research proposal
Research Proposal:
Charitable Donation
Category Audit
A study to determine what information, when clearly conveyed to a potential donor, will increase the likelihood of preferential donation.
Research Proposal 3733_MANAGEMT_7250
A. Falconer-Edwards – A1197314 I. Coker – A1702846
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Table of Contents
I. ........................................................................................................................................................................................................................................ Executive Summary .............................................................................................................................................. 2
Objectives ............................................................................................................................................................................................................................................................... 2
Mission Statement.................................................................................................................................................................................................................................................. 2
Keys to Success ...................................................................................................................................................................................................................................................... 2
II. ....................................................................................................................................................................................................................................... Introduction ......................................................................................................................................................... 3
Background ............................................................................................................................................................................................................................................................. 3
Business Problem................................................................................................................................................................................................................................................... 4
III. ...................................................................................................................................................................................................................................... Objectives ............................................................................................................................................................. 5
Research Problem .................................................................................................................................................................................................................................................. 5
Research Objectives .............................................................................................................................................................................................................................................. 5
Research Proposition ............................................................................................................................................................................................................................................ 5
IV. ...................................................................................................................................................................................................................................... Literature Review ................................................................................................................................................. 6
Overview ................................................................................................................................................................................................................................................................. 6
Motivating Factors ................................................................................................................................................................................................................................................. 7
Awareness of Need .....................................................................................................................................................................................................................................................................................7
Solicitation ....................................................................................................................................................................................................................................................................................................7
Costs and Benefits .......................................................................................................................................................................................................................................................................................7
Altruism ........................................................................................................................................................................................................................................................................................................7
Reputation ....................................................................................................................................................................................................................................................................................................7
Psychological Benefits ................................................................................................................................................................................................................................................................................7
Values ............................................................................................................................................................................................................................................................................................................8
Efficacy .........................................................................................................................................................................................................................................................................................................8
Donor Types .......................................................................................................................................................................................................................................................... 8
Everyday Donors.........................................................................................................................................................................................................................................................................................8
High Net Worth Individuals: .....................................................................................................................................................................................................................................................................8
Corporate Donors: ......................................................................................................................................................................................................................................................................................9
Summary ............................................................................................................................................................................................................................................................... 10
V. ....................................................................................................................................................................................................................................... Research Methodology ....................................................................................................................................... 11
Literature Review ................................................................................................................................................................................................................................................. 11
Survey Questionnaire .......................................................................................................................................................................................................................................... 11
Category Development ....................................................................................................................................................................................................................................... 12
Category Graphic Design ................................................................................................................................................................................................................................... 12
Focus Group ........................................................................................................................................................................................................................................................ 12
Data Collection, Analysis and Revision ............................................................................................................................................................................................................ 12
VI. ...................................................................................................................................................................................................................................... Administration and Logistics ............................................................................................................................. 13
Budget ................................................................................................................................................................................................................................................................... 13
Project Timeline ................................................................................................................................................................................................................................................... 14
Project Deliverables ............................................................................................................................................................................................................................................. 15
VII. ..................................................................................................................................................................................................................................... References .......................................................................................................................................................... 16
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Executive Summary
This research proposal sets out the framework for the execution of the University of
Adelaide capstone ‘Social Enterprise Project’.
Objectives
The key propositions that will be investigated through this research are:
It is proposed that current charitable donors, and potential donors, are concerned
with the level of transparency of charitable organisations. It is further proposed that
an increase in perceived transparency may result in an increase in donations from
existing and potential donors.
It is proposed that a simple, concise and intuitive methodology of detailing the key
operations and activities of the charity can be developed by determining the key
parameters of interest to the public.
Mission Statement
To determine to what extent donor behaviour will be impacted by providing
clear, concise and transparent data on the operations of a charitable
organisation.
Keys to Success
Progressing the research in a timely, effective and objective manner in line with the
Project Timeline will assist in progressing and increasing the understanding of how
charitable transparency impacts the behaviour of donors.
