Generosity on Hold: Exploring Donation Roadblocks

It’s the time of year to be charitable but for many of us, our holiday to-do list is longer than Santa’s naughty list. However, being busy isn’t the only reason we might put a hold on giving to charities on this “Giving Tuesday”—a global day of charity and generosity.

Many of us are facing donation whiplash from a year of political requests and a great need for humanitarian aid. In fact, Giving USA’s recent report found that although 67% of giving in the US is from individuals in 2023, there had been a 2.4% drop in personal donations from the previous year. Gradient surveyed a representative sample of the US population to understand the barriers to charitable giving for the average American this year.

Though a character like Buddy the Elf has a pure enthusiasm for giving, he doesn’t necessarily understand the roadblocks to a giving spirit that everyday people face. People may have the best intentions, but there are many reasons they might withhold donations. Gradient consulted with colleagues in donor relations at two high-profile charities to identify common blockers for potential donors and used a MaxDiff approach to explore the relative impact of 13 common impediments to making charitable contributions.

The most significant barrier for Americans is having a limited budget. Giving might be in the spirit of the holidays, but for many, charity is still on layaway. Charities also must provide clear information on how donations are being spent. Americans want to know what they give actually goes to the cause. Without this, donors may look elsewhere. Charities must moderate leadership pay and minimize administrative costs to earn donor's trust.

Donors might also be dissuaded from giving to a charity if there is negative publicity about a scandal or controversy. Avoiding this is important for any organization, but if it happens, its PR team should be proactive and remember transparency.

All of this speaks to how donors perceive organizations that are effective at serving their mission. If donors have reason to doubt a charity is successful, they will withhold their dollars.

Most donors are motivated by a sense of personal pride—not because they care about recognition or tax write-offs—but because they believe in the cause. Giving in and of itself is a reward, like when the Grinch’s heart grew three sizes in Whoville that day.

Much like the ghosts of Christmas Past, Present and Future, who gave spectral insight to Scrooge to help him prioritize generosity and goodwill, this approach helps organizations understand what truly matters to their audiences. Are you curious what is getting in the way of your audience? We’d love to talk. No ghostly visitations required!

From Tight Wallets to Open Hearts: Mapping the Giving Spectrum

Some wallets look like Ebenzer Scrooge’s and others like Bob Cratchit’s. Budget may be the biggest barrier for Americans overall, but not for everyone. Gradient used a Latent Class analysis to reveal the different types of donor segments that charities will be courting this Giving Tuesday. Like the eight nights of Hannukah, our analysis uncovered eight groups with different attitudes toward donating. 

First, segments are defined by the extent to which a limited budget is a concern or not. When it comes to giving, some are Kris Kringles, and others are Kevin McCallisters—just trying to protect their homes and keep the lights on.

Of those where limited budget is the top concern (48%), we uncovered four unique segments:

• Humble Helpers (9%): Budget is the dominant barrier. They donate small, one-off amounts, when they’re able, to charities that share their values.

• Priority Pretenders (21%): Prioritizing other causes is their major concern after budget, but that might be self-delusion. Many never donate, but those that do have low value, frequency, and intent.

• Salary Scrutinizers (10%): Their main concern after budget limitation is leadership pay. They tend to make small-dollar donations spontaneously, taking pride in helping an organization reach its goals, and are motivated by a sense of duty.

• Alignment Allies (8%): They reject donating to causes that don’t align with their values. They have the highest intent and highest value among the budget-conscious groups, with similar motivations to Salary Scrutinizers.

How to Speak to Budget-Conscious Donors: You don’t need a four-foot-tall leg lamp to see that for some, giving is a heart’s reward, even when it’s a stretch. When spreading goodwill like George Bailey, money becomes just a detail. Speak simply to your organization’s mission and values, emphasizing how even small contributions go to the cause and add up to a big difference.

Among donors where budget is not a concern (29%), we find three additional segments:

• Confidential Contributors (11%): Their primary worry is about protecting their personal information. They are high-intent, low-frequency, moderate-value donors. Personal fulfillment motivates most, but a quarter are seeking tax breaks.

• Accountability Altruists (11%): They have several blockers, all centering around a charity’s accountability and fiscal responsibility. They are higher-value donors who give out of a sense of duty and belief in the mission.

• Reputation Reliants (7%): Their main barriers are bad press and ineffectiveness. They are higher-value donors with the highest intent and frequency of giving, donating to causes in which they have a strong belief.

How to Speak To Higher-Value Donors: Santa doesn’t worry about budgeting his giving—he just checks the list twice and makes sure everyone’s got something to smile about. Speak to all aspects of financial responsibility, mission effectiveness, and privacy protection while avoiding controversy. Emphasize personal fulfillment and a sense of duty.

The last group is only moderately concerned about budget, caring more about other issues:

• Balanced Benefactors (23%): They are dissuaded by irrelevant causes, lack of spending info or clear communication, perceived ineffectiveness, over-solicitation, and not having their giving recognized. They donate with average size, frequency, and intent, with about half making recurring donations.

How to Speak to Balanced Benefactors: These folks are a bit like Clark Griswold, trying to make the holidays perfect down to the last detail—just make sure not to deny them their bonus. For these middle-value donors, provide clear communication about the mission and how financial management leads to big-picture impact. Give recognition for contributions, but don’t solicit them too often.

By understanding these unique donor profiles, charitable organizations can overcome the barriers that keep people from donating, working to maximize giving to help fund their missions.

How Gradient Explored Barriers to Giving

If you want to see into Santa’s workshop, let Gradient show you how the elves make the toys. We have nothing to hide in how we uncovered these insights about barriers to charitable giving.

First, we used a best-worst choice exercise called Maximum Difference Scaling (MaxDiff) to determine the relative strength of 13 barriers in preventing donations. Among our nationally representative sample of Americans, we presented each respondent a series of tasks, presenting four barriers each time. Since there are so many possible combinations of 13 barriers, no one respondent could see everything, so we balanced many possible combinations across the sample.

Using advanced analytical methods, we build a model of how each individual prioritizes the barriers, and from that, we can understand the whole population, showing the ranking of barriers from biggest to smallest.

Next, to look at what unique groups exist within the overall sample, Gradient used a Latent Class analysis which identifies subgroups with similar patterns of barriers. We evaluated several candidate outcomes of the analysis, arriving at the one we present here because it balanced mathematical performance and coherence in telling an insightful story. We bring these segments to life by profiling how each group is different in their attitudes and behavior.

Reach out today to see how Gradient can help your organization apply these techniques to understand the uniqueness and nuance within your audience.

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