Incentives for Giving in the Downturn: Trend or Fad? (Does it Matter?)

The Penn Almanac ran a highlight of last week’s ribbon cutting for the new entrance to the Caster Building, home of the School of Social Policy & Practice (SP2) at Penn. This event also showcased the new Centennial Wall, celebrating the 100 year anniversary of SP2, formerly the School of Social Work (SSW), as well as the 100 for 100 Campaign to raise $1 million by 2010. You can read more about the Ribbon Cutting Event on the Almanac’s website, and also in an article by the Daily Pennsylvanian. One feature of the new SP2 fundraising campaign caught my attention: Each donor who pledges over $400 to the “100 for 100” Annual Fund Centennial Campaign will be given the option to have their name inscribed on the Centennial Wall. That’s quite an incentive (and a great asking price), especially if you’ve seen the unique artistry of the Centennial Wall, sculpted by Karen Singer, a graduate of the Penn MFA program. This name-inscribing incentive also called my attention to a recent Bloomberg News article by Alexis Leondis, Getting Your Name on a Building Gets Cheaper as Non-Profits Compete,  featured in The Chronicle of Philanthropy, which discussed how the current economic environment has influenced the fundraising practices of nonprofits and universities who dedicate buildings, walkways, and other memorable landmarks to their respective donors. Although the wording of the title of the Bloomberg News article could be viewed as contentious, the quotes from various wealth management professionals and financial data are hard to dispute. For instance:

Some organizations are struggling to find revenue as wealthy donors as well as corporate sponsors reduce contributions, said Andrew Hastings, vice president of external affairs at the National Philanthropic Trust in Jenkintown, Pennsylvania, which helps donors establish charitable funds. Universities are struggling as endowments and foundations managing more than $1 billion in assets posted a median investment loss of 17 percent in the year through June, according to Wilshire Associates, an investment-consulting firm in Santa Monica, California.

The article also offers a potential solution to the decrease in giving amounts, in regards to a financial gift from Arnie Zaslow, executive vice president of ATD-American Co. of Wyncote, PA, to supply massages to nurses at Abington Memorial Hospital:

Nonprofit organizations may be more creative with what kinds of gifts donors can make.

I’ve seen the same sentiments voiced in other articles of the need for creativity and innovation in how businesses, families, and individuals must operate to survive during the economic downturn. At the Center, we conduct research to find high impact or “bang for buck” philanthropic investment opportunities for social impact. Our work revolves around a general statement: “I want to make a difference. I have one million dollars to give. How can I spend it to make the greatest impact?” Our executive director, Katherina Rosqueta, discussed the concept of “high impact philanthropy” with BigThink earlier this year. In that interview, she gives an example from the point of view of a philanthropist who may give money for reciprocal or social motivations, without thought to the social impact of their gift:

“I don’t care so much about whether or not I am really maximizing the impact of my gift but I’m really happy that my name is on that big building.” – View the whole video here:

The ego is a wonderful thing— it is no secret that human beings enjoy seeing, touching, and feeling their mark on the world. We learned firsthand during our interviews for I’m Not Rockefeller that 47% of respondents found it “very important” to touch/see/interact with the people or organizations to which they give money. Is it safe to assume that this feeling of being connected to a cause is reflected in the number of buildings, bridges, streets, and other national and global landmarks dedicated to someone or something’s namesake? Maybe. However, the motivation behind why people give is what we at the Center are interested in, as the title of our first education investment guide suggests we focus on “translating good intentions into meaningful impact” in improving the lives of others. I wonder if the current economic situation will foster not only new and innovative incentives for nonprofits and universities to raise money but also a new and innovative attitudes of donors towards how they give for social impact. We welcome your comments and/or feedback.