The Invisible Individual Donor

If we had a dollar for every person who was surprised to learn that roughly three-quarters of philanthropic funds in the U.S. are allocated by individual donors (Giving USA 2011), we’d be sitting on a nice pot of unrestricted funding.

Expressions of surprise come from many corners of the nonprofit and philanthropic sector—program officers of major foundations, policymakers, nonprofit board members, and social entrepreneurs. Until someone on our team asks them why they are ignoring individual donors, most are focused on corporate and foundation giving, despite the fact that those funders represent a mere 5% (corporate) and 14% (foundation) of the philanthropic pie.

To be sure, there are individuals who are quite visible in their giving. Many are celebrities, such as Ben Affleck, whose recent Facebook partnership is a strategy for the famous actor to engage people in issues dear to him that others might overlook, and Lady Gaga’s Born This Way Foundation. There are also new intermediaries, such as the Admiral Center, that work to help celebrities achieve more social impact with their giving, and list members such as Eva Longoria and Dave Matthews.

But most individual donors are not celebrities. They remain invisible, even to those deeply invested in social impact and smart philanthropy.

Here’s why they matter:

  1. Individual donors are responsible for the largest share of philanthropic capital allocation annually. In 2010, this represented 73%, or $211.77 billion. Since 1970, this percentage has never dipped below 70%. Some may argue that this segment is far too dispersed to understand or influence, but high net worth individuals give a disproportionate amount of this figure. Influencing even a fraction of those individuals could trump the sizable program budgets of some well-known foundations.
  2. Individual donors are sticky. While many institutional funders have explicit guidelines regarding sunsetting their grants in order to not create “dependency” among grantees, individual donors often stay the course well beyond what most foundation program officers would ever entertain. And it’s not just for their churches or alma maters. Organizations like the KIPP public charter school network and the global health nonprofit Partners in Health would not be where they are today were it not for the tens of millions of dollars and more than decade-long support of individual donors like Doris and Donald Fisher (KIPP) and Tom White (PIH). Our own I’m Not Rockefeller analysis, as well as dozens conversations we’ve had, further supports the notion that individual donors hate to and often don’t break up with the nonprofits they fund or the causes they support.
  3. Individual donors are more than just donors. This was made especially clear to us in a recent roundtable breakfast we co-hosted with CEO IntroNet for 12 regional CEOs. Yes, the folks around the table were interested in how to allocate funds for high impact. But they also discussed their roles as parents, community members, boards members, civic leaders, and as business leaders interested in corporate philanthropy and employee volunteerism. Their contributions often go far beyond check-writing.

For institutional funders, engaging individual donors offers a path to sustaining the impact of foundation investments when foundation grant terms inevitably end. For all of us who care about social impact, we ignore the role of individual donors at our own peril. Their size, stickiness, and multiple roles enable them to be a powerful force for good. Even if they choose to remain anonymous, their contributions—financial and otherwise—deserve to be seen.