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The Future of Giving: Are you ready for the millennials?

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To better understand the challenges
and opportunities facing charities
we surveyed over 6,000 Americans
and Canadians, including over
1,500 millennials. We’re sharing
some of what we learned so
that your organization might be
better equipped to survive and
thrive in the future of giving.

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The Future of Giving: Are you ready for the millennials?

  1. 1. ARE YOU READY FOR THE MILLENNIALS? FUTURE THE OF GIVING I want a personal connection to those I'm helping.
  2. 2. | marumatchbox.com In the increasingly competitive and complex world of charity today only one thing is certain: the future of giving is with millennials. And they do things differently, which means charities will either adapt or fade away. Yes, the boomers are about to transfer the largest amount of wealth ever, but that play is largely cast. The winners and losers in that transfer will largely be determined by the brand perceptions and tactics of today. The strategic challenge is to think about the long term future that, inevitably, will be shaped by the millennials. There is a great opportunity with millennials to build relationships and create new perceptions. But be aware that millennials are not passive, they are changing things to the way that works for them. Witness the revolutions in the music industry (iTunes, Pandora, and Spotify) and the television industry (Netflix, Crave, and Amazon Prime). We will witness the same kind of disruption to the status quo in the charitable sector. The question is: are you ready? To better understand the challenges and opportunities facing charities we surveyed over 6,000 Americans and Canadians, including over 1,500 millennials. We’re sharing some of what we learned so that your organization might be better equipped to survive and thrive in the future of giving. We live in a time of unprecedented change. The transformations going on today are accelerating and interacting in ways that make it impossible to predict what is coming next. But some things are certain. The sun rises and sets. The seasons come and go. Generations age and pass away, and new ones arise from them. 2
  3. 3. | marumatchbox.com Millennials are surpassing baby boomers as the nation’s largest living adult generation, according to population projections from the U.S. Census Bureau. And in 2016 they became the largest percentage of the workforce. They are projected to spend $1.4 trillion dollars in 2020, and that will only increase as their salaries grow and they pay down significant student debt. On average they are saving $480 dollars a month, which is more than what they spend on eating out and coffee. Right now, they are relatively small potatoes to charities. They don’t account for a large proportion of the dollars donated, but that will change with time, as lifecycle effects have their inevitable impact. Building relationships with millennials is like planting a vineyard. The vines you plant today won’t give you wine tomorrow, but the harvest will eventually come and the wine will appreciate in value over time. The relationships that are being forged today will become increasingly important because the donor base is shrinking, while—at the same time—the money given by each donor is increasing. Research by the Blackbaud Institute for Philanthropic Impact confirms that the percentage of self-reported donors is decreasing, including among millennials. That means the lifetime value of a millennial donor will be high, while their numbers will be few. The stakes are significant when it comes to connecting with potential millennial donors. Your communication must resonate with them. MILLENNIALS ARE MANY $1.4 trillion $480 (projected spend by millennials in 2020) (average monthly millennial savings) Millennials (largest percentage of the workforce as of 2016) 3
  4. 4. | marumatchbox.com Millennials have more of a global civic sense of duty to care than the older generations, who are more jaded and skeptical. They are significantly more likely to agree that “I have a responsibility to help others around the world.” They also expect a lot of themselves. They are notably less likely to agree “I already give enough and don’t need to give more.” And they are more likely to say that “generous” is a good description of themselves. So when millennials hit peak earning power (and start inheriting from boomers) expect to see them take their charity seriously. Millennials’ big hearts are not bound by borders either. They are significantly less likely to agree “We must solve problems in our own country first before helping those around the world.” While millennials may not have big dollars to spend right now, they do yearn to make a difference. There are opportunities to diversify your base by building life long connections with them through volunteering, crowdfunding and social fundraising. MILLENNIALS CARE “I tend to give spontaneously when a charity tugs at my heart” is something that millennials are much more likely to agree with, compared to the older generations. This shows up in them being more likely than others to donate at the cash register and less likely to donate in a scheduled or planned manner. This spontaneous approach may be strategic—responding to needs as they become aware of them. They are more likely than older generations to agree “I like to change which organizations I support over time depending on what I feel is the most needed.” This spontaneity and willingness to change is challenging for charities—especially those looking for predictable monthly donors. It increases the degree of difficulty and decreases certainty, but expect that to become the new normal. MILLENNIALS ARE SPONTANEOUS AND UNPREDICTABLE I tend to give spontaneously when a charity tugs at my heart 4
