Fundraising and Institutional Advancement

Theory, Practice, and New Paradigms

Noah D. Drezner, Frances Huehls

• Publisher: Routledge
• Year: 2014
• Print ISBN:
  9780415517348
• eBook ISBN:
  9781136341793
• Topic: Business
• Subtopic: Education General
• Index: Business

In this timely textbook, authors Drezner and Huehls take the interdisciplinary, complex nature of the study of philanthropy and fundraising and apply it to the field of higher education. Covering issues of increasing importance to institutions—including donor cultivation, growth of fundraising at community colleges and minority institutions, engagement of young alumni, volunteerism, and the competing roles of stakeholders—this book helps readers apply theory to the practice of advancement in post-secondary education.

Special Features:

• Coverage of historical and theoretical underpinnings and insights from related literature and research.
• Discussion of new donor populations including women, communities of color, the LGBTQ population, students, and young alumni.
• On-the-ground case studies bring theories into focus by creating a bridge to experience and action.
• Practical implications for the design of fundraising campaigns and strategies.
• Guiding questions that encourage students to think beyond the current literature and practice.

This textbook bridges research, theory, and practice to help higher education administrators and institutions effectively negotiate the fundraising terrain and advance their institution.

1
Fundraising

Theories of Motivation for Giving

Advancement offices at colleges and universities are tasked with motivating alumni and friends of the institution to give voluntary support. The questions of why donors give freely and how to encourage them to make annual and major financial contributions are the basis of building good fundraising strategy. What motivates alumni and other donors to make financial contributions to their alma mater has been a topic of a lot of research stemming from multiple disciplinary perspectives. In this chapter we explore the literature that grounds the study of philanthropy and philanthropic behavior in theory.

We present the theoretical frameworks that guide most of the research on philanthropy and fundraising. Scholars from the disciplines of economics, psychology, and sociology have all contributed to our understanding of philanthropic motivations. In this chapter we explore different perspectives of the public- and private-good models and the psychological and sociological paradigms that scholars have put forward to explain why people give.

As we begin this literature review, it is important to note that most of the theories that currently exist to explain philanthropic motivations were created using research that almost exclusively looked at the giving of wealthy White men. Therefore, most of the literature that is reviewed in this chapter does not take into account the diverse cultural approaches enacted in communities of color and often among women. Where possible, we have included theoretical approaches that engage populations other than wealthy White men.

Motivations

Myriad reasons exist for people giving of themselves and their wealth through volunteerism and philanthropy. There is a debate if there is such a thing as true altruism. Most scholars find that philanthropic gifts and prosocial behaviors are motivated by a blend of altruism and self-interested motives, or impure altruism. Forms of impure altruism vary, with donors thinking of themselves and their self-serving interests obviously varying. Some gifts are given out of a motivation to receive recognition, whether it is for access to networking opportunities, to receive tax deductions, or to see their name etched into building or on an endowed professorship. In its extreme forms, these self-interested types of giving are forms of egoism.

Mutual benefit is a more nuanced motivation for giving. Within a philanthropic and volunteerism context, mutual benefit is when the donor or volunteer receives either some level of intrinsic or extrinsic gain from their action to assist others, while the recipient of the donation of time or wealth benefits as well. Even donors whose giving is considered highly altruistic and recipient-oriented—for example, the 2009 anonymous donor who gave $70 million to 12 institutions led by female presidents with the caveat of total anonymity, not just to the public, as is typical for anonymous gifts, but to the entire institution, including the president—likely still derive some personal benefit in the form of a sense of self-worth or, as Andreoni (1989) called it, a “warm glow.” There are many forms of benefit that donors receive in recognition of their financial contributions, including a listing in the annual report, naming of an endowed scholarship, entrance to an exclusive event, a small thank-you gift, or the tax deduction.

Within the context of volunteerism, Clary and Snyder (1990) found, like with financial giving, that volunteers are motivated by a combination of altruism and personal benefit. The personal benefit that volunteers often receive is a form of personal growth— for example, joining a group of colleagues or aspirational peers, learning or enhancing a skill, or even assuaging some form of guilt. As with monetary gifts, the level of egoism and altruistic intentions vary among individuals and situations.

Public-Good/Pure Altruism Model

One of the most frequently given reasons explaining why a person engages in different forms of prosocial behavior is out of a want to help others (Piliavin & Charng, 1990). This is the concept of altruism. Roberts (1984), using an economic lens, defines altruism as “the case where the level of consumption of one individual enters the utility function of the other” (p. 137). In other words, altruism exists when the donor or volunteer disregards his or her own self-interest in order to help others. This idea of selflessness has been studied widely in many academic disciplines including economics (Bergstrom, Blume, & Varian, 1986; Ribar & Wilhelm, 2002; Roberts, 1984; Sugden, 1982; Warr, 1982, 1983), sociology (Piliavin & Charng, 1990; Simmons, 1991; Wilson, 1975), and social psychology (Berger & Smith, 1997; Ling et al., 2005; Weyant & Smith, 1987).

