Money for Good- International Giving Report

8/9/2019 Money for Good- International Giving Report

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HOPE CONSULTING CONFIDENTIALMAY 2010

Money forGood

Special Report onDonor and InvestorPreferences for

Supporting OrganizationsWorking Outside the US

HOP E CONSULT I NG

MAY 2010


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Important Context for This Report

1

INTRODUCTION AND CONTEXT

This report is an addendum to the full Money for Good Report (Money for Good:

The US Market for Impact Investments and Charitable Gifts from Individual

Donors and Investors) and should be viewed alongside that document.

The full report contains useful information on the context for the project, themethodology used, and the general findings surrounding donor and investor

preferences, behaviors an demand for charitable gifts and impact investments.

These general findings contained in the main report should be of interest to

organizations that focus outside the US. This report focuses largely on how

international donors and investors are different, and what additional

recommendations exist for organizations that focus outside the US.

While this addendum talks broadly about donor and investor preferences for

international giving and investing, we have paid particular attention to donors

and investors who support international entrepreneurship.


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The Goal and Structure of the Money for Good Project

2

INTRODUCTION AND CONTEXT

The goal of this project was to understand US consumer preferences, behaviors, and

demand for impact investment products and charitable giving opportunities

(together, these make up the money for good market), and then to generate

ideas for how for- and non-profit organizations can use this information to drive more

dollars to organizations generating social good.

The main document focuses on three questions:

1. How can nonprofits more effectively obtain donations from individuals?2. How can a greater share of donations go to the highest performing nonprofits?3. What is the market potential for impact investing and how can it be realized?

This document addresses one additional topic:

How can more capital be driven to organizations operating outside the US,

particularly to those focused on international entrepreneurship?


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1. Summary of Findings and Recommendations from Main Report p 4 62. Supporting Organizations Operating Outside the US p 8 253. Appendix: Segments p 27 30

Agenda

3

1. Summary of Findings and Recommendations from Main Report p 4 6


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Increasing Charitable Donations From Individuals

4

F INDINGS AND RECOMMENDATIONS FROM MAIN REPORT

Key FindingsRecommendations For Nonprofits to

Improve Fundraising Capabilities

A. There is $45B of market opportunity, limited in partby high levels of loyalty in charitable giving

B. Donors are generally satisfied with nonprofits, butcite being solicited too often as their key area of

frustration

C. Few donors do research before they give, andthose that do look to the nonprofit itself to provide

simple information about efficiency andeffectiveness

D. Behaviors matter: there are six discrete segmentsof donors with different primary reasons for giving

E. Demographics dont matter: HNW donors behavesimilarly to others

A. Segment on behaviors, not demographicsB. Tag and track your donors by segmentC. Determine what segments are best for your

organization, given your strengths

D. Develop consistent outbound marketing thatappeals to target segments

E. Prioritize investments based on what will drivedonor behavior

F. Capture donors earlyG. Understand how to manage different segments

when approached


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Increasing Donations to the Highest PerformingNonprofits

5


Key FindingsRecommendations To Increase Funding

to High Performing Nonprofits

A. While donors say they care about nonprofitperformance, very few actively donate to the

highest performing nonprofits

B. Changing this behavior will be difficult givendonors varied motivations for giving, their loyalty

to the nonprofits to which they give, and the fact

that they believe that nonprofits perform well

A. There are three primary opportunities toimprove the quality of giving:

1. Closing the care vs. act gap2. Closing the quality information gap3. Closing the good vs. best gap

B. The Care vs. Act and Quality Information

gaps are the top priorities and can beaddressed concurrently by

1. Providingsimple information donors will use2. Pushing information to the donors3. Building broad awareness around some

select key messages

C. The opportunity to close the Good vs. Bestgap lies with the High Impact segment

D. Foundations can also help direct more capitalto high performing nonprofits by helping them

to develop superior fundraising capabilities


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Realizing the Potential of the Impact Investing Market

6


Key FindingsRecommendations To Unlock the

Impact Investing Market

A. Most individuals are open to impact investing, butneed to know more

B. There is $120B of market opportunity, half of whichis for smaller (


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Agenda

7

1. Summary of Findings and Recommendations from Main Report p 4 62. Supporting Organizations Operating Outside the US p x y3. Appendix: Segments p 27 302. Supporting Organizations Operating Outside the US p 8 25


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Context

8

SUPPORTING ORGANIZAT IONS WORKING OUTS IDE THE UNITE D STATES

In addition to looking into behaviors regarding charitable donations and impact investing,we also investigated individuals preferences for donating to organizations that work abroad,

or for investing in developing countries

In the following pages, we have summarized the relevant information regarding howinternational donors/investors are different from others. However, it should be noted that onmost dimensions these donors/investors do not have different behaviors or preferences to

those who focus domestically

To test international giving behaviors and opportunities, we were able to look at the data cutonly by those that said they donated to Organizations that do charity work outside the US

