Donor Centricity: Where Did It Come From and Why Does It Matter?

I don’t see donor centricity as the dominant paradigm in fundraising.

But to understand why, it is important to chart the history of the concept and explore how our sector has embraced it.

A Brief History of Time

Interest in what one might term strategic orientations dates all the way back to the 1960s. It came to prominence because a strategic orientation shapes the strategy an organization will implement to create the behaviours necessary to sustain or enhance its overall performance (Gatignon and Xuereb 1997, Berthon et al 1999). So unsurprisingly there has been considerable academic and professional interest in different strategic orientations and how these in turn might help develop differing levels of performance.

To give some context – in the early 1900s the route to higher performance was seen as efficiency. Markets were expanding globally and organizations didn’t need to worry too much about where they might sell their products as someone, somewhere would buy them. So management theory around this time focused on the redesign of production tasks to speed up production times and use resources (including human resources) ever more efficiently. Organizations that adopted these practices came to be known as “product” or “production” oriented organizations (Sargeant 2009).

By the recession of the 1920s and 1930s a new paradigm began to emerge. By dint of the recession organizations suddenly found themselves with masses of inventory they were unable to sell. So the focus at this time switched to effectively selling whatever it was that organizations were producing. Again, these organizations weren’t really interested in the needs of their customers. Their focus was on THEIR needs. And we still see many “sales oriented” organizations today.

More recently there have been learning, technological, innovation and market orientations (e.g. Baker et al 1999, Calantone et al 2002) – and academics have explored the links between each of these and various measures of performance.

 Notable in the marketing literature has been the conceptual and empirical work on “market orientation”, which gives primacy to customer needs and ensuring satisfaction with the organization’s goods and services. Kotler and Clarke (1987), for example, define marketing orientation as follows:

 “A marketing orientation holds that the main task of the organization is to determine the needs and wants of target markets and to satisfy them through the design, communication, pricing and delivery of appropriate and competitively viable products and services.”

(Kotler and Clarke 1987)

 While this definition makes it clear what market orientation is, it offers little insight into how it might be achieved. Kohli and Jaworski (1990) thus prefer to define it as:

 “The generation of appropriate market intelligence pertaining to current and future customer needs, and the relative abilities of competitive entities to satisfy these needs; the integration and dissemination of such intelligence across departments; and the coordinated design and execution of the organization’s strategic response to market opportunities.”

(Kohli and Jaworski 1990)

 From this very practical perspective, a market-oriented enterprise is therefore seen as one where: 

 1)    Systems and procedures exist that facilitate knowledge of actual and future customer needs.

2)    This market knowledge is then diffused and made available to all in an organization that might benefit.

3)    The whole organization is receptive to this knowledge and its influence is discernible in the actions that are taken as a consequence.

The perspective is interesting, but perhaps more difficult to apply to the nonprofit domain because of the narrow focus on information gathering and dissemination which many nonprofits may not find relevant or applicable, primarily because they can lack formal mechanisms of information gathering and dissemination (Oczkowski and Farrell 1998; Pelham and Wilson 1996). Moreover, the smaller size of a substantial proportion of nonprofits obviates the need for a systematic dissemination of intelligence (Seymour et al. 2006).

Narver and Slater (1990), take an alternative approach preferring to see market orientation as the culture that produces behaviours that create superior value for customers. Culture in organizations is defined as the deeply seated (and often unconscious) values and beliefs shared by employees at all levels, and it is manifested in the characteristics (traits) of the organization. It epitomizes the expressive character of employees and it is communicated and reinforced through symbolism, feelings, relationships, language, behaviours, physical settings, artefacts, and the like (Schein 1984). This in turn is supported by rational tools and processes (Dobni 2006; Dobni and Luffman 2003), and through the expressive practices of employees (Coffey et al. 1994).

 Narver and Slater (1990)  argue that market orientation consists of three cultural components:

1)    Customer Orientation

 Customer orientation requires the organization to gain a detailed understanding of its  target markets so that it may be better able to meet their needs. Systems and procedures are developed to acquire this insight and then meeting those needs becomes the primary focus of the organization. Performance metrics (and staff appraisals) are aligned with that goal and teams are routinely rewarded for meeting customer requirements and championing the customer experience (Kennedy et al 2003).

