Unlocking Fort Philanthropy - How data can influence strategic philanthropy

 

November 20th, 2014 - Presentation at CKX (Community Knowledge Exchange) on how data is influencing individual and family philanthropy as well as the role that advisors and estate planners are having on the discussion.  

Good afternoon, thank you for your time today.  It’s exciting to be a part of this amazing panel of thought leaders in the area of charity sector data. Before I get into my introduction I want to acknowledge a couple members of my team who are here – Rama Gilaka, database architect and Jeanne Milne, director of marketing.

They say if you are going to build a company, you should do so in an area that you are passionate about and have knowledge.  My passion lies at the intersection of data and philanthropy.  My area of expertise is in non-profit management and strategic development, and my personal knowledge in technology, unfortunately, stems for several years of online dating.

SLIDE #2: Online dating looks at different pieces of information, attributes weights to that information and through a series of algorithms comes up with a connection between two individuals.  It is from this space that I began looking at how donors and charities connect.  What are the determining factors that make a donor choose one kid’s organization over another kid’s organization, when they are ostensibly, the same?  How effective is the donor investment into literacy, when there are 36 literacy agencies in one city?  Can we create portfolios of giving, similar to how we create mutual funds for investment growth?  Is there a way to shift policy by looking at the way funds are invested in a market?

These questions and many others led to the creation of Place2Give.  Using the principles of investor risk profiling with investment analysis and the concepts of online dating, finding the superficial as well as the more intrinsic value statements, could we create a way to capture, measure and analyze charities and donor relationships and the various ways that social issues were being addressed.

SLIDE #3: In the weeks leading up to this summit Lee Rose shared four key areas of interest expressed by attendees that are to be explored:

• How can we use research to make more informed decisions?
• How can we turn data into knowledge to drive change? 
• How can we use stories to demonstrate our impact?
• How do we know we’re making a difference, together?

The approach that I am taking to answer these questions are from the perspective of the individual donor, their financial advisors and their estate planners.

SLIDE #4: The mandate of Dexterity Ventures Inc. in partnership with Place2Give is to make charitable giving a part of every person’s banking experience, retain assets under management across generations and positively influence $1Billion in charitable transactions by 2015.

When I first started looking at these questions from a technology perspective, in 2008, the only information I had at my fingertips was CRA data, which doesn’t really tell you anything other than the cost of running a charity, how close to the line it operates and whether they are in compliance.

SLIDE #5: Today, there are several more sources of data and when you layer the information together you can start to see patterns.  Data is only valuable if you can ask questions of it and it can give you the answers to those questions.

SLIDE #6: So what are the right questions to ask?  Thanks to funding from the Canadian Federal Government through IRAP we spent several months mapping out the questions that individual donors, private and corporate foundations ask charities before they donate.  This research was conducted in response to some work that Anil Patel had shared at an Imagine Canada conference a few years ago, where he reported that charities are spending on average $250Million/year completing online grant applications.

What resulted was the Harmonized Grant Application Form.  A tool that autocompletes funding applications and shares this information across platforms to multiple funders.  The prototype is complete and we are now in conversations with some of the larger funders to pilot this technology.  I estimate that once adopted we can be saving the sector 20% of the costs associated with online grant applications.

SLIDE #7: We mapped out 248 commonly asked questions and when possible, found the answers in the public domain. We can now map these answers to the proposals that charities are seeking funding for. By benchmarking the answers to the donor profiling questions we can determine what type of donor an individual is and find suitable matches. 

Using academic research and information gleaned from personal experience, I sorted donors along a giving spectrum divided between three different profile types, Maverick, Steady and Informed.

Some of this information is shared privately with financial advisors in order to help them have more meaningful conversations with their clients about charitable giving and how best to integrate philanthropy with wealth management plans.  That which is part of the public domain is shared on the Place2Give.com website and used in aggregate form to develop new technologies.

SLIDE #9: Using open data to influence philanthropy is still relatively new and the only way it can be truly effective is if it overlaid with multiple different sources of information.  We analyzed 90,000 charities and the keywords they used to describe themselves and overlaid that with words that financial advisors are using when they talk with their clients about philanthropy and then we looked at where the dollars are going and what words are the most valuable as it relates to how donors react.  The keywords are pulled from the charity annual reports, CRA and IRS filings, news clips, hashtags and websites.  The donation values come from CRA filings as reported by the charities themselves.

Here’s what we learned - Language is a key factor.  We know that financial advisors that use our services grow their book of business by 6% year-over-year, simply by having the social capital conversation and offering philanthropy management services.  We also know that charities, on average, receive between 10 to 15% more dollars than what would have been contributed to them because we have worked with the donor and her advisor to map philanthropy into the entire wealth planning process, and not just at the end of the conversation.

This was validated by third party research. 

SLIDE #10: In an article published by Michael Rosen on his blog Donor-Centred Planned Gift Marketing – 3,000 people in the UK who were setting up their estate plan, were randomly placed into one of three groups when speaking with an estate advisor:

1. No reference to charity.
2. Would you like to leave any money to charity in your will?
3. Many of our customers like to leave money to charity in their will. Are there any causes you’re passionate about?