Since Impact Investing is a newer market, we were only able to look at the data cut by thosethat said they invested in developing countries. However, this applies to all investments, notjust impact investing

We focused particular parts of our analyses on those who support InternationalEntrepreneurship specifically, but given smaller sample size we did not focus solely on that

population


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Executive Summary

9


A. A third of respondents donated or invested in thedeveloping world

B. The top drivers for these donations/investments arenot international in nature (they are responses to

disasters or driven by other motivations)

C. While international donors are similar to others onmost dimensions, they are more engaged

D. especially when they support internationalentrepreneurship...

E. and they are willing to donate more in the futureF. The same levels of engagement hold true for those

who invest abroad and especially for those that

invest in economic development/entrepreneurship

G. The barriers to increasing international giving arehard to overcome

H. The barriers to increasing international impactinvesting are focused on risk

A. Overall, focus on recommendations forcharitable donations and impact investing

B.

Proactively provide additional information todonors on performance and impact

C. For donors, focus on the 30% that already giveinternationally

D. For investors, focus on the 35% who alreadyinvest in the developing world

E. Structure products and marketing to address topbarriers to investing in developing countries

Key FindingsRecommendations To Increase

International Donations/Investments


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30% of respondents donated to organizations thatoperate outside the US

10

% Donors

22%

% of Respondents who Donated To:

54%

52%

46%

41%

37%

36%

32%

30%

30%

30%

21%

14%

8%

5%

0% 10% 20% 30% 40% 50% 60%

Place of Worship

Local Community Orgs

Education

Health / Healthcare

Children / Youth

Fundraising Orgs

Poverty / Social Welfare

Outside the US

Arts/Culture/Humanities

Animals and Wildlife

Women's Issues

Environment

Other

Econ Development /Entre reneurshi

Donations within International

64%

44%

35%

23%

20%

18%

14%

13%

13%

12%

8%

6%

2%

2%

1%

0% 10% 20% 30% 40% 50% 60% 70%

Emergency Relief

Children / Youth

Health

Education

Water / Sanitation

Econ Dev / Ent / Mfnce

Human Rights

Housing

Women's Issues

Agriculture

Environment

Other

Energy

Info / Communications

Transportation

A. PARTICIPATION

We will focus some of our findings specifically on those that support entrepreneurship


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35% of respondents invested in developing countries

(Refers to any investment, not just impact investing)

11

Investment Within Developing World

42%

36%

28%

28%

27%

24%

23%

23%

22%

20%

19%

17%

15%

12%

12%

0% 10% 20% 30% 40% 50%

Energy

Health

Econ Dev / Ent / Mfnce

Info/Communications

Education

Children/Youth

Agriculture

Water/Sanitation

Transportation

Emergency Relief

Other

Environment

Housing

Women's Issues

Human Rights

94%

44%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

North America Other DevelopedAreas

The DevelopingWorld

Where People Invest(All investment not just impact investing)

A. PARTICIPATION

Figures refer to % of respondents in the survey

We will focus some of our findings specifically on those that invest in entrepreneurship


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HOPE CONSULTING CONFIDENTIALMAY 2010 12

Many international donors are not necessarily focusedon the international nature of the charity

54%

33%

27%

23%

22%

19%

19%

6%

5%

0% 20% 40% 60%

Respond to Natural Disaster

Other Reasons (Happen to be Int'l)

My Issues Affect Those Outside US

Learned About Issues Abroad ThruTrusted Source

Dollar Goes Further in DevelopingWorld

Biggest Social Needs are Abroad

Saw Challenges Thru Travels

Most Innovative Ideas Abroad

US Orgs Receive Their Fair Share

70%

selected at

least oneof these

Why People Gave Internationally1

1. Respondents allowed to select up to three options

B. DR IV ERS OF PART ICIPAT ION

The top two reasons do notpoint to a core interest in

international giving, per se Respond to natural disaster Other reasons

30% of donors that donateinternationally selected only

one of these two reasons

The 70% of donors with moreof a core driver for

international giving do it for a

wide range of reasons

30%

selected

only these


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Traditional investment rationale drive the choice toinvest in the developing world