Business groups have long advocated for the primacy of the customer and in recent decades this has come to be known as “customer-centric” thinking. The customer’s need is quite literally “at the core” of how we will communicate and care for them.

As often happens in the nonprofit sector, “good” ideas are simply borrowed from elsewhere (in this case the business world) and applied with little apparent thought. The notion of donor centricity was born.

2)    Competitor Orientation

In the market orientation literature developing an understanding of the short-term strengths/weaknesses and long-term capabilities/strategies of competitors is seen as important. This is regarded as essential if the organization is to avoid being overtaken by competitive innovation (Porter 1985). Profiling competitor strengths and weaknesses can allow an organization to see where its performance lags behind the competition, but it can also highlight areas where it either outperforms the competition, or has the capacity to do so. These areas are key, because they could represent a major source of competitive advantage that an organization has over its rivals.

3)    Interfunctional Co-ordination

Interfunctional coordination refers to how the organization utilizes its internal resources in the creation of superior value for its customers. It is important that opportunities for synergy are exploited across traditional departmental boundaries and for market intelligence to be shared constructively between all those who stand to benefit. To be successful organizations need to ensure that all teams work together systematically, to give primacy to customer needs.

Market Orientation and Performance

It is important to recognize that the preceding discussion is of more than simply theoretical interest. A multitude of studies have now demonstrated links between the extent to which an organization has successfully operationalized the marketing concept (i.e. its degree of market orientation) and its performance relative to others operating in the same sector.

Extant research has shown that higher levels of market orientation lead to:

1.    Higher perceptions among stakeholders of delivered service quality.

2.    Higher customer satisfaction and higher customer loyalty (Becker and Homburg 1999; Homburg and Pflesser 2000, Kirca et al 2005).

3.    Higher job satisfaction, job satisfaction, trust in organizational leadership and organizational commitment (Kirca et al 2005).

4.    There is also substantive evidence that market orientation can make employees feel they are proud members of an organization, enhance their identification with its collective goals, and reduce exit behaviours (Hirschman 1970).

It is important to note that while the majority of these studies have been conducted in the for-profit context, there is now a substantive body of evidence that the degree of market orientation attained is linked to many facets of the performance of nonprofit organizations (cf Bennett 1998). Shoham et al. (2006), for example, found that market orientation affects performance positively and the market orientation-performance link is actually stronger in nonprofits than in for-profits. This impressive meta-analysis included research from over 1815 organizations from many different countries. Market orientation (or at least some variant of it – see below) IS APPLICABLE to the nonprofit domain and it impacts a wide range of performance measures of which fundraising revenue is just one (Kara et al 2004).

A study of nonprofits in Spain by Vazguez et al. (2002), for example, demonstrated that market orientation results in greater success in meeting the needs and expectations of beneficiaries and donors. It also results in greater success in fulfilling the mission. Furthermore, evidence suggests that market orientation enhances stakeholder satisfaction (Chan and Chau 1998), increases volunteerism (Voss and Voss 2000), increases available resources (Macedo and Pinho 2006), and delivers a more positive reputation (Padanyi and Gainer 2004).

A key insight that the work on market orientation could also have given our sector was the notion that focusing on the genuine needs of a community is important. Product (rather than market) oriented organizations don’t bother with that research. They already know what is right for the community and they just need their solution to be implemented. A market oriented approach, by contrast, would start by establishing a dialogue with those in the focal community and facilitating the provision of what they themselves believe to be appropriate. This is thinking that is now some 60 years old (cf Hise 1965, La Londe and Morrison 1967), yet how many nonprofits continue to prescribe solutions without fully engaging with the focal community.

But this insight aside, in the late 1990s I took serious issue with this body of work. Here’s why.

Towards a Societal Orientation

Market orientation has been an attempt to operationalize the concept of marketing. It was an attempt to answer the question – what does it mean to embrace the marketing concept? In the for-profit context the Chartered Institute of Marketing’s definition of marketing is “the management process for identifying, anticipating and satisfying, customer requirements profitably.” So ask yourself what behaviours might an organization need to adopt to embrace marketing as an underlying management process or philosophy. Both Kohli and Jaworski and Narver and Slater give