Many economists argue that philanthropic giving lies within the public-good model. The economic principle of public good assumes that a need, or good, that is consumed by an individual does not reduce the good for others. In other words, a public good does not lie within a zero-sum game. Economists argue that a philanthropic donor gives of him or herself out of an altruistic concern to maximize the public good among others.

The concept of public good and pure altruism only allows for giving to offset a direct need rather than supplement a need. In other words, an increase in one person’s (or the government’s) contribution results in a decrease of other people’s (or the government’s) contributions (Sugden, 1982; Vesterlund, 2004). The economic concept of crowding out, in its simplest form, explains that the reduction of private investment in a public good occurs because of an increase in government spending on that good. Using this concept, Roberts (1984) and Warr (1982) found that, theoretically, government contributions to nongovernmental organizations (NGOs) and other nonprofits supporting public goods would “crowd out” private contributions dollar for dollar. Neil Levy (2006), in his essay on philanthropic giving in Australia, contends that philanthropy has the ability to crowd out the government’s responsibility to its citizens.

Private-Good Model

Identification Model

Many studies on the motivations of donors have found that there is an aspect of the donor’s ‘self’ in the decision to engage in the philanthropic behavior (Aaker & Akutsu, 2009; Drezner, 2013a; Jackson, Bachmeier, Wood, & Craft, 1995; Martin, 1994; Oyserman & Destin, 2010; Schervish, 1993, 1995, 2003; Schervish & Havens, 1997). Schervish and Havens (1997) find that many donors see themselves in “the needs and aspirations of others” (p. 236). Jackson et al. (1995) find many voluntary gifts are made out of “the sense of being connected with another or categorizing another as a member of one’s own group” (p. 74); they refer to this as “we-ness.” In other words, when donors identify with a cause, this identification can trigger their motivation to give. This “we-ness” can take many forms, including kinship within groups of shared social identity (race, religion, gender, sexuality) or other shared identities. For example, within higher education, this shared identity can be in the form of former scholarship recipients. According to the identification model, an alumna who received a scholarship might decide to give a gifttoward a scholarship to a student at her alma mater, while recognizing that she might not be as successful as she is, had not someone done the same for her (Monks, 2003). According to Martin (1994) there is mutual benefit to prosocial behavior, as “philanthropy unites individuals in caring relationships that enrich giver and receiver alike” (p. 1).

The identification model is based on Becker’s (1974, 1976) rational utilitarianism theory. Becker’s theory holds that pure altruism does not exist, arguing that while many who give of themselves have a desire to improve an aspect of society, donors are also motivated by forms of peer pressure, or extrinsic motivations “to avoid the scorn of others or to receive social acclaim” (1974, p. 1083). Schervish and Havens (1997) believe that Becker is pointing to a level of ‘selfless’ that is found within altruism. They note that this motivation is actually “grounded in a form of mutual self-interest” or, as Becker describes it, “multi-person altruism” (p. 237).

Schervish and Havens (1997) argue that the identification model encompasses five theoretical interrelated clusters:

• (1) models and experiences;
• (2) communities of participation;
• (3) frameworks of consciousness;
• (4) direct requests; and
• (5) discretionary resources.

According to their model, a donor’s experiences lead to a personal moral ideology. This moral ideology then affects the donor’s participation in an organization based on his or her belief in the group’s mission and the fact that the solicitation for support occurs within communities of participation. Finally, the amount that a donor gives is subjective and connected to disposable income.

Schervish and Havens (1997) used the 1992 National Survey of Giving and Volunteering (Gallup, 1992) through the lens of identification theory. Interestingly, they found that giving behaviors were more closely related to the donor’s current communities of participation than his or her prior experiences. Yet, Jackson et al. (1995) found that religious participation increased philanthropic behaviors toward secular organizations. Jackson and colleagues’ finding was more significant among those who defined themselves as actively involved in the church (p. 74). The influence of religion is not surprising, as charity and philanthropy are the cornerstones of all of the world’s religions (Gasman, Drezner, Epstein, Freeman, & Avery, 2011).

Scholars have regularly found the concept of community to be an important motivation for giving. Martin (1994) defines community as “any group of people joined by shared caring, both reciprocal caring in which they care about the well-being of members of the group and of caring for the same activities, goals, or ideals” (p. 26). Within his definition of community is the idea of reciprocal caring relationships. Within a philanthropic context, this definition of community allows for a donor to have some reciprocal benefit, even when giving anonymously or when giving to someone the donor might not know.

Sugden (1984) refers to this as reciprocity theory. Within a higher education context, this concept of a reciprocal benefit is often espoused. One example is annual fund solicitations; often universities remind alumni, especially young alumni, that part of the U.S. News & World Report rankings is tied to alumni participation in giving. Therefore, development offices argue, by giving even small amounts or “participation gifts” to their alma mater, alumni might help increase the university’s ranking and thereby the value of their degrees.

