Coming of age

Exclusive: for the second year, Philanthropy Age’s landmark Arab Giving Survey has polled Arabs across the GCC to gauge how and why they give, and what would make them give more. From Riyadh, to Abu Dhabi, the results are in

Arabs in the GCC care about doing good and – increasingly – they care about how to do good. Philanthropy Age’s second annual Arab Giving Survey (AGS) reveals impact-led giving is exerting a greater pull on how philanthropy is conducted in the region, with donors increasingly seeking transparency in how funds are disbursed, and their effect.

Our benchmark poll of the giving behaviours of Arabs in the Gulf found a complex mix of motivators and deterrents for charitable donations. Despite economic headwinds, the impulse to give remains strong. But the channels through which money is given, and the causes supported, continue to evolve.

The AGS polled 1,008 Arab nationals in six GCC states, aged 18 and above; a sample consistent with that used in the 2015 survey. For the first time, the survey also quizzed an exclusive sample of 17 high-income Gulf residents, those with a net worth of $30m or more.

The findings are both a barometer for the giving patterns and priorities of Arab donors, and an unparalleled insight into what drives the GCC’s growing trend of big-ticket philanthropy. For nonprofits and fundraisers keen to move the needle on pressing global issues, the results offer a clear signal of how to engage with – and better encourage – donors across the region.

Walking the talk

This year’s AGS reveals a maturing donor market. Those who give increasingly want to know how their money will be used – and what impact it will have – before handing over their cash. More than 80 per cent said they choose a charity based in part on its effectiveness. The ability to track the impact of donations on beneficiaries was named the most influential factor in selecting a cause, up from fifth place last year. Nineteen per cent of donors said knowing their money was being used well would spur them to give more.

“The findings show strategic philanthropy is on the rise,” notes Leonard Stall, editor-in-chief, Philanthropy Age. “We’re seeing a sharper focus on results and increasing demand for transparency from donors. This, paired with the Gulf’s sizeable youth population – which favours an investment-orientated approach to philanthropy – is helping to bring intelligent giving into the mainstream.”

This trend may have spurred a change in habits. Putting money in a charity collection box fell from first to second place as a donation method. Instead, giving directly to an individual is now the most popular form of philanthropy for 51 per cent of those polled, a rise of 25 per cent on the previous year’s findings.

“The onus is on the industry to make sure they are creating systemic impact” There remains a gap between the goal of giving effectively, and the practice. The AGS found that 58 per cent of donors still give on impulse – a finding unchanged from the first survey. Spontaneous giving means 36 per cent of donors did not consider the cause at all when making their last donation.

This finding was reinforced in our poll of high-net-worth respondents. While wealthy donors give clear signals of supporting impact-led philanthropy, they are torn between wanting to solve an immediate need – by giving to an individual – and a desire to adopt a more planned, strategic approach.

Just six per cent of high-value philanthropists said they have a formal strategy to guide their giving. Donating to an individual in a personal capacity (59 per cent) was a more popular method than a charitable trust or foundation (41 per cent). Yet, half still believe the majority of their philanthropy spurs long-term impact.

Change needs to come first from foundations and charities, many of which are fixated on short-term programmes, says Clare Woodcraft-Scott, CEO of the Emirates Foundation. “The onus is very much on the industry itself to make sure they are looking at creating systemic impact,” she says. Open, honest debate between donors and NGOs on failures would go some way to achieving this, she adds. 

The tension between short- and long-term priorities should come as no surprise in the Middle East. On the one hand, vast humanitarian need is fuelled by conflicts roiling Syria, Iraq and Yemen, among others. On the other, the region faces deep-seated development challenges, including sky-high youth unemployment rates.

The causes to which respondents direct their money reflect these twin concerns. Charities tackling poverty alleviation or addressing the third world, shared first place with giving directly to an individual in need as most popular cause. Addressing poverty and refugees were top of the agenda for wealthy donors, while education-related causes also scored highly.