57%

34%

27%

25%

18%

16%

15%

15%

10%

5%

0% 20% 40% 60%

Diversification

Expect Higher Returns

Lack of Capital in Developing World

Biggest Opp's are Abroad

Heard from Trusted Source

Other

Personal Travels

Cause Doesn't Affect US

More Innovative Ideas

US Has Fair Share

Why People Invest in Developing World1

B. DR IV ERS OF PART ICIPAT ION

The top two reasons donot point to a core interest

in developing countriesper se, but are rather a

means to maximizing their

investment portfolio

Diversification

Expect high returns



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People that donate to international nonprofits areoverall more engaged in charitable giving

14

% Donors

22%

% Donations1

xx%

44%

35%

0%

10%

20%

30%

40%

50%

DonateInternationally

Non-InternationalDonors

78%

70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%


Non-InternationalDonors

More likely to give toevery other cause as well

More likely to engage inresearch1

Care more about howdonation will be used2

0% 20% 40% 60% 80%

Place of Worship

Local Community Orgs

Education

Health / Healthcare

Children / Youth

Funraising Orgs

Arts/Culture

Animals and Wildlife

Poverty/Social Welfare

Women's Issues

Environment

Econ Develmnt / Ent Non-InternationalDonors


1. % responding that they researched any gift they made in 2009. 2. % responding 5 or 6 on a 1-6 scale, where 6 = I pay extremely close attention to

C. ENGAGEMENT


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The 18% that donated to Economic Development /Supporting Entrepreneurs were even more engaged

D. DONORS SUPPORTING INTERNATIONAL ENTREPRENEURSHIP

53%

44%

32%

0%

10%

20%

30%

40%

50%

60%

Donate Int'l -Entrepreneurship

Donate Int'l - All Non-InternationalDonors

Even more likely to engagein research

% People ThatResearch

% People in HighImpact Segment

35%

26%

12%

0%

10%

20%

30%

40%

Donate Int'l -Entrepreneurship

Donate Int'l - All Non-InternationalDonors

And even more likely to be in theHigh Impact segment1

1. See appendix for full detail on segment breakouts


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... And care a bit more about the organizationseffectiveness and how their money will be used


86%83%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

DonateInternationally -Entrepreneurship

DonateInternationally -

All

% of Costs to Overhead Organizations Effectiveness

69% 70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%



All

% Respondents that pay significant attention to:1

84%

78%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%



All

How Donation Will Be Used

1. % responding 5 or 6 on a 1-6 scale, where 6 = I pay extremely close attention to


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Those that support international entrepreneurship arealso less focused on transient reasons for global giving

54%

33%

27%

23%

22%

19%

19%

6%

5%

0% 20% 40% 60%










Why People Gave Internationally Overall



37%

34%

34%

23%

34%

32%

26%

16%

7%

0% 20% 40% 60%










Why People Gave Internationally Support Econ Dev / Entrepreneurship

More Important SameLess Important


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Those who currently donate abroad are willing toincrease their donations more than the average donor

% Donors

22%

% Donations1

xx%

12%

17%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Int'l Donors All Respondents

37%

34%

0%

5%

10%

15%

20%

25%

30%

35%

40%


$1,850

$1,650

$0

$400

$800

$1,200

$1,600

$2,000

$2,400


Intl Donors are MoreLoyal with Current Gifts

But, Are More Willing toDonate New $

...And Those Willing to DoSo Would Give More

% Current DonationsWilling to Switch

% Willing to IncreaseTotal Donations

Avg. New Headroom /HH

E. MARKET OPPORTUNITY


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People that have invested in developing countries aremore interested in impact investing than average

49%

44% 43%41%

46%

35% 34%32%

0%

10%

20%

30%

40%

50%

60%

Investment withSocial Bonus

Business SolutionSocial Issue

Helping OthersHelp Themselves

SustainableCharity

And also show moreoverall interest

Developing world investors are more interested ineach of the four impact investing concepts1

Developing World Investors

All Investors

15%

42%

10%

36%

0%

10%

20%

30%

40%

50%

Very Interested Want to LearnMore

F. INTERNATIONAL INVESTOR INTEREST IN IM PACT INVEST ING

1. % responding 5 or 6 on a 1-6 scale, where 6 = I am very interested in


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People that have invested in developing countries aremore likely to be impact investors, and to invest in

impact investments in the future

% Donors

22%

% Donations1

xx%

19%

12%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Int'l Investors All Respondents

$26

$21

$0

$5

$10

$15

$20

$25

$30


$15

$12

$0

$5

$10

$15

$20

$25

$30


Higher % have ever madean impact investment

They have made largerinvestments / HH

And they are willing toinvest 25% more / HH

% EverMaking I.I.