Many economists have considered the motivation for giving beyond the position of the public goods theorists who emphasize altruism. These economists argue that some donors give for private-good benefits (Andreoni, 1989, 1990, 1998; Cornes & Sandler, 1984; Palfrey & Prisbrey, 1996, 1997; Steinberg, 1987; Sugden, 1984). As mentioned earlier, Andreoni (1989) argues that philanthropic giving and volunteerism often provides the donor or volunteer with a “warm glow” (p. 1448). In economic terms, that warm-effect theory is an additional personal utility that a donor receives from engaging in prosocial behavior.

Andreoni (1988, 1989, 1990, 1998) refers to this as impure altruism. Andreoni’s studies disagree with Roberts’s (1984) and Warr’s (1982) findings. He found that government’s crowding-out effect is incomplete and that those who give to the public good do so for two reasons, one to increase the public good and the other to receive some aspect of private good from their gift(Andreoni, 1998).

Impact Philanthropy Model

Understanding both public- and private-good motivations for philanthropic behavior, Duncan (2004) suggested that some donors have an extreme desire to “make a difference” (p. 2159) with their philanthropy. Duncan refers to these donors as “impact philanthropists.” Others have called this type of philanthropy “venture philanthropy” (Boverini, 2006). This recent philanthropic movement is associated with donors providing not only the means but also the expertise, typically in the area of organizational capacity building (Boverini, 2006). Similar to those who might give in order to create change, some donate to repair what they view as injustice (Drezner & Garvey, forthcoming).

Social Psychological Perspectives

Relationship Marketing

Relationships are the key to fundraising. Therefore, relationship marketing and social exchange theory are often noted as conceptual foundations to understanding fund-raising and philanthropic giving. The relationship fundraising model in development is derived from marketing theory (Burnett & International Fund Raising Group, 1992; Burnett, 2002; Kelly, 1998). Relationship marketing, defined as “establishing, developing, and maintaining successful relational exchanges,” (Morgan & Hunt, 1994, p. 20) is one of the most prevalent models for engagement and fundraising. In other words, in the context of higher education, relationship marketing is the idea of establishing long-term relationships with alumni and friends in order to engage them and maintain their loyalty, involvement, and donations (Gamble, Stone, Woodcock, & Foss, 1999; Kotler, 1997; McKenna, 1991). Relationship marketing within the corporate world is predicated on the benefit of customer retention and a customer’s lifetime value to a company (Buttle, 1996; Sargeant & McKenzie, 1998). The idea of customer retention—or within a nonprofit context, retaining donors—is easily combined with the idea of continuity theory, borrowed originally from the medical world, which states that repeated actions are more likely to be continued and sustained (Atchley, 1989). Relationship marketing and continuity theory suggest, and have shown, that those who have established giving relationships are likely to give repeatedly (Lindahl & Winship, 1992; Okunade & Justice, 1991; Piliavin & Charng, 1990).

Relationship building between the institution and its current and prospective donors is one of the most important aspects of successful engagement and solicitation of the largest, or leadership, gifts. In the past, fundraising offices relied on transaction-based marketing rather than on sustained relationships. Transaction-based marketing within fundraising means a series of one-time transactions, or each year, donors were asked to give and then not engaged until the next ‘ask.’ Relationship marketing theory changes fundraising strategy from a series of one-time transactions to a focus on donor lifetime value and continued engagement (Sargeant & McKenzie, 1998).

Social Exchange Theory

Social exchange theory is another popular theory to explain philanthropic giving. Similar to the concept of mutual benefit, social exchange theory is based on the belief that “voluntary actions of individuals … are motivated by the returns they are expected to bring and typically do in fact bring from others,” such as social recognition (Blau, 1992, p. 91). A number of scholars apply social exchange theory to philanthropic and volunteer motivations (Cook & Lasher, 1996; Gächter, Fehr, & Kment, 1996; Hollander, 1990; Kelly, 1991). Hollander (1990) and Gächter, Fehr, and Kment (1996) investigated the effects of social approval on voluntary actions. Gächter et al. (1996) used a cont...

Table of contents

• Cover
• Title
• Copyright
• CONTENTS
• Series Introduction
• Acknowledgements
• Preface
• Chapter 1 Fundraising: Theories of Motivation for Giving
• Chapter 2 Grounding Institutional Marketing in Theory
• Chapter 3 Boards of Trustees and Philanthropy
• Chapter 4 Leadership for Philanthropy
• Chapter 5 Youth and Student Volunteerism and Philanthropy
• Chapter 6 Social Identity and Philanthropy
• Chapter 7 Conclusion: A Call to Advance the Field of Advancement Research
• Appendix A Philanthropic Research Resources
• Appendix B Institutional Advancement Related Dissertations, 1993–2013
• Bibliography
• Index