In an increasingly competitive philanthropic marketplace, donors are more likely to give to community foundations that provide good customer service and make a meaningful impact on the community in ways that are clear to donors, a new research report says.
“Donor satisfaction is vital for community foundations,” says the report from the Center for Effective Philanthropy.
“Donors who are more satisfied with their community foundations are more likely to indicate that they plan to continue giving and more likely to recommend the foundation to others,” the report says. “The consequences of donors not being satisfied with their community foundation are simple — donors will walk away and won’t help bring new donors to the foundation.”
The report, What Donors Value: How Community Foundations Can Increase Donor Satisfaction, Referrals and Future Giving, is based on surveys of over 6,000 donors from 47 community foundations that commissioned a donor perception report from the Center for Effective Philanthropy between 2009 and 2013.
Based on a model of philanthropy created 100 years ago with formation of the Cleveland Foundation, community foundations serve as a partner for donors, who create funds at the foundations; a funder of nonprofits; and a resource for local issues.
But the past 10 years have been a period of “challenge and questioning” for community foundations, with growing competition and questions about whether their business model is sustainable or needs radical change, the report says.
Helping to drive that competition with local community foundations has been the rapid growth of donor-advised funds offered by big financial services companies like Fidelity and Vanguard in the face of research estimating that trillions of dollars in wealth will be transferred between generations over the next 50 years.
Community foundations can take tangible steps to maintain or improve donor satisfaction, it says, “but it’s not a simple formula.”
The strongest predictors of donors satisfaction are “donors’ sense of the foundation’s level of responsiveness when they need assistance and donors’ perceptions of the foundation’s impact on the community,” the report says.
Communication with donors is critical, it says.
“Both the frequency of a foundation’s communications with its donors and the extent to which staff clearly communicate the foundation’s goals matter,” it says.
And donors who find staff to be more responsive tend to be more satisfied with the foundation overall, it says.
“Failing to be responsive can cost community foundations their donors,” it says.
If donors are not satisfied with their community foundation, they are “more likely to turn to one of many alternatives for their giving,” it says.
Capacity and impact
“To thrive,” it says, “community foundation boards and leaders must pay careful attention to the capacity of their organizations to deliver excellent customer service while positioning themselves to have an impact in their communities.”
The data also suggest that community foundations “may be best served by capitalizing on their strengths rather than changing to compete in areas, such as administrative fees, where they’ll be harder-pressed to do well against companies with massive economies of scale.”
— Todd Cohen