The initial literature review has determined that there are indeed donor segments
that are positively influenced by the transparency of charitable organisations and
negatively influenced by the potential reputational damage from charitable
organisation scandal. By leveraging further literature analysis, in combination with
qualitative and quantitative research methodologies, a thorough analysis can be
undertaken with actions to be determined as an outcome.
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Introduction
The Australian charity and non-profit sector is a $104 billion a year industry. Today,
more than ever, donors and the broader public are expecting greater transparency of
how these charitable organisations execute their charitable remit. How can the
activities of individual charities be conveyed in a clear and concise manner to
increase the transparency of their operations? Will this increase the likelihood of
preferential donations on a like-for-like basis?
Background
Charitable donations are engrained into the Australian psyche. Whether it is passing
volunteers collecting change in the street, purchasing groceries that contribute to
charitable causes or television advertisements spruiking a charity raffle, we are
constantly bombarded with requests to donate. Despite the low key pervasiveness of
the eliciting of these donations, charitable donations are big business.
During the financial year 2015-16 Australian individuals donated $12.5 billion
dollars per year to charities and non-profit organisations. During the same period,
Australian businesses gave $17.6 billion dollars through community partnerships,
donations and non-commercial sponsorships. (Cortis, Young, Powell, Reeve,
Simneet, Ho & Ramia 2016). A further $42 billion dollars is provided by way of
government grants. The charity and non-profit sector is a $104 billion dollar
industry and is responsible for employing one in every ten Australians (Cortis et al.,
2016). Charity is big business. It contributes 3.8 per cent of Australian GDP; “a
contribution more than twice as large as the entire economic contribution of the
state of Tasmania; and larger than the agricultural, forestry and fishing industries
(2.4 per cent) and the information, media and telecommunications and media
industries (3 per cent)” (Cortis et al., 2016). Despite the magnitude of the financial
contribution, the industry is completely fragmented and broadly unsophisticated
both in terms of operational execution and regulation.
The pool of charitable organisations is busy and is growing increasingly crowded.
There are currently 54,000 registered charities (McGregor-Lowndes & Myles, 2014)
which makes differentiation and marketing of individual charitable ventures
challenging. This challenge is further exacerbated as new charities are registered at a
rate of nine new charities every day (Pascoe, 2016). Gaining visibility in a crowded
market, and demonstrating relevancy, is challenging for organisations that often
have inadequate resourcing. Lack of experience and governance expertise is a key
contributor to why so many charities are routinely deregistered for not completing
mandatory reporting (PBA, 2016). The administrative and logistical costs required to
run a charity, combined with organisations that often have little practical business
and operational experience, contributes to high running costs and a reduction in the
final monies that are used to directly support the beneficiaries.
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Business Problem
Recent scandals in the charitable sector are shaking the confidence of both individuals and
businesses. This will lead to higher scrutiny of donations to these organisations. The two
areas that are attracting media scrutiny. Firstly, the performance of charities in discharging
their stated goals in a responsible and financially responsible way. Secondly, opportunistic
contractors exploiting the goodwill and naivety of charities to secure a portion of the $30
billion dollars flowing to charities on a yearly basis. These challenges pose a threat to the
charities as it will lead to fewer donations across the sector and potentially an increase in
governance and regulatory requirements that will further increase the administrative
burden associated with running a charity.
Therefore, to gain a competitive advantage in a crowded market place, individual charities
should prioritise increasing awareness and transparency in how they maximise throughput
of donations to the beneficiary. Furthermore, by demonstrating a high level of regulatory
compliance and accountability, combined with efficient back office functions, the
organisation can further demonstrate their effectiveness while limiting reputational risk.
These actions will increase the likelihood of the organisation receiving donations from the
public on a like-for-like comparison.
