A New Perspective on Philanthropy and Fundraising

By October 26, 2016 July 25th, 2017 Cool Analysis, Philanthropy

We have been hard at work developing groundbreaking analysis and insights on philanthropy and fundraising. We are authoring a series of Linkedin posts to walk you through our work to date, some of our initial insights, and how you can access this information, knowhow, and better practices should you so desire. We thought we would also deliver them directly to your inbox so you don’t miss out.

 

Oh, for the Love… There MUST be a Better Way

“Oh, for the love…” I can’t tell you the number of times in my I’ve said those words in

my nonprofit executive life. While they have been uttered for a variety of reasons, a consistent focus of my expletives was fundraising, expansion, growth, oh my!

Deciding where to go, what to do, and how to resource are fundamental duties of any nonprofit executive, yet as nonprofit executives, Ben, Anna and I always felt underwhelmed by the available data and struggled to make effective, timely decisions across our organizations and markets.  We decided there MUST be a Better Way…except when we looked around, there wasn’t.  There were analogues like Forrester Research, Corporate Executive Board, Advisory Board where we saw glimpses of what we wanted for the nonprofit sector, so we knew it was possible, but it didn’t exist… yet. It was up to us to make it happen.

And so that’s what we’re doing:  for the past two years, we’ve been developing Peer Performance Insights (PPI) on philanthropy and fundraising, a data-driven approach to answering the questions we struggled with:

  • How much philanthropy can I raise in my existing markets?
  • What if I expand to new markets? How do I evaluate my team’s fundraising targets across geographies?
  • How does my fundraising performance stack up against peers, and what can I learn and improve?

We’re excited to start sharing “the Better Way”: how the PPI helps answer these questions.

Philanthropy is Local, Local Markets are not Equal

Our first step in building the PPI was to size the philanthropic market for the 381 metropolitan statistical areas in the United States. We know, thanks to Giving USA, that $373B in corporate, foundation, individual philanthropy originates in the United States, but now we know from where!

Below in Figure #1 you can see a map of the United States and 381 “dots”, each representing a metropolitan statistical area. The size of the dot represents the size of the philanthropic dollars originating from those markets. Blue are the top 15 biggest (YUGE); adding in the orange brings us to the top 30 (way smaller); the green brings us to the top 50 (significantly smaller still), and the brown rounds out the remainder (chicken pox).

Insight #1: Philanthropy is local, and highly concentrated in a small number of large markets. Not earth shattering, I know, but stick with us. Plus, maps and dots are fun.

Figure 1: Philanthropy is Local

Figure #2 takes a closer look at those top 50 markets (blue, orange, green) in snazzy bar chart form. Here we can see even among the top 50 there is a strong concentration towards the left, and holy New York, Batman! This chart starts to explain why most of our national multisite nonprofits tend to cluster in the blue markets… high concentrations of need in urban areas coincident with high concentrations of wealth. This both makes a ton of sense, and makes me a little sad when you consider how much need exists in suburban and rural areas.

Insight #2: Not all philanthropy that originates in a market stays in a market – and how much stays depends on the size of the market.  For the largest markets, we estimate ⅔ stays in market, and ⅓ goes elsewhere. For the middle of the pack, about ¾ stays in and ¼ goes elsewhere, and as you get smaller the in-market dollars approach 100%. Who cares you ask? Well this has some interesting implications for how you might construct your ask, particularly if you are raising money for multiple geographies. Finally, note there are, of course, exceptions to these general rules of thumb… Hi Seattle and Mr. Gates!

Figure 2: Local Markets are not Equal

We’ll stop there for today. Hopefully we’ve captured your attention and interest. If I’m you, I’m thinking “cool charts”, but where’s the “so what?” How does this actually help me make any decisions?

No worries friend, we’ll get there. Stay tuned next week, same Bat Time same Bat Channel, for our next post “Yes, Market Size Really Does #@$#@ Matter”.