Session 1 Recap: The Value of the Community Donor
May 24 (Replay at end of page)
After a research process that included interviews with over fifty development leaders from arts organizations around the world and a survey of more than 5,000 donors to arts organizations, yesterday was the first day of our member summit meeting, Redefining the Donor Value Proposition. We were excited to have members from over fifty arts organizations present during our two sessions.
It is an important time to be studying donor behavior, as the pandemic has brought both new challenges and new opportunities. We asked our attendees to share some of the ways they are now thinking differently about working with their donors, and the groups shared some interesting insights:
Layering in a video appeal with the email and letter appeal provided a powerful supplement in donor impact.
Donor engagement doesn’t always have to take place in person -- digital can be a good way to bring donors together.
Connecting artists and donors over Zoom has been a great opportunity during this time.
How We Got Here
We started the session by sharing a reminder of what brought us to our current moment in development for the arts. Of course, there were many challenges arts organizations faced during the pandemic, including an even higher reliance on the individual donor in absence of regular ticket sales, foundation grants, and government support. At the same time, though, there were bright spots: we communicated with our donors more regularly and in new (sometimes digital) ways, gave them a greater appreciation of our work through more behind the scenes access, and saw a donor drop-off of less than 10% due to lack of benefits.
Yet, not all of our challenges in the donor space are due to the pandemic -- there have been very real trends in recent years that give us some reason to worry. Primarily, we see that donations are trending upwards but from a smaller group of donors, creating a concentration of risk at the top. This stands true across the board, as even with differences in the culture of giving in Europe, the endpoint is the same: fewer donors giving more money.
The pandemic exacerbated these existing problems, as donation amounts (and in some locations, number of donors) declined. So we now face a pivotal moment. On one hand, the disruption of COVID-19 is worrisome, with donors’ habits being broken, donations to other causes turning funds away from the arts, and newer generations being less engaged with our industry. On the other hand, this moment of widespread change is a real opportunity for innovation in the fundraising space.
So we need to think about what we can change, the challenges we face and the assumptions we make behind those challenges — by testing those assumptions, we can find new, sustainable ways to operate.
The below model is based on interviews we conducted with development leaders at arts organizations across the world:
Based on the approaches and challenges we heard on these calls, we pulled out three main assumptions that we tend to to make about our donors:
We assume that transaction benefits appeal to most of our low-end donors, which is why they stay and why they increase.
We assume that mid-tier donors naturally shift to be more philanthropic, as the value of their donation increases relative to the benefit they receive, and we want to figure out how to speed up this process.
We cultivate our top donors based on their deep love and appreciation for the art form
So in testing these assumptions we developed our research question: how can we resonate more deeply with new, high potential donors and move them from transactional to philanthropic, to accelerate their velocity to major giving?
Lessons from the Quantitative Data
Starting at the end of 2020, we recruited over 5,000 donors to fill out our extensive survey, from 47 different organizations both in and out of our membership of arts organizations. Our respondents donated at least $250 once in the past three years, but also went up to the major donor level. Our analysis process was in three parts:
Question clustering: this analysis shows where different questions actually reflect the same concept.
Cluster analysis: we then slotted donors into different segments mathematically, and looked at the different behavior of different segments using cross-tabs against other survey questions.
Regression analysis: finally, we looked at which elements drive higher donation levels, at different tiers of donation.
Through these various analyses, we are able to control for location, to identify items that applied both during and beyond the pandemic period, and also to understand patterns -- specifically, in order to go beyond what donors said to understand what else that means.
First, we discussed our cluster analysis, in which we grouped donors into groups that share motivations in their giving. What we found was a bit surprising: donors clustered into just three motivations (in comparison to the eight clusters in our audience study). The groups were as follows:
Benefits Donors: these individuals are motivated by accessing benefits, accessing the network of other donors, and the potential tax write-off of giving.
Arts Lovers: these are people who are motivated primarily by the love of the art and by the desire to support the cultural vibrancy of their area.
Community Donors: the motivation of these donors is twofold: one is that they support projects and community activities -- these are the people who want to have impact on the community where they live. The other is that they support friends and family and access the network of donors -- they want to be part of a community.
Another surprise is that each of these donor segments represents about one-third of our donor base -- that is, our donors are spread fairly evenly across motivations. And unlike we had assumed, donors did not start transactional and become more philanthropic as they moved up towards major gift giving. In fact, it was almost the opposite:
In the graph above, we see that both Benefits donors and Community donors pick up steam into higher donor tiers. Arts lovers, on the other hand, decline as a percentage of the whole. To get a fuller picture, we looked at each donor type a bit more closely.
Benefits donors: from our data, it is clear that many donors place a high value on our benefits, so offering them is certainly an important element of our fundraising efforts. It is, however, important to note that Benefits donors are least likely to increase their giving, as they get more easily locked into levels. We saw this in the example from Midland Center, where only one of the nearly eighty “between-level” donors they contact elected to move up to the next benefits tier.
Arts lovers: one clue for why these donors are such a large group at the lower end of giving comes from the regression analysis we did on donors who gave below $1000. The most important driver of donation at that level is emotional connection to the organization, which we see as tightly connected to loving and understanding the art form.