Demonstrating relevance in a competitive and crowded market is critical for small and
medium charities to ensure that they have the requisite funds. Additionally, being able to
demonstrate that the received donations will meaningfully impact the beneficiary is a
consideration that drives donor behaviour (Cordery & Baskerville, 2011). If the current
trend of opacity and growing mistrust continues grow, the following implications can be
expected:
Reduced percent of the population making donations;
Reduced size of donated amounts;
Reduced necessary social support;
Increased number of failing organisations; and
Continued exploitation of organisations by opportunities contractors.
As the cost of regulatory compliance continues to grow, potential donors will increasingly
scrutinise the percentage of the donation that reaches the beneficiary. With over fifty-
thousand registered charities, many of which are small scale operations, it is clear that
lessons learnt and common functions can be shared, thus ensuring that the charity can
maximise their time and effort on the supporting the beneficiary. By simplifying their
operations and driving efficiencies through their organisation, charities can maximise the
benefit they provide to their beneficiaries while also discerning a competitive advantage in
attracting donations.
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Objectives
Research Problem
The research problem can be defined as:
1. “How dependent is the likelihood of a charitable donation on the perceived
transparency of the charitable organization?”
2. “What are the community’s attitudes to charitable giving and, in particular, would
the likelihood of giving be influenced if the charitable activities of a charitable
organization was conveyed in a simple and effective format?”
Research Objectives
The key objectives of the research are to identify:
1. The extent to which donations are influenced by the perceived transparency
and accountability of a charitable organisation;
2. What the key categories of information are regarding the operations and
activities of the charitable organisation that donors are interested in;
3. What priority donors assign to the categories of information;
4. The extent to which donors would be influenced by the presentation of
relevant charitable organisation information to increase transparency;
5. How the information can be most effectively conveyed in a simple, concise
and intuitive manner;
6. Whether the presentation of this information would increase charitable
donations to organisations which conveyed this information; and
7. Whether there are difference in attitude to this information by demographic.
Research Proposition
It is proposed that current charitable donors, and potential donors, are concerned
with the level of transparency of charitable organisations. It is further proposed that
an increase in perceived transparency may result in an increase in donations from
existing and potential donors.
It is proposed that a simple, concise and intuitive methodology of detailing the key
operations and activities of the charity can be developed by determining the key
parameters of interest to the public.
These two hypotheses should be explored as part of the research process.
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Literature Review
Figure 1 – nVivo word cloud exhibiting the word frequency count as an outcome of the literature review
demonstrating the key themes surrounding charitable organization transparency.
Overview
The literature review was undertaken with a focus on three key questions:
What motivates one to donate?
What disincentives’ one to donate?
What impact does transparency have on donor behaviour?
When considering these lines of enquiry, three donor segments were identified as
each having distinct behavioural patterns and motivating and demotivating variables
that vary inversely between and similarly within.
The three donor segments are:
Everyday donors;
High net worth individuals; and
Corporate donors.
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Motivating Factors
For the purpose of standardising our approach to each segment we considered
Bekkers and Weipking’s, ‘Eight mechanism that drive charitable giving’ review as
a good basis of evaluation. It is proposed that these eight forces can be
summarised under the following subjects:
Awareness of Need
People have to become aware of a need for support it which is largely beyond
the control of donors, and driven by the media and is the result of actions
charitable organizations.
Solicitation
Refers to the act of being solicited to donate. A large majority of all donation
acts occurs in response to a solicitation. The more solicitations for donations
people encounter, the more likely they are to give.
Costs and Benefits
This relates to the costs and benefits associated with donating, it is the “tangible
monetary consequences of making a donation”. When the cost of a donation is
lowered, giving increases. This is not only true for the absolute costs, which can
be lowered through fiscal incentives, but also for the perception of the costs of a
donation. Often donations to charitable organisations result in a personal
benefits: e.g., a services or incentive. When people receive material benefits in
return, they tend to undermine self-attributions of helpfulness, which reduces
the effect of prosocial self-attributions on future helpfulness.
