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Men vs Women Donors

Men vs Women Donors

Why Women Donors Are Likely More Valuable

If you’ve detected a trend in the last few years that shows women becoming more politically engaged, you’re not imagining things.

The 2018 election cycle saw new records for the number of women candidates for governor as well as both the House of Representatives and the Senate. And they’re not just running–they’re winning. The current crop of House members includes a record number of women “by a wide margin,” as Time magazine noted.

This activism goes well beyond political office–it extends to donor patterns as well. An analysis by Nonprofit Quarterly found that women’s political engagement has surged in the last two years, including donations. This has major implications for charities that provide basic human needs.

Research by Indiana University Lilly Family School of Philanthropy found a direct link between income levels and how donors spend on charitable giving. No surprise there. What may be surprising is the respective donation patterns of men vs. women. As the Nonprofit Times explains, men are more likely to give to organization-focused charities–think schools and societies, religious organizations, or youth-focused endeavors. However, “When the woman’s income increases, the couple is more likely to give — and give a larger amount — to charities that provide basic human needs, such as the Salvation Army, American Red Cross or a homeless shelter.”

Women also are more likely to give from their heart, meaning they are more likely to be motivated by current events or major trend shifts, such as an election result.

The research backing this was done in 2015–before the recent overall surge in women’s activism. Combining the established tendencies with the current political environment, and it’s not a stretch to say that women are having greater influence than ever over charitable giving and overall political activism.

New research from the Lilly School concludes that adult daughters are more likely to be influenced by the charitable giving of their parents than adult sons. While this underscores the idea that women have increasing influence, it also highlights a general need to bridge the gap between parents and sons.

“If giving is to increase to continue to address the pressing challenges of today’s society, then society in turn must find ways to ensure that these values are passed on to both sons and daughters,” the report says.

As a nonprofit executive who relies on donors to drive your organization, what should your takeaways be?

First, understand that men and women are different, even if all other demographics–income, place of residence, education, etc.–are exactly the same.

Also recognize that while both genders show tendencies to form established donation patters based on their experiences and values, women are more likely to shift theirs and get more involved based on current events.

You should always tailor your campaigns so they appeal to subsets of donors based on income, location, age, etc.
If you’re not already targeting men and women differently, too, consider doing so.

A new Trend In Donor Finance: The Individual Giving Account

A new financial vehicle for giving has emerged among tax-conscious Philanthropists. It’s called the Individual Giving Account and it allows Donors to immediately harvest the tax benefit of donation deductions while stashing away assets earmarked for contribution at a later time. Think of it as an IRA set up to handle a donor’s philanthropic ‘investments’. Writing about the visible proliferation of these new accounts, Wall Street Journal Contributor Laura Saunders provides an excellent example of how they work:

Say Mary usually gives away about $15,000 a year, and she has stock valued at $45,000 that she acquired for $10,000 and has held for more than a year.  She’s worried both that the stock will drop and that tax changes next year could lower her deduction’s value.

Rather than writing checks to her favourite causes this year,  Mary contributes the stock to a donor advised fund.  She gets a deductions for the full $45,000 for 2016 and bypasses capital-gains tax on the stock’s growth.

Then the sponsor (such as [Charles] Schwab) immediately sells Mary’s stock, tax-free, and funds her giving account with the $45,000.  If she wants to give,  Say, $3000 to a qualified non-profit such as her church or college, she asks the sponsor to make a grant, and it typically does, taking care of all paperwork, meanwhile, the remainder is invested as she directs in a menu of mutual funds, awaiting her decisions about whom to give to and how much.

The result, Mary has made a tax-efficient donation of stock and gotten a full deduction this year, no matter what happens to the market or the tax code next year, meanwhile, she doesn’t have to parcel out three years’ worth of donations until she wants to (see Wall Street Journal article mentioned below)

Non-profit directors are right to conclude that anticipated changes to the tax-code enormously influence the giving behavior of donors in the upper crust.  Proposals by the new Republican administration to curtail the value of charitable deductions – either by directly limiting the allowed deductible amount, or by reducing the tax rate itself have driven charitable actors to open swaths of IGAs, also known as donor- advised funds.  The number of people with giving accounts now exceeds 270,000 and during the five year time period ending in 2015, annual contributions to the accounts doubled to $224 billion from $10.4 billion according to data from the National Philanthropic Trust.  As noted in the above example, the accounts and the various stocks and bonds contained within them are managed by a third party such as Fidelity, Vanguard, or Charles Schwab.

Given that these new-fangled accounts are exploding in popularity and have become an alternative to private foundations for the wealthy non-profit directors would be wise to target some of their holders through their fundraising efforts. An important caveat with regard to? donor-advised funds is that once money is deposited, it cannot be withdrawn.  That means that these donors have a different source? of mindset than ordinary retail donors who must choose where to?  dip into their checking or savings account in order to make a gift.  Well-heeled philanthropists who possess well-funded giving accounts have already made the decision to contribute a certain amount and so the only question left is where the donation will go.  Quite likely, they will be receptive to a number of causes and non-profits.  At Vanguard in 2015. 29% of grants went to educational causes, 21% to human services, 13% to religious groups, and only 1% to historical causes.

Non-profits would do well to study up on this new preferred philanthropic financial structure for the affluent. If nothing else, directors could educate their own donors about the flexibility and tax efficiency of the new and exciting Individual Giving Account.

 

Sources

Charity Accounts: Holiday Must – Have by Laura Saunders, The Wall Street Journal, December 24-25, 2016