Avg. investment/ HH ($000)

Avg. Headroom/ HH ($000)



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The 28% that invested in Economic Development/Entrepreneurship/Microfinance are more interested in

impact investing


They are more interested inimpact investing

And are interested in investing moremoney in these opportunities

24%

49%

15%

42%

10%

36%

0%

10%

20%

30%

40%

50%

Very Interested Interested and Want toLearn More

Developing World Investor Econ Dev

Developing World Investor

Other Investor

$20

$15

$12

$0

$5

$10

$15

$20

$25

Dev WorldInvestor - Econ

Dev

Dev WorldInvestor - All

All Respondents

Avg. MarketOpportunity/ HH ($000)


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The top barriers for international giving are hard toovercome

Why People Dont Give More Internationally1

64%

60%

44%

27%

23%

16%

8%

4%

0% 25% 50% 75%

Local Issues Should be Solved First

Possibilty of Corruption/Fraud

No Personal Connection

Limited Info on Int'l Charities

People Don't know Where to Begin

Int'l Orgs Don't Use $ as Effectively

People not Interested in New Charities

Int'l Charities Ask for $ Less Often

1. People allowed to select up to three options

G. BARRIERS FOR INTER NATIONAL GIVING

Virtually all respondents stated thatat least one of the top three barriers

were important to them

Each is hard to overcome: Local Issues Should be Solved First is

a philosophical belief many hold dear

Possibility of corruption is a belief withmerit, and it will take time to changethe reality and the perception

No personal connection can beaddressed (see Kiva), but requires a lotof work by each nonprofit


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Recommendations for organizations working outsidethe United States

1. Overall, focus on recommendations for charitable donations and impact investing overall While international donors/investors more engaged, general behaviors not dramatically different The international angle is not the driving motivation for most international donors or investors

2. Proactively provide additional information to donors on performance and impact International donors are more engaged, and use information more frequently than others Looking for performance and information on efficiency, effectiveness, how use $$, and few solicitations More concentrated in the high impact segment International donors still use information to validate donations, not to choose organizations

3. For donors, focus on the 30% that already give internationally Only have ~10% of the share of wallet of international donors today (30% donors, 4% total giving) They are already over the international hurdle, and those barriers are hard to overcome

4. For investors, focus on the 35% who already invest in the developing world People already over the international hurdle; just have to deal with impact investing hurdles Demonstrate higher headroom for future growth

5. Structure products and marketing to address top barriers to investing in developing countries Perceived riskiness and difficulty evaluating investments opportunities are items that can be addressed

25



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Agenda

26

1. Summary of Findings and Recommendations from Main Report p 4 62. Supporting Organizations Operating Outside the US p x y3. Appendix p 27 283. Appendix: Segments p 27 30


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International donors are much more likely to be in theHigh Impact segment

28

APPENDIX

% DONORS OVERALL US

POPULATION1

% DONORS DONATE

INTERNATIONALLY

% DONORS DONATE INTL

ENTREPRENEURSHIP2

Repayer 23% 18% 17%

Casual Giver 18% 18% 12%

High Impact 16% 26% 35%

Faith Based 16% 18% 18%

See the Difference 14% 10% 5%

Personal Ties 13% 11% 13%

1. Refers to the population we tested: US households with over $80,000 in annual household income. They comprise the wealthiest 30% of US householdsand account for 75% of individual donations to charity each year. 2 Refers to the people who donated internationally AND said they supportedentrepreneurship, economic development, or microfinance with those international donations


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There are six segments of impact investors

29

APPENDIX

Skeptic

I keep my charitablegiving and financial

investments separate.Im not at all interested

Hassle Free

If I dont have to looktoo hard and its a

pretty liquid investment,Im willing to try

Quality Organization

Show me a strongbusiness model and a

good track record, and

Ill invest

PersonallyRecommended

A business schoolclassmate is a social

entrepreneur. Imhappy to invest in his

venture

Socially Focused

This is a great way tosupport the causes that

are important to me

Safety First

I want to know Ill getmy money back andmaybe some upside.

The social benefits aresecondary


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Those that invest in developing countries are morelikely to be in the Socially Focused segment and less

likely to be Skeptics

30

% INVESTORS OVERALL US

POPULATION1

% INVESTORS INVEST IN DEV

COUNTRIES

% INVESTORS INVEST IN DEVCOUNTRIES +

ENTREPRENEURSHIP2

Safety First 29% 23% 23%

Socially Focused 27% 32% 39%

Quality Organization 19% 23% 23%

Hassle Free 6% 8% 7%

Personally Rec. 5% 5% 5%

Skeptic 13% 9% 4%

APPENDIX

1. Refers to the population we tested: US households with over $80,000 in annual household income. They comprise the wealthiest 30% of US householdsand account for 75% of individual donations to charity each year. 2 Refers to the people who invested in developing countries AND said they supportedentrepreneurship, economic development, or microfinance with those investments

Documents

Money for Good- International Giving Report