Happily, the Gulf’s generosity remains undimmed. Among everyday givers, the average value of their last gift to charity was $234, contributing to a typical annual pot of around $650. Among our sample of high-value donors, 76 per cent donated up to $500,000 to philanthropic causes in the year; 12 per cent gave between $1m and $2m. The evident spirit of charity among GCC donors is cause for cheer, as is an emerging desire to do the most good with each donation. The next step is matching action with aspiration.

The trust gap

One result came across loud and clear: donors want more openness from charitable organisations before opening their wallets.

Transparency in how a charity spends donations was the second most influential factor (26 per cent) for Gulf donors when choosing who to support, the AGS found.

“Donors need to ask very clear questions, not to make life hard for charities, but to help all of us reach our targets more effectively”It also has an impact on how much they give. Some 24 per cent said more clarity on how money is used by charities would prompt them to give more. A further 24 per cent said understanding the impact of their donation would encourage then to give more cash. Together, these findings overshadow 2015’s top finding, which named a higher disposable income as the strongest driver to increased donations.

More tellingly, 32 per cent said not knowing how the money would be spent was the main obstacle to donating – a 13 per cent increase on the previous year’s findings.

Openness is a concern for high-net-worth donors, too. Easy access to data on a charity’s spending and the personal relevance of the cause weighed equally on their choice of charity (59 per cent). One high-net-worth respondent requests regular reports as a condition for gifts of more than $50,000, but admits “these are not always received”.

Trust and transparency go hand in hand. The 2016 survey discovered a small, but significant, trust deficit among some donors. Fifteen per cent of everyday givers had very little confidence in charitable organisations, with a further 34 per cent sitting on the fence.

The issue divided genders: more men (54 per cent) than women (47 per cent) trust charities. With budgets stretched to cope with spiralling aid costs, NGOs need to act fast to plug the trust gap – and raise more cash.

How to reach them

For nonprofits, knowing how to reach donors is crucial. For a second year running, everyday givers bank primarily on family, friends and colleagues for information about charity, the AGS found, with street fundraising campaigns a distant second. But the biggest fillip was for social media campaigns, particularly in Saudi Arabia and Qatar, which are now the fourth most popular source for philanthropic information, a six per cent bump on the previous year.

Traditional methods – adverts placed on TV, radio and in newspapers and magazines – saw a significant decline of 10 per cent.

For high-net-worth donors, personalised communication from charities they know is the dominant source of philanthropic information (82 per cent). And it is bad news for wealth advisors, who got zero responses.

But when it comes to inspiration, donors’ nearest and dearest wield the most influence: both high-value donors (65 per cent) and everyday givers (37 per cent) say their philanthropy is primarily inspired by friends and family.

Charities looking to to spur greater giving should also take note of the power of match funding. In a new finding, 78 per cent of respondents said they would give more if they knew their donation was being matched. This suggests an opportunity for organisations with commercial partners to drive a greater level of funding from their donor bases.

With generosity still high among Arab donors, charitable organisations need to find a way to get personal.

Measuring up

Making an impact matters to high-value donors. The effectiveness of charities emerged as the single biggest influence among high-end donors when choosing a cause to support, with 94 per cent reporting they would stop contributing to a charity that performed poorly.

But ‘impact’ means different things to different donors. Wealthy donors responded in myriad ways to the question of how they measure success. Some favour personal fulfilment, with one respondent saying “seeing people happy and having a better life” was their measure of impact. On the other end of the spectrum, one cited “intelligent metrics” to gauge the effects of their philanthropy.  “Success is very narrowly defined to mean the effective disruption of a problem and ability for the funding to eventually no longer be necessary,” the donor wrote.

Differing definitions explain the low levels of monitoring in our sample. Just 12 per cent of high-value donors measure the results of their giving and only 24 per cent cite regular progress reports from charities as an influential factor in their donations.

Donors’ inconsistency on impact filters through to how they give, too. Just 6 per cent of those polled said they have a strategy in place to guide their philanthropy, while fully 65 per cent said they do not plan or formalise their giving.

The findings suggest while the will to make a difference is present, there is a long road ahead towards more impactful philanthropy.