Whats Trending in Philanthropy: Information and Innovation

2012 Creating Connections Conference Shelley Brown

Christopher Maddocks

(we)areinaconuenceoftwosectors(healthcareandphilanthropy)undergoingprofoundtransforma:on,eachthefocusofextensivedebate.

EmergingTrends:TheChangingLandscapeof HealthCarePhilanthropyAHP2010

OurPhilanthropicLandscape

Volatility investment RECESSION transformation cost containment Vigilance ROI donor-centric IMPACT compliance

COLLABORATION Competition transparency metrics INNOVATION

ACCOUNTABILITY May we live in interesting times. Confucius

TodaysChallenges Risingnancialobliga0ons,shrinkingpublicsupport(nancialandmoral),increasedneedforunrestricteddollarsandtransparency

Goingglobal:morecompe00on,moreopportuni0es,greatersophis0ca0on

ShiBindonormo0va0onfromdoinggoodtoinves0ngincommunity/cause

Thenewimpera0ve:transforma0on

OurBestResponse

Keeptothebasicprinciplesbuildthebase,deepenrela0onships,makethecase

Usenewmediaandmethodsinserviceofthoseprinciplestoextendreachandshapecontent

Informdecisionmakinganddonors:knowyourdonorsandletthemknowyou

Investinnewideasandcreatetransforma0onalopportuni0esfordonors

TodaysConversa:on

Sharethegoodnews:revenueinhealthcareupby8%in2010(childrenshospitalsamongthegreatestsuccesses)!

Highlighttrendsandexperienceshapingourbestresponseinforma0on,innova0on,investment

Sharesuccess(andnotsomuch)stories Ques0ons???

INFORMATION:TRENDSANDEXPERIENCE

INFORMATION:TRENDS

Genera:onalShiKsTechnologyusageisthemostcommonthemeforhowtheemerginggenera0ons(GenX,Millennial)denethemselves

Source: Pew Research Center - http://pewinternet.org/Presentations/2012/Feb/National-Religious-Broadcasters.aspx

GadgetGenera:ons

Source: Pew Research Center - http://www.pewinternet.org/Presentations/2012/Jan/The-New-Environment-for-Advocates--NGOs.aspx

MobileRevolu:on83%ofalladultsaremobilephonesubscribers

45%usesmartphones

Source: Pew Research Center - http://www.pewinternet.org/Presentations/2012/Jan/The-New-Environment-for-Advocates--NGOs.aspx

OntheirMobiles

63%ofAdultsarewirelessInternetusersIncreasedby26percentagepointsinjust3years

Source: Pew Research Center - http://www.slideshare.net/PewInternet/state-of-social-media-2011

FromMobiletoSocial50%ofalladultInternetusersareonsocialnetworks

Source: Pew Research Center - http://www.pewinternet.org/Presentations/2012/Jan/The-New-Environment-for-Advocates--NGOs.aspx

SocialRevolu:onAdultsaged5064arethefastestgrowingpopula0on,Havinggrownfrom25%to52%adop0onin3years

Source: Pew Research Center - http://www.pewinternet.org/Presentations/2012/Jan/The-New-Environment-for-Advocates--NGOs.aspx

Halfofadultsaged1849usesocialmediaonadailybasis

Systema:callySocial

Source: Pew Research Center -http://www.slideshare.net/PewInternet/state-of-social-media-2011

AccordingtothePewProjectforDigitalandAmericanLife

Forsocialnetworkusersbetween18and49yearsold,theprimaryreasontousesocialmediaistoconnectwithfriendsand

groupstheylike.

Forusersover50,thetopreasontoistoconnectwithfamily.

AFriendlyBunchSocialmediausersaged1834havetwiceasmanyfriendsasusersaged4756andfour0mesasmanyasusersaged6674.

Source: Pew Research Center - http://www.pewinternet.org/Presentations/2012/Jan/The-New-Environment-for-Advocates--NGOs.aspx

Butwhataboutthewealthy?

Itturnsout,theyrenotthatdierent

TheWiredWealthy

Atandemofresearchstudiesexaminedtheonlinehabitsoftheauent.

OneresearchprojectbyEdgeResearchandConviostudiedtheonlinehabitsof3,443majorgiBdonorswithincomegreaterthan$200,000

ThesecondstudybyMcKinseyandCompanyandtheHewlelFounda0onexaminedonlinebehaviorsandinforma0onneedsformajorgiBdonors.

OnlineHabits

40

donations. Looking forward, 46 percent said that they expect to make a greater percentage of their charitable gifts online within the next 5 years.34 While our focus in this paper is on more af!uent donors, this trend is certainly encouraging and supports our belief that online platforms will increasingly be an effective channel.

