Secondary Menu

To Give…And To Receive: Examining the ‘Exchange’ ProcessTo Give…And To Receive: Examining the ‘Exchange’ Process

Editors Note: This is the second in a series of articles by this author introduced in the first issue of this year.

When I was a young…and presumptuous…development officer, I remember saying such smart alec, cynical things about donors as, “They say they don’t want to be thanked for their donation, but just forget to send them a letter” or, “Just leave their name off the annual report, or misspell it, and you’ll see!”

I was really on to something, only backwards!

Development is not a one-way relationship. It is an exchange. An exchange of values. And such an exchange, by definition, is always two-way.

Marketing expert, Armand Lauffer says, “Exchange is a process whereby individuals and/or organizations associate in order to achieve shared or complementary objectives.”

In development, exchange is a process where donors give to nonprofit organizations to achieve shared or complementary values. The nonprofit receives resources of various kinds, and donors receive a satisfaction that reinforces their values — from achievement of higher purpose to ego-gratification.

Donor Expectations:
If we do not understand that donors get something from their gift — well beyond a tax deduction, and if we do not act on that understanding, we are seriously remiss, and derelict in our professional duties.

Donors have expectations attached to their gift, and it’s the development officer’s job to understand this complex expectation pattern of the major donor. As indicated in the previous article in this series (February 4 of this year — “What Really Provokes a Donation?: It Isn’t About Money !!”), these exchanges center on values, not money.

The exchange relationship must be seen as the norm, as functional, if we are to maintain a long-term relationship with our donors. The relationship must also be defined in terms of benefit, where mutual benefit outweighs “costs.” There needs to be anticipation of reward by both parties to the exchange, with one of the parties expecting mostly non-financial reward.

When we examine the natural history of donor loyalty, “exchange” has high explanatory power. Jerald Panas’ investigation of the motivations and relationships in the hundred largest gifts in one calendar year clearly demonstrates the importance of exchange in what Panas describes as a lifetime relationship, a long history of mutually rewarding exchange.

“Exchange” as Marketing:
All donations involve some mix of tangible and intangible rewards, but donations of resources in exchange for intangible benefit ranks among the highest forms of charitable giving. As a marketing concept, “exchange” has the remarkable power to clarify charitable intent.

Moreover, I would maintain that charitable response, as the intangible benefit, is the penultimate in “marketing,” and that we development people serve one of society’s highest callings.

The marketing concept of “exchange” as a mindset is a basic, but invaluable way of understanding the essential act of resource development: the donation.

In an increasingly resource-competitive era among charities, understanding the complex reasons why donors give, and then employing response strategies based on that understanding, may very well be the difference between long-term societal significance and organizational stagnation.

Donors may be attracted to a charity by an initial promise, with both extrinsic and intrinsic outcomes. Extrinsically, a donor may be attracted by a the prospect of achieving some desirable outcome, or being numbered among the movers and shakers in the community, or pleasing a spouse or friend, or paying back, or pleasing God, and/or any combination of “rational” motives.

Donor Motivation:
Intrinsically, the donor may experience waves of good feeling, a sense of well-being, rectitude, and/or inner peace to name but a few of the many inner motives which lead to donations and relationships over time.

What then motivates donors to give? A myriad of reasons are always given, with anecdotal examples and myths that often cover up facts.

Some attribute donations to guilt as the motivating factor in many gifts. Guilt may work once or twice, is then satisfied and becomes insufficient. Long-term relationships need more.

Another explanatory factor is the tax deduction. We all know that, for most taxpayers, they’d be ahead financially if they kept their money and paid the taxes — they’d have more money by not giving it away.

The way to actually know and understand motivation is to ask the donor. There are many ways to do this. Given the fact that the best way to do research on a donor is to talk to them, that might be the place to start. There are also other, more sophisticated, representative ways to get at larger cohorts.

Jerald Panas’ work, cited above, is an interesting way to get at a specific, perhaps non-representative, but highly influential and important group of people.

Giving as an Institution:
Similar work by Terry Odendahl, an anthropologist, covered personal interviews of donors of wealth giving to “their own” institutions regardless of the needs of these organizations. Paralleling Veblen’s concept of “conspicuous consumption,” Odendahl discovered a pattern of “conspicuous contributions.”

