Through our recent research into the emerging donor base in China we developed a three-step approach that NGOs can use to more deeply understand, anticipate and respond to donors’ needs, based on the donor’s lifecycle of interactions with the organization.
More than ever, NGOs need to demonstrate meaningful results. We believe a deep understanding of what Chinese donors care about and how they make decisions, when used as part of the system we describe, will significantly benefit both donors and NGOs.
1. Understand What Motivates Donors and their Investment Strategies
Donors give to create change. For new individual donors, this may involve responding to a natural disaster or a local appeal for aid. Their information needs are limited; they want to hear narratives.
As philanthropists get more experienced and sophisticated, they expect a broader and deeper impact at the level of root causes. They also seek more quantitative information about the results of their contributions.
Our model enables development teams to understand their donors based on distinct behavioral segments, and then anticipate the mix of interactions, narratives and numbers appreciated by donors in the same segment.
When we combined the segmentation model with the results of interviews with Chinese philanthropists, we found five distinct groups: Affluent Individuals, Chinese Companies, Early Stage Foundations, Mature Foundations, and Multinational Corporations.
These donors are understood in terms of their similar reasons for giving and similar investment strategies. This allows beneficiaries to engage with them more effectively, and make more efficient use of organizational knowledge and resources.
2. Anticipate Donor’s Needs as Your Relationship with Them Evolves
The information donors need to make decisions depends on the stage of their relationship with a beneficiary NGO. How a donor becomes aware of an NGO and what they first inquire about is different than what the same donor later seeks when reinvesting in the organization.
Since each donor segment has different motivations and investing strategies, each segment has differing information needs in each of four donor lifecycle phases: Gaining Awareness, Evaluate and Invest, Engage and Validate, Reassess and Reinvest. The interaction and information expectations of each donor segment can be anticipated as their relationship with an NGO evolves.
We found that firms in the Chinese Companies segment often evaluate donation opportunities based on their own business offerings and brand considerations. After donating money and products they seek to know how much exposure their gifts create.
Early Stage Foundations are different; they often visit the nonprofit as part of their evaluation process and focus on providing coaching, advice, and introductions in addition to funds. The foundation will continue to give if it feels the organization is becoming more efficient and having greater impact.
3. Leverage Metrics You Already Have; Add New Metrics With Care
NGOs measure and monitor their performance with varying degrees of sophistication. Some of their metrics may provide the data that donors need to finalize their investment decisions. Yet an NGO development team may be unaware that operations is collecting this information.
By inventorying the availability and flow of performance metrics, new and important metrics can also be identified and shared. When combined with a good understanding of donors’ information needs, especially regarding outcomes and impact, new metrics can be designed that meet the requirements of both the operations and the development teams.
For example, we looked at the performance metrics employed by two sister Chinese NGOs that work at multiple sites. We found that regularly aggregating certain specific results from all the sites provided a more comprehensive view for the operations teams and gave the development teams access to more of the data sought by different donor segments.
We believe this three-step approach (based on Design Thinking), with its universal frameworks and underlying tools, create practical and actionable ways for NGOs to be more efficient and effective.
Operations will know what numbers it must aggregate to satisfy the shared needs of management and donors, and what types of narratives it should be collecting. Development will know what is available for its use – and reuse – without having to pull information from an over-stretched operations team. Together, they can tell the stories (through narratives and numbers) that are most necessary to inform and enthuse donors in each segment.
Further information on this approach, and new insights about emerging philanthropy in China, please see our report: Catching the Rising Tide: Chinese Donor Strategies and Implications [PDF 8.2MB].
This research was conducted for Half the Sky Foundation and Chunhui Children’s Foundation, and supported by the Skoll Foundation.