Barriers to greater impact

While the trends described above are promising, nonpro"t market intermediaries have yet to realize their full potential. Many intermediary organizations are subscale and offer limited products, services, and value. They could be doing much more to disseminate the valuable information generated by foundations and others and to facilitate collaboration and partner-ships. Lastly, intermediaries could add signi"cant value to the nonpro"t market by shining an objective light on nonpro"t performance.

Insuf!cient scale

The nonpro"t marketplace is served by hundreds of intermediary organizations. With few exceptions, they tend to operate as unconnected islandsdespite the fact that intermediaries by de"nition are meant to help connect those who are not yet connected. We believe that

34 Convio, Sea Change Strategies, and Edge Research, The Wired Wealthy: Using the Internet to Connect with Your Middle and Major Donors, March 24, 2008.

Online usage is high for affluent

Source: Mendehlson Affluent Survey, 2006; Pew Charitable Trust; Luxury Institute; expert interviews

Percent

Exhibit 11

7

1414

23

1714

22

27

3841

17

29

24

4445

2325

32

40

48

Banking Made a purchaseTravel information or reservations

WiredWealthyClusters

!"#$%&'(%)*+(%,-()./-0()-123,4(!2563-/6( ( %,-()./-0()-123,4(

(

78(

!

!"#$%&'()$*+,#$*($-.$/((0$#.$1).*$,2."#$#+($2(+,'&.3/$.4$#+(/($56"/#(3/7$$-.(/$0,1($,$

5(3#,&)$,0.")#$.4$/()/(8$

!(6.*$,3($#*.$#,26(/8$9+($4&3/#$:;&%"3($3.4&6(/$1(?$,##3&2"#(/$4.3$(,5+$.4$#+($#+3(($56"/#(3/8$

9+($/(5.)-$:;&%"3($@=$>3(/()#/$56"/#(3$23(,1-.*)/$4.3$(,5+$.4$#+($0,A.3$/(5#.3/$.4$).)>3.4/$

*($/#"-&(-$:(8%87$B)&0,6$C(64,3(7$D(,6#+7$(#58=8$E6(,/($#,1($#+($/(5.)-$#,26($*+$,$%3,&)$.4$

/,6#$F$#+($>3.>.3#&.)/$,3($3(46(5#&'($.4$#+($%3.">/$*+.$5+./($#.$>,3#&5&>,#(7$,)-$0,?$.3$0,?$

).#$3(46(5#$#+($56"/#(3$-&'&/&.)/$.4$#+,#$()#&3($/(5#.38$G."3$0&6(,%(7$&)$.#+(3$*.3-/7$0,?$',3?8$

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HowTheyChoosetoGive

TheHewlelresearchfoundagrowingsegmentofstrategicoroutcomeorientedphilanthropists(comprisingroughly1/3ofmajordonors)whodemandgreaterinforma0onbeforemakingagiB.

Thesedonorsincreasinglyuseonlineinforma0onsourcestoinformkeycharitablegivingdecisions:Whichorganiza0onstoini0allysupportWhichorganiza0onstocon0nuetosupport

26

In light of this demand for more and better performance information, !nancial institutions with signi!-cant donor servicesincluding JP Morgan Chase, Wells Fargo, Bank of America, UBS, and Schwab Charitableare expanding their philanthropy-related products and advisory services, offering more donor education forums, collecting nonpro!t performance information, and/or adding professional staff with nonpro!t expertise. Several !nancial executives interviewed were enthusiastic about partnering with nonpro!t-sector intermediaries and foundations in an effort to gain access to more information on nonpro!ts and better serve their high-net-worth customer base.23

Suggestions for improvement

There is good reason to believe that better information would result in more impactful choices by indi-vidual donors. As one !nancial services professional put it, I believe performance information is like e-mail was in the 80s. Donors dont know they want it because they cant imagine it, but they will !nd it very useful once its widely available.

23 As this paper was published, a severe credit crisis was roiling the !nancial markets. While it is impossible to predict how the crisis will play out, it may reduce the near-term capacity of some !nancial institutions to expand their philanthropic services.

What motivates high-net-worth donors?*

* Defined as households with Incomes greater than $200,000 or assets in excess of $1 millionSource: The Center on Philanthropy at Indiana University, Bank of America Study of High Net Worth Individuals: Initial Report, 2006

Impact-driven

Important motivations for charitable giving by

HNW households (percent

15

15

16

20

21

21

31

35

36

36

40

47

53

58

75Less money spent on admin

Able to determine impact of gifts

More financially secure

Better return on investment

Not already financially committed

Knew of more organizations

Able to use skills in nonprofits

More access to research

Understood goals of nonprofits

More info on giving vehicles

Name would not be made public

More time

Less legal red tape

Able to compare notes with peers

Not already leaving donations in estate1

1

8

26

27

29

57

62

62

62

64

69

82

83

86Meet critical needs

Giving back to society

Reciprocity

Desired impact

Nonprofits provide services

Being asked

Se