Altruism
People contribute to charities because they care about the output of the
organisation, or for the tangible consequences of donations for the beneficiaries.
Reputation
Reputation refers to the social consequences of donating, typically viewed as a
positive thing to do, especially when giving reduces inequality. People who give
to charitable causes are held in high regard by their peers and relish the
recognition and approval that they receive from others.
Psychological Benefits
Giving not only yields social benefits, but also psychological benefits for the
donor. Giving may contribute to one’s self-image as an altruistic, empathic,
socially responsible, agreeable or influential person. In many cases it provides an
almost automatic emotional response, producing a positive mood, alleviating
feelings of guilt, reducing aversive arousal, satisfying a desire to show gratitude,
or to be a morally just person.
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Values
Attitudes and values endorsed by donors make charitable giving more or less
attractive to donors. Donations can also be instrumental to representing one’s
specific values, but this is captured by the mechanism of reputation.
Efficacy
Efficacy refers to the perception of donors that their contribution makes a
difference to the cause they are supporting. People perceive that their
contribution will not make a difference, they are less likely to give or leave a
charitable bequest.
Donor Types
Everyday Donors
Total individual giving in Australia is estimated at $12.5 billion, of which
individual tax payers claimed $2.29 billion (McGregor-Lowndes & Crittall, 2016).
Whilst individual giving in Australia only recovered in 2013-14 (McGregor-
Lowndes & Crittall, 2016) post GFC there is evidence to show that those who
continued to give have been giving more. This supports that motivation in this
segment is driven largely through the values, efficiency and psychological
mechanisms.
This point is supported further by the fact that religious institutions are
recipients of the largest share of individual giving in Australia, followed by social
welfare and community services, health and medical research, education and
overseas aid. This group predominantly donate with no intent of making regular
or planned ongoing donations. Their motivations range from again from purely
altruistic drive through to obligation/solicitation or event reputation. Further
socio-demographic factors, such as income level, life experience, age, marital
status, and personal and social behaviours also influence giving behaviour
(Bekkers & Wiepking, 2011) in this category. Personal values play a vital role in
shaping individual’s giving (Scaife et al., 2012), with values established in
childhood by family culture and history which develops into a sense of
responsibility.
For individuals transparency does not play a significant role in the donor’s
decision making process. This is because often giving for individuals in not a
long term commitment and is directly related to solicitation rather than efficiency
and cost/benefit.
High Net Worth Individuals:
When considering the giving behaviour of High Net Worth Individuals
(HNWIs), the mere fact that they have increased access to finances provides that
they have the greatest capacity to contribute (Elliott & Pilkington, 2015; OECD,
2011), and as such they give generously. Large donations from Australian
HNWIs have increased in recent years (Strickland, 2014), much of this occurring
through structured giving vehicles, covered by the umbrella terms of trusts and
foundations. Many donors are therefore being motivated by cost and benefit.
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The importance of transparency to this segment is a strong motivator as is the
importance of positive social impact to HNWI donors. A number of researchers
have proposed typologies for affluent donors, such as Cermak, File and Prince
(1994) who clustered affluent donors into four distinct types as Affiliators,
Pragmatists, Repayers and Dynasts. Affiliators are those who give to those
aligned with their personal value, Pragmatists, those who give back to grass root
level, Repayers, those who give in return and Dynasts, giving because of family
tradition.
Similarly, Prince and File (1995; Prince and File (1994) and Prince, File and
Gillespie (1993) segment affluent individual donors into seven distinct types,
based on needs, motivations and benefits sought from the giving experience;
while other authors (Abeles & Kohler, 2009), distinguish between ‘passionate’
(triggered by an event or encounter with an individual or an organisation) or
‘rational’ where the philanthropist selects a societal issue, before researching the
organisations in the sector likely to contribute in the most efficient way.
