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Build Philanthropy Into Customer Relationships

Charitable giving continues its surge to a record $200 billion for 2000. According to the American Association of Fundraising Counsel, Indianapolis, charitable contributions rose $15.98 billion in 1999 – the second-largest increase of the decade.

Despite the turbulence in the economy, this growth promises to continue with the intergenerational transference of wealth estimated between $41 trillion and $136 trillion over the next 50 years.

The burgeoning philanthropy industry holds a wide range of possibilities for profit-making companies that have the vision to incorporate philanthropy solutions into their customer acquisition and retention strategies while integrating cause marketing into their overall communications efforts. Philanthropy can be transformed into a powerful financial, marketing and customer relationship management tool for your company, no matter the industry.

Individuals made 75 percent of donations in 1999, according to Giving USA, a statistical almanac published by the AAFRC. About 50 million Americans reported giving time and money to social causes. Many individuals who want to contribute to a cause are also your customers.

A company that provides convenient and credible philanthropy solutions that dynamically connect customers to relevant causes will deepen and strengthen those customer relationships while driving revenue across multiple channels and expanding market reach.

Developing your philanthropy strategy. Discovering your customers’ giving preferences is a key component to developing a philanthropy strategy. Your company may target high-net-worth individuals, whose attitudes about giving differ from those of the overall population. Developing an understanding of their beliefs and attitudes about giving is crucial to reaching them.

According to New York-based HNW Digital’s recent Wealth Pulse Survey on Wealth and Giving, conducted by Harris Interactive, Rochester, NY, high-net-worth individuals believe strongly in giving back because they are inspired by the significance of a cause, not just because they feel a moral obligation. Other incentives include tax and estate laws; the wealth market is three times (34 percent) more likely to give than the total population (11 percent). The survey reports that the recent wealthy tend to give to children and youth services. Wealthy women are more likely to give to social causes, whereas wealthy men are more likely to give to arts and cultural organizations or political and advocacy organizations.

In the overall population, The Council of Economic Advisers’ report on “Philanthropy in the American Economy” determined that single women are much more likely to give than single men. African-Americans, after accounting for differences in income and net assets, are more likely to make charitable contributions than white Americans. The report states that minorities are underused resources with respect to philanthropic giving.

Once you have determined the types of causes your customers are interested in, you can start focusing on the nonprofit organizations that you would like to partner with. If your customer base is diverse, consider aligning with an umbrella organization that has established relationships with a variety of nonprofit organizations.

Incorporating e-philanthropy solutions. Embracing the Internet in your philanthropic strategy will enhance your ability to expand your client base by reaching out to a younger and more affluent audience. A significant finding in The Wealth Pulse Survey on Wealth and Giving is that 40 percent of the wealth market has contributed more than $500 over the Internet. The more recent wealthy are increasingly using the Internet for online financial management and e-tailing. In fact, 5 percent of the wealth market made donations online more than five times in the previous 12 months.

Although e-philanthropy is still in a nascent stage, it is growing as Internet users become more accustomed to online transactions. A recent study, “Socially Engaged Internet Users: Prospects for Online Philanthropy and Activism,” which was conducted by The Mellman Group for Craver, Mathews, Smith and Co., Arlington, VA, reports that 8 percent (or about 16 million adults) are willing to make a donation to a nonprofit over the Internet.

Overcoming obstacles There is a lack of confidence by the overall population on how their donations are being spent. A company Web site that can provide highly vetted research and financial assessments on nonprofit organizations will be perceived as a reliable resource to users. Going one step further, your company could provide financial reports on nonprofits according to the users’ preferences. This provides another mechanism of forming a personal interaction with the customer.

E-philanthropy appeals to donors. According to the online giving study conducted by The Mellman Group, the overall population views the Web as having a significant impact in educating the public and making nonprofits more accountable, due to the increased access to information. Donors are aware that the Web reduces overhead for nonprofit organizations, which provides a compelling reason for giving online. The convenience of making donations online combined with the flexibility and quick transaction capability, especially for year-end charitable contributions, adds to the appeal of online giving.

Moreover, companies that provide the additional tools requested by users surveyed will be further servicing their customers. You can include e-philanthropy solutions such as regular monthly donation functionality, easy cash fund and stock transfers, and specialized calculators for quick tabulations of tax deduction figures.

Affluent contributors who wish to set up donor-advised funds or other philanthropic programs as part of a complete financial plan will appreciate the ability to establish a giving portfolio fund. Even a simple history of online donations is a time-saving convenience that users appreciate.

By providing these features, companies such as financial institutions or insurance companies will gain a competitive advantage as customers’ need to use philanthropic contributions for tax reasons and effective estate planning grows. In focus group research, the general population has expressed the desire to budget its giving and perhaps set up cyclical donation plans.

Personalizing your Web site for customers and providing successful stories on the site including profiles of fellow contributors, how-tos, expert advice, a charitable event database, or a gifts and memorial fund are just a few examples of features that enhance your Web site and encourage users to visit regularly.

Givenation.com received an average donation of $125 in 2000 with some select one-time donations amounting up to $5,000, proving that there is an audience willing to give online.

Companies that develop their philanthropy strategies complemented by a comprehensive marketing campaign can forge a powerful relationship with their customers and establish themselves as leaders in the untapped area of e-philanthropy.

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