  5. 5. | marumatchbox.com There is an important body of academic research on how emotional connections move people to give. People have an emotional connection if they believe the charity is, on their behalf, having a positive impact on people they want to help. One of the most powerful findings of this stream of research is that people are more likely to build an emotional connection if they feel they are making a difference for an individual. People can relate to another person. But they lose that sense of connection when presented with larger numbers of people, or statistics about a problem. Potential donors tend to walk away if marketing messages leave them with the feeling that their donation is a tiny contribution to an enormous problem. The sad death of three-year-old Syrian refugee Alan Kurdi in 2015 is an example of how this works. Psychologist Paul Slovic and colleagues studied how the iconic photo of the little boy’s body lying face-down on a Turkish beach impacted donating. That image was viewed by more than 20 million people on social media alone. The death toll in the Syrian crisis started even before Alan was born, and a conservative estimate put the toll at a total of 250,000 people killed by the time of his death. In Sweden, they had been taking in about 40,000 Syrian refugees a month, just before the photo appeared. The Swedish Red Cross started a campaign to support the refugees roughly a month before the photo of Alan was published and donations were modest. The photo of Alan changed everything. The researchers found “The mean number of daily donations during the week after publication of the photo was more than 100-fold greater compared with the week before”. They concluded “these data illustrate the iconic victim effect: MILLENNIALS WANT TO CONNECT 1x 100x The photograph of a single identified individual captured the attention of people and moved them to take interest and provide aid in ways that were not motivated by statistics of hundreds of thousands of deaths. 5
  6. 6. | marumatchbox.com The importance of this sense of connection is even greater amongst millennials. They are much more likely to agree “I want a personal connection to those I’m helping.” It is critically important that charities not get lost in the numbers when talking about their impact to millennials. What millennials want is to experience the effects of their giving on a very personal level. In this ad from Sick Kids—part of an ambitious and bold campaign called Vs—the personal connection comes when kids start to fall and are scooped up and carried on. A strong sense of empathy is evoked and there is a feeling that you too are helping uplift the fallen children. I want a personal connection to those I’m helping. 6
  7. 7. | marumatchbox.com We asked Canadians and Americans to rank their top three things they wanted to hear about from a charity. Millennials’ priority was in keeping with their desire to make a personal connection. The number one thing they want to hear from a charity is “Impact - what is the change that occurred as a result of my donation?” The organization’s goals was second and the less personal “how does the organization’s work make a difference?” was third. This desire to connect and make a difference has huge implications for messaging and marketing in the future of giving. Millennials are looking to be the change agents. Charities need to understand how to enable them. How millennials connect with the world has big consequences for how you communicate those messages. • Goals - What is the organization trying to accomplish? • Success - What does a successful outcome look like? • Metrics - How is success measured? • Accomplishments - What did the organization accomplish so far? • Impact - What is the change that occurred as a result of my donation? • Motivation - Why does this cause matter? • Difference - How does the organization’s work make a difference? • Donor Communication - How will the organization communicate with me? “As a donor, the organization needs to tell me...” MILLENNIALS WANT TO HAVE AN IMPACT Impact - what is the change that occurred as a result of my donation? 7
  8. 8. | marumatchbox.com Mass media is foreign to millennials. Direct mail is something they dutifully recycle, not something they open. To them, newspapers, magazines and television networks are just websites with names that reflect their historical roots. The idea of not having content available on demand is foreign. They expect everything to be accessible and to be delivered to them, wherever they are. Their world is digital, social and mobile. As a digital generation, they are being exposed to thousands of messages, appeals, emails and banner ads. There is a real challenge for breaking through the noise of their daily digital lives. For many, life before the Internet is a distant memory, if it is a memory at all. I know an 18-year-old who wears a t-shirt that reads “I miss my pre- internet brain.” It’s ironic, because he has never known life without the internet. He doesn’t even recall the whine of dial-up modems. Millennials have long led the way in technology adoption, and are especially comfortable with smartphones. According to the Pew Research Center, a sizable number of millennials access the internet solely through their smartphones—they have no broadband connection at home. This means that a mobile- first strategy is essential. We find that, for many surveys we conduct, the majority of interviews with millennials are completed on smartphones. The same applies to millennials connecting to charities. REACHING MILLENNIALS MILLENNIALS ARE MOBILE If something is not mobile friendly it might as well not exist. 8
  9. 9. | marumatchbox.com The vast majority of millennials are active on social media, more so than any other generation, according to Pew. And they notably lead the way in the adoption of platforms like Instagram and Snapchat. This is a huge opportunity for charities to reach and connect with millennials. Millennials are particularly influential because they are not shy about charitable giving. They are much more likely to agree “I like sharing the donation experience with family/ friends.” Our research revealed that millennials are more likely to have done each of the following: They are more likely to do these things because social media is an important part of how they live their lives. A recent study found that while the average worker spends an hour of each workday on social media, millennials spend nearly double that: 1.8 hours a day on social media at work alone. And according to a study by the American Press Institute, for millennials, “social media is no longer simply social. It long ago stopped being just a way to stay in touch with friends. It has become a way of being connected to the world generally — to send messages, follow channels of interest, get news, share news, talk about it, be entertained, stay in touch, and to check in and see what’s new in the world.” For millennials a charity’s social media presence is critical. It can’t be an afterthought—it is the critical point of contact and is shaping millennials’ perceptions of what your organization is all about. Should you be investing more time and talent on your social media presence? Are you truly mobile friendly? If you’re serious about millennials, these are important questions. MILLENNIALS ARE SOCIAL Liked a post by a charity on social media; Recommended supporting a charity to a friend or family member; Shared a post with your network from a charity on social media; Followed a charity on social media. 9