Another, more systematic way to ask donors is by overall population surveys, then by surveys of members of a group and of donors to the organization themselves.

The biennial national survey done by Independent Sector and published as “Giving and Volunteering in the United States,” the latest for 2001, is the first place to go for answers. A whole section on motivations for giving, and volunteering, sets out the major parameters. A second section on the input factors and characteristics that influence giving is a goldmine for development officers interested in more than the clichéd “contacts” and “who you know” school of resource development.

The groundbreaking work of Prince and File in The Seven Faces of Philanthropy gave donors the opportunity to express the extrinsic motivations in deciding where their gifts go.

Prince and File developed seven generic categories to characterize donors:

1. Communitarians: Give to improve local conditions.
2. Devouts: Motivated by religious and spiritual factors.
3. Investors: Financially motivated and concerned with tax and estate considerations.
4. Socialites: Group and social basis of motives.
5. Repayers: Obligated sense of giving back.
6. Altruists: Higher sense of purpose, achievement of values.
7. Dynasts: Inherited wealth following family values, traditions.

The “nametags” are useful in sorting out the appeals that work with groups and in understanding why certain donors are attracted by specific charities. Because there is great variability in areas of choice for donations by the various categories of donors, the insights gained here are enormously helpful to development officers.

At an even deeper, intrinsic level, Roy Menninger MD, who followed his fabled father as head of the Clinic of that name, discovered that his training as a psychiatrist helped him understand the motivations of donors when he became, in effect, the Clinic’s chief fundraiser.

“Peeling the Onion:”
In a paper, “The Psychology of Giving and Receiving,” Menninger states the most eloquent argument for the concept of exchange. He discerns three layers of motives in giving, with donors’ decisions to contribute related to one, two, or three of the layers simultaneously.

The first layer, narcissistic motivation, “involves donors giving for self-centered reasons, seeking honor or prestige or glory or personal recognition.”

The second is conscience-driven, with obligations and guilt motivating the donor. It may also reflect a religious or moral view for giving as a duty, an expectation, a “should.”

A third level is altruistic giving, what Menninger calls the most mature form of giving, a way to participate “in the lives and work of others as well as a way to express gratitude.” The donor becomes a “genuine participant who shares in an achievement by facilitating it, but the focus is on the recipient, not the giver.”

Menninger goes on to explore “exchange,” “the best outcome for both giver and receiver is the development of a mutually satisfying relationship, one that has a reality and value apart from the act of giving… Such relationships are mutually enhancing: they provide the donor with a renewed sense of significance and a means of transcending the self. They provide the recipient with a renewed sense of mission and purpose, a reinforcement of the basic values which have guided the work of the organization. Such reciprocity is a worthy end in itself.”

I quote at length because Menninger eloquently “nails” the idea of the exchange of values and the importance of the “exchange”!!

In understanding the profound nature of exchange relationships in charitable donations, the development profession performs its highest potential of service, and it is to this end of understanding that all of us should aspire, and work to achieve.

Jim Toscano

About the Contributor: Jim Toscano

James V. Toscano

Jim Toscano is a principal in the consulting firm, Toscano Advisors, LLC, and an adjunct professor at the School of Business, Hamline University. Recently retired as president of the Minneapolis Heart Institute Foundation, the cardiovascular research and education center of Abbott Northwestern Hospital in Minneapolis, he is a past chair of the Minnesota Charities Review Council and board member of Minnesota Council of Nonprofits. Mr. Toscano served as chair and co-chair of the committees that produced the two editions of MCN’s Principles and Practices for Nonprofit Excellence, and is serving in the same capacity for the third edition in 2014.
With 50 years experience in nonprofit management, Toscano has served as consultant to hundreds of nonprofit organizations and served on over 50 nonprofit boards and commissions, many as chair. He has served as Executive Director of the World Press Institute, President of the Minnesota Museum of American Art and as Executive Vice President of the Park Nicollet Foundation. See his essays on many nonprofit and philanthropy topics at www.toscanoadvisors.com He is a graduate of Rutgers College and Yale University.

, ,

No comments yet.

Leave a Reply

Pin It on Pinterest