This group are increasingly asking themselves what needs to happen to actually
solve some of the world’s biggest problems and as such are not only motivated
by altruism, but also by efficiency, being that they want to know that their
contribution makes a difference.
Corporate Donors:
Business giving has in recent years evolved and moved away from a purely
altruistic exercise to one where mutual benefits are sought and one where giving
is a major part of most business strategy (Centre for Corporate Public Affairs
and Business Council of Australia, 2007).
One of the most significant developments that has had an impact on business
giving is the emergence of Corporate Social Responsibility (CSR), or as it has
been described by some leading commentators, “Corporate Social Opportunity”
(Grayson & Hodges, 2004). CSR builds sustainability and public interest into
business decision making and activities (McKee et al. 2013) and is a mechanism
which aids in building trust and respect within their businesses respective
consumer groups. As such, CSR has a positive impact, and is directly connected
to revenue growth and profitability. Managers are recognising rewards in terms
of influence, reputation and competitive survival from working voluntarily
towards lifted social standards (Livesey, 2001) and it is therefore fair to say that
business are highly motivated to donate for reputational and cost benefit
reasons.
There is further evidence to suggest motivation for giving in this segment is
influenced by the desire to improve society in the geographic area in which the
business operates. Businesses are more likely to support causes if it aligns with
their respective business interests. For example, legal service providers are more
likely to provide pro-bono legal support to the community though pro-bono
charitable organisations than they are to plant trees for the nature conservation
society.
Transparency in this sector is a fundamental consideration and motivator as
should organisations support causes that are found to be disingenuous they risk
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reputational damage. A company’s overall reputation is a function of its
reputation amongst stakeholders, so anything that exposes or aligns an
organisation to misleading, dishonest or misaligned causes threatens positive
reputation for the company overall and will have impact on the sustainability of a
business.
Summary
Everyday ndividual giving is influenced by Awareness of Need driven by the
media, Solicitation, Psychological Benefits in that giving contributes to one’s self-
image as an altruistic, empathic, socially responsible, or influential person and
Values in that donating endorses one’s specific values. They are demotivated by
the costs burden of giving and as such will go for lower costs initiatives and they
are not primarily influenced by transparency.
HNWI giving is motivated by Altruism, in that they contribute because they care
about the consequences of donations for beneficiaries, Reputation in that they
receive recognition and approval from their peers. Efficacy in that they are
concerned that their contribution makes a difference and Costs and Benefits by
way of using fiscal incentives to reduce their cost of giving. They too are
motivated by family tradition and giving back to society. Transparency is a
significant consideration in this segment too.
Corporate giving is driven predominantly by Costs and Benefits in that business
are seeking a return on their investment, Reputation and Values with reputation
being the most significant motivator and making sure values are aligned and
transparency is of utmost consideration as aligning with a cause that is found to
be disingenuous poses significant negative reputational risk.
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Research Methodology
The research methodology outlines the way that data will be collected and analysed to address the
research question.
Literature Review
The literature review will continue as an iterative process throughout the research
project to reference and align findings as they become apparent, in addition to
providing direction with which to progress the research. Specifically, the ongoing
literature review will be central to developing questions for the survey, providing
structure for the focus groups and providing hypothesises with which to analyse the
data.
Survey Questionnaire
The survey seeks to build on the hypotheses that have been drawn from the
literature review in order to build context and generate data to support the research
objectives. Using the literature review as a baseline of the current findings and
theoretical understanding of charitable organisation transparency, and how this
influences the propensity of the public to donate. Specifically, the survey will seek to
build gather data on the current donation habits of a representative group of the
Australian general public. The survey will further seek to understand what factors
limit the amount that donors, or potential donors, may be will to contribute to a
charitable organisation. Building on this data, the survey will then seek to determine
what type of information would alleviate the concerns and whether the presentation
of this information would increase the likelihood, and amount, that a potential
donor would be willing to donate. Lastly, the questionnaire will seek to understand
how participants would prefer to see this information.