  10. 10. | marumatchbox.com Millennials are the future of giving. By population, they are the largest generation and they are moving toward their peak earning years. They also stand to inherit a great deal as the boomers fade away. Their sense of duty to care and give is remarkable. They feel responsible and are compelled to help when confronted with hardship. For them, it’s personal. It’s about emotional connections and spontaneous reactions to a felt need. It’s not about sending off a cheque each month, in response to a direct mail campaign. It’s about discovering relatable needs on social media, giving, and then sharing that giving with family and friends. It’s about connecting. SO WHAT? WHAT’S NEXT? 10
  11. 11. | marumatchbox.com Imagine you wanted to get to know someone. Here’s one approach: ask the person questions for 30 minutes, go away and puzzle over the answers, and then never see that person again. Here’s another approach: You start up a conversation, hear what they say, and then reply. And then you keep talking, back and forth. Which strategy is most likely to help you get to know that person? That may seem like a silly question, but it underscores the reality that an agile and iterative approach to understanding millennials is far better than the typical one-off survey. An ongoing dialogue is more efficient and effective. It is more efficient because you end up only asking questions that are relevant. It is more effective because you learn as you go, adjusting as knowledge accumulates. Agile learning journeys are most effective when they are based in a community—a group of well- profiled people that you can return to on an ongoing basis. The community can be just a few thousand people and focused on millennial donors or potential donors with an interest in your space. Or it can be vast and representative of the general population, like our Springboard America and Maru Voice Canada communities. One important benefit is that you know a great deal about these people and can use that information to enrich your analysis and avoid asking unnecessary questions. Shawn Henry of Camorra Research in New Zealand was an early pioneer in community-based research. In Maru/Matchbox’s The Insight Revolution: Questioning Everything he said “The community approach has been a revelation, in terms of the relationship with the respondent. You can do quant; you can do online qualitative; you can invite them to focus groups. And the whole time you’re carrying around a cumulative knowledge of what they think, and who they are. That is a stark change from the traditional 80’s CATI research, where everything is anonymous.” It is also very different from interacting with unknown respondents who get routed to your survey from a sample exchange. GETTING TO KNOW MILLENNIALS 11
  12. 12. | marumatchbox.com In a community, you and the members are on a journey together. They know where your questions are coming from, and where they are going. Millennial respondents love the interactive dialogue because they see their voice is heard, and their input makes a difference. A learning journey for millennials might start with exploratory qualitative work with a digital ethnographic component. Understand how they live, work and play, and where your cause fits in their lives. Perhaps then connect with them to co-create new ways of helping that especially resonate with millennials’ interests. Test messaging to see what resonates. Get reaction to different ways and means of communicating those messages. Understand what kind of feedback and examples of impact keep them engaged. The possibilities are endless. But one of the most important things to understand is how connected they are to your organization. Insight communities are a vehicle for engagement and connection and a way to continuously show the impact they are making on a very personal level. They enable charities to address the very core of what millennials want and expect. Millennial respondents love the interactive dialogue because they see their voice is heard, and their input makes a difference. 12
  13. 13. | marumatchbox.com To learn more about how Maru/Matchbox can help your organization better understand and connect with millennials, contact us. ARE THEY CONNECTED? TO LEARN MORE, CONTACT: sales@marumatchbox.com About Maru/Matchbox Maru/Matchbox, has been pushing the boundaries of the customer market insights space for over a decade. We are a sector-focused consumer intelligence firm focused entirely on better client outcomes. Our expert teams are deeply invested in key sectors of the economy, delivering insights and analysis backed by superior quality data. We know that millennials are especially attuned to and triggered by emotional connections. That’s one reason we developed Connection Compass. Our innovative solution provides direction and a clear path forward, revealing the depth of people’s emotional connections to charities. Our Connection Compass research program has benchmarked 20,000 North American donors and provides charities with unparalleled access to the hearts and minds of your donors and prospects. Connection Compass is a game changer for predicting donation intent, by bringing the donors’ emotional connection into the equation. As part of our Connection Compass program, we have developed a proprietary method for you to reach more donors, understand what messages will work and connect with millennial donors in a way which builds loyalty. 13