Why do these donors not give as much at the higher levels? One potential indicator is that arts lovers tend to donate more to other nonprofits, particularly environmental and social justice nonprofits. They love the arts, but it seems they also love to change the world. It may then be harder to be one of their top priorities.
Community donors: these donors are 35% of the top-end donors, and they are surprisingly engaged with your organization, in roles like board members or volunteers. Community donors also gave twice as much to “other giving” (special projects, galas, etc.) than the other two segments. Besides being engaged with events and volunteering, they are the most likely to increase their giving and to advocate for your organization with their networks.
In short, your Community donors have an extremely high potential to help increase both your funding and number of donors.
Speaking to our Community Donors
The power of community-motivated donors is not a brand new idea. A past Washington Post article we read points out that younger philanthropists tend to donate to community development, and that when they are donating to the arts, they give to places with strong education and community development. As Bob Lynch, formerly of Americans for the Arts, put it: your organization has to offer “Arts and Something Else.”
It’s not that newer generations don’t appreciate the arts, just that these donors need to understand what the art is doing for them and to progress the interests of the community. Fortunately, there are many versions of “and something else” that we can offer by asking ourselves what the nature is of the progress or change that we are trying to make in the community that we are using our art form as a vehicle to effect. And the data tell us there’s a large, generous, set of people interested in being part of the “something else” we provide.
Looking at our chart of assumptions from the start of our meeting, we could then add in what the data actually shows us:
These updates to our assumptions lead us, then, to our conclusion from our data: to resonate with our most important segment of donors, we need to shift to a community-centric approach to fundraising. We need to build a community and to show our community impact such that we attract a group of donors who will work with us to build and sustain the organization.
So how do we start?
Shifting to a Community-Centered Approach
We began our final portion of the session by asking our attendees what they felt “community” could mean in their organizations, and got some great responses, including:
Pride in the local community
Human connection
Shared experiences
Impact on social issues
A place in the world
In our interviews, we heard generally three types of a Community donor described:
Standing: this kind of Community donor wants the area where they live to have a reputation as a place where arts and culture are available for all. They position themselves as a pillar of society.
Belonging: for these donors, community is about belonging to something bigger than themselves.
Change: finally, these are the change agents, donors looking to be part of a movement. The emotional intensity of a movement is likely to attract strong advocates, even as it may risk the commitment of some current audiences and donors if we take a strong stance.
To see an arts organization that shifted towards attracting the Community donor in action, we took a look at Shaw Festival Theatre in Niagara-on-the-Lake, Ontario. In response to lower ticket sales and a lack of a culture of philanthropy in their part of Canada, the organization’s newly appointed artistic director and executive director decided to shake things up.
First, they shifted the mission to “Pioneering a movement for real human encounters” -- a great example of “arts and something else.” Then, they increased the number of education and community engagement initiatives, while also ensuring that their donors were able to be involved. Next they switched their membership program to a friends program -- no more emphasis on exclusivity, now it is about closeness. Finally, they dramatically increased the events they did around the performances and community activities, and opened them up to all. The results were encouraging: in addition to eliminating the deficits in 2017, they dramatically increased their individual giving, by 30%.
We pulled out some of the key ways to support Community donors, in two categories: making the community better, and being part of a community.
All of these activities -- and the crossover between them -- adds up to something that is much more than just a community education and engagement strategy.
And so, we have envisioned a new community fundraising approach -- one that begins with “purpose.” This clarity of purpose, or broadened mission, will be the arts “and something else” that attracts donors to us. That will also widen the base of attendees and subscribers who want to join us.
As we move up in levels, rather than the past thought processes of moving from transactional to philanthropic giving, we see now how donors can be attracted through values and then cultivated to our community leaders. We can accomplish this through, among other things, events and the activation of our own advocates.
Even for organizations in regions without a strong culture of individual giving, this emphasis on community can have great impact. Especially this past year, foundations, corporate sponsors, and government funding apparati have dramatically changed their focuses in light of the increased emphasis on antiracism and inclusion stemming from the murder of George Floyd -- but long unaddressed before that. To maintain or increase funding, these funding bodies will want to know not only that the arts are available to citizens, but also that arts organizations are engaged in improving communities in specific ways.
While this is certainly a challenging time for arts organizations -- particularly in fundraising -- it is truly an opportunity for us to engage with our community of donors. Our audiences and donors think of us as enablers of connection. They want to connect to each other, and they have just been through over a year of isolation and anxiety. Our audiences and donors will want to feel like part of something more than ever before, and we now have a once in a lifetime opportunity to give that to them while fixing some of the historic challenges of fundraising at the same time.
Key Takeaways
We’ve gathered the most important points from our first session in the helpful slide below:
There is still much more to come on these findings in our summit, including:
A discussion with Kyle Polite of the San Francisco Opera around his initiative to shift donor officers’ valuable time towards high potential donors
A deep dive into our data and findings from our survey of 5,000+ arts donors.
Our final full group session to discuss the implications of community cultivation.
To access all of our case studies, recaps, and other articles, visit our Donor Summit homepage here.
Watch the Recording Here
