Batts Morrison Wales & Lee - News & Resources - Nonprofit Special Alert

Wall Street Journal Reports on Motivating Donors to Give More

By Michael E Batts

 

In a recent article, Wall Street Journal reporter Anna Prior provides an interesting perspective on donors’ motivations for giving.  Among its observations, the article cites a UC San Diego study addressing the issue of administrative expenses or “overhead.”  Under the heading “Overhead is a Huge Turnoff,” Prior relays an eye-opening view of donors’ perspectives regarding such expenses.  In the study, professors conducted a mail campaign, sending 40,000 solicitation letters to four groups of donors – each group receiving a different version of the solicitation letter.  One version of the solicitation letter mentioned that “the charity had already secured donations to cover its overhead costs, so every subsequent dollar donated was going directly to programs.”  That particular version of the letter resulted in almost double the response rate of other versions and total donations that were double or triple that of some of the other versions.  The article quotes one of the professors conducting the study as saying, “The average donor doesn’t seem to care about the size of the overhead, as long as they aren’t the one paying for it.”

 

Here is a link to the WSJ article (a subscription may be required to access the full article).

 

Overhead or administrative expenses are a necessary part of effectively operating any nonprofit organization.  And, while deep flaws exist in the overhead measurements by many nonprofits and the evaluations done by many donors and analysts, the reality is that donors want to know that their gifts are being used effectively to carry out good work.  The idea of telling donors that “we have already raised funds to cover our overhead, so all of your gifts will go to our program activities” is an interesting one…and one that seems to resonate with some donors, based on the study cited by the Wall Street Journal.

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