When the estate planner did not raise the subject of charitable giving, five percent of the clients initiated the inclusion of at least one charity. In the second group, which was asked about including a charity, 10.4 percent agreed to do so. However, members of the third group, which heard that others were including charities in their will, were even more likely to make a commitment. Now, here’s one of the key findings: Among those in the third group, 15.4 percent included at least one charity in their estate plan.

We know that people give to people.  We also know that peer-pressure plays an important role in influencing decisions.  The research presented by Michael Rosen goes on to say that:

"Among members of the first group who made a charitable plan, the average size was $5,610. Among those in the second group, the average gift size was $5,291. Among those in the third group, the average gift size was $11,333!"

By simply showing that others are involved “Many of our customers like to leave money to a charity in their will…” psychologically upped the value that resulted in a larger donation.

From my business’s perspective, the more digestible information we can provide donors and their advisors the more money will end up in the philanthropy market.  In fact, we have seen with the boutique wealth management firms, that when the conversation started with what the value of the tax problem was, that ended up being the focus of the value of the investment.  When the conversation shifted to “what causes are you passionate about” and we provided the with client with the information about what it costs to NOT solve those issues related to his passion, the amount that was put into the charity account was significantly higher, between 20 and 35% more.

Now we can get into the “juicy bits of the conversation.”

SLIDE 11: How do we align passions to drive responsible investment?

For this case, I started with an article published in the Vancouver Sun this summer about the number of charities based in Vancouver’s East Side and a report from CTV from last year that said that the Vancouver East Side postal codes had the highest poverty rates in all of Canada.  The query I posed our data was, how effective have the investments into poverty related charities been over the past couple of years?

SLIDE 12:There are 533 charities in the East Vancouver postal code region.  Of these organizations 154 focus on poverty related services and programs as their core mandate.  According to the BC Poverty Reduction Coalition, last year, the BC government spent $8-9Billion province wide on poverty related issues.  Looking at data within Place2Give (provided by the CRA and charities directly) the government spent $162Million directly to the 154 charities in East Vancouver.  Using this same data source, an additional $169Million came from private donors, nationally and internationally, yet poverty in this part of the city did not decrease. 

SLIDE #13: So what information do we need for donors to determine which of the organizations are best suited for funding?    Where are we seeing significant overlap in services? Is how we fund these charities the solution or should we be looking at a different model?  Can we look at a continuum of care that identifies the ideal point for an injection of capital into a collective impact solution?

It’s this type of data that helps the conversation around the BC poverty reduction initiative and more specifically how people can look at investing in projects.  At this point, I want to stress, this isn’t about a question of overhead and dollars spent on fundraising.  Rather, for this case, it is a simple look at how money is flowing in a marketplace.

SLIDE #15: Armed with this information, and the sources of supporting information, we can now create a “mutual fund of charities” that when combined together on a specific theme could actually show how the needle is being pushed on a specific issue. 

SLIDE #16: The information that we need is where charities and third party researchers come in.  In order for platforms like Place2Give to work effectively we need data and lots of it.  But we also need consistent information.  We know that charities spend a lot of hard resources filling in online forms.  We don’t want to add to this burden.  So, what we are advocating for is for organizations to invest in updating their own websites.  To put tags on their sites that are consistent with industry standards.  To post their annual reports and other supporting documentation and update that information as frequently as necessary.  If charities do this, and make their data accessible through appropriate tags, RSS feeds and, when appropriate API’s, then we can connect and pull your data directly from your websites automatically.  This in turn will allow us to share it out with our network.   Our harmonized grant application form does the work for you because we share the information to funders in a way that they have already articulated they want the info, the previously referenced 248 questions. 

Slide #17: I believe that data (little data, like what we have in our database) and big data, or the meta data like that which we are starting to collect on the white spaces between our sets is going to fundamentally disrupt the way that we finance the charitable sector.  So much so, that I believe in the next decade you are going to see:

• New polices that govern how charities are regulated
• The launch of a charitable stock exchange
• The ability for social change to be clearly monetized and financed
• The disruption of investment regulatory bodies
• The reshaping of traditional umbrella agencies and
• New policies around how companies can be structured

We are already seeing aspects of this through micro-finance platforms like Kiva, social enterprise funds like the Edmonton Community Foundation, social impact funds like Vancity and mobile investment platforms like Mobile Movement.

Slide #18: We are at a stage where data-driven technology is pushing new conversations and forcing new boundaries.  When Craig Kielburger can put a tracking number on a dollar that is donated through his platform and the donor can follow that dollar all the way to the school project in Sierra Leone; that is a data driven solution.  Or when we can profile how you give, provide that information to your financial advisor so that she can create the best wealth management strategy for you and the legacy that you want to build, that is data driven.  But most especially, we can look at the non-profit landscape and see and understand how a market will respond to investment capital, we can actual stop putting good money into the problem, and start investing in real solutions.

Slide #19: Thank you.