations reaching defined goals was the most popular answer among donors who gave • The lack of clarity around the term “impact” between $51 and $5,000 (with the portion held across generations. Gen Xers were of respondents ranging between 25.5% and least likely to say they understand the term 28.6%). Donors with reported contributions (46.4%). above $5,000 were most likely to select the • When comparing participants by giving efficiency of the organization’s spending level, people who gave more during 2020 (26.6%). were significantly more likely to say they know what a charity means by “impact.” For example, only 27.5% of non-donors said they understand the term, as compared to 59.4% 2021 Give.org Donor Trust Special Report: Charity Impact 4 How important is impact in the giving • The relatively high importance attributed process? to long-term results as compared to immediate results held across generations, 30.7% of respondents rated “information on but the difference was most marked among the charity’s impact” as a very important (9 or older generations. For example, 28.4% of 10 on a scale of 1 to 10) aspect in their giving Matures said they attribute high importance process. While that is a significant portion of to long-term results, while only 12.0% respondents, other aspects were rated similarly said they attribute high importance to (and sometimes with higher importance). For immediate results. example, 39.5% of respondents rated how much they trust the charity as very important; and • The relatively high importance attributed 28.2% rated financial ratios as very important. to long-term results as compared to immediate results also held across giving • Charity trust was most frequently (between levels but was most marked among higher 36.1% and 44.1%) selected as a very donors. Among donors who report donating important aspect in the giving process more than $5,000 in 2020, 44.3% attributed across all generations. Charity impact was high importance to long-term results, the second most popular choice among while 24.7% attributed high importance to Gen Zers (31.5%), Millennials (35.2%), Gen immediate results. Xers (31.2%), and Matures (20.7%). Financial ratios were relatively more important among When asked to consider a situation where a Boomers (34.46%), but continue to be charity must demonstrate immediate results or significant across generations (between long-term results, most participants prefer a 18.8% and 28.7% for other generations). balance. That is, 47.0% indicated a preference ranging between 41 and 70 on a 100-point • Charity trust was most frequently selected scale, with 1 representing immediate and 100 as a very important aspect in the giving representing long-term. At the extremes, more process among all giving levels $51 and people would prioritize long-term results above. Among donor who gave $1,000 and (17.1%) than immediate results (13.3%). above, charity impact came behind charity trust and financial ratios, but is an important • The portion of respondents with high consideration. preference for long-term results is similar across generations (between 14.8% and 18.2%). How do donors feel about competing There is a higher degree of variance among priorities? people who would prioritize immediate results, with 8.2% of Millennials and 19.7% of Matures We asked potential donors to rate the importance prioritizing immediate results. of immediate and long-term results. Respondents • Larger donors are more likely to say that indicated that both immediate and long-term they would prioritize long-term results results are important, but more respondents said (22.8%). People who did not donate are long term results are highly important (31.9%) more likely to say they would prioritize than immediate results (20.7%). immediate results (27.3%). 2021 Give.org Donor Trust Special Report : Charity Impact 5 We asked potential donors to rate the reach. Millennials were the only generation importance of program volume and program with a preference toward reach, with only quality. Respondents reported that both 7.8% of millennials reporting they would volume and quality are important, but more prioritize depth and 17.4% favoring reach. respondents said program quality is highly important (37.8%) than said the same about • Among different giving levels between $1 volume (31.9%).