The survey will be built in Qualtrics and distributed by email and social media. The
survey will be developed to ensure that the parameters meet the definition of
‘negligible risk’ under the Adelaide University Code of Ethics to expedite the
development and distribution of the survey. The survey data generated in Qualtrics
will be exported to Microsoft Excel and IBM SPSS to perform computational and
statistical analysis.
Specifically, the survey will seek to estimate the relationships between variables to
determine whether increased transparency will increase the likelihood or total
amount donated, what information would increase the perceived transparency of a
charity and how this information can be most effectively conveyed. The importance
of these variables will be primarily determined via regression analysis.
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Category Development
The conclusions drawn from the survey will be used to formulate and prioritise the
categories of information that would increase the likelihood of donating, or result in
an increase donation amount. The categories, and number of discrete categories, will
be determined and supported by the regression analysis. Primarily, the analysis will
seek to determine what information, when presented, will increase the likelihood,
and increase the total amount donated, to a charity.
Category Graphic Design
Once the categories have been confirmed, the survey analysis can be used as an
input to determine what are the most effective methods of presenting the data. The
information obtained throughout the literature review will be used to further
support the development of a simplified method of graphically displaying and
quantifying the discrete categories that are most likely to influence the behaviour of
potential donors.
Focus Group
The focus group provides an opportunity to qualitatively assess how the survey
analysis aligns with the feedback from a focus group and can serve as a test bed for
the development that has been undertaken as a result of the survey analysis.
Specifically, the focus group will be used to determine whether the categories that
have been developed align with the preferences of the focus group and whether the
graphically depiction of the information contained within these categories
Data Collection, Analysis and Revision
This juncture allows for a critical analysis of the information that has been obtained,
the decisions and actions that have been taken. The quantitative and qualitative
aspects have been developed in a constructive and additive manner and common
threads should be developing. If there are outliers, if omissions have been made or
if conclusions have been drawn that do not align with the assumptions, the iterative
process can be repeated. As an example, if the outcomes of the focus group
identified areas that required further analysis, an additional, targeted survey could be
developed to bridge a knowledge gap. Alternatively, the knowledge gap could be
bridged by an additional focus group.
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Administration and Logistics
Budget
To determine a budget for the project, an hourly sell rate, or indeed opportunity
cost for the two researchers, has been estimated at a rate of $80 per hour. This
aligns with a market sell rate for a tertiary qualified researcher and is a fair
representation of opportunity cost of the two researchers.
A similar approach was assigned for determining the value for the project
supervisor. A hourly sell rate of a $220 was estimated a market rate for a business
consultant and university lecturer with good industry recognition.
All other costs, including focus group participants, survey participants and software
access costs were determined to be negligible or in-kind.
Assuming that the total period of the research project will extend for 26 weeks, and
that both research students spend twelve hours per week on the research, and
engage with the supervisor for an average of two hours per week, the total cost in
labour is estimated at $61,360.
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Project Timeline
The project timeline detailed below at Figure 2 progresses the research and analyses through a sequential building process while allow iterative steps to refine and hone
analyses as the understanding of the subject matter and data evolves.
Figure 2 – Project Timeline
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Project Deliverables
The Project Deliverables at Table 1 details the tangible outputs and actions of the project.
Table 1 – Project Deliverables
Deliverables Details Advanced Literature Review Refine available information relating to charity accountability and transparency
Survey Development Development of survey to provide data to support research objectives Survey Delivery Survey delivery to ensure a representative Australian population sample is achieved
Data Analysis Analysis of survey data Prioritised List of Categories Category prioritisation of information as an outcome of survey data
Graphical Representation of Category Develop a simple graphical way of communicating key information and data Focus Group Focus group to test analysis outcomes Data Analysis Clean and analyse final data to draw conclusions and develop outcomes
Report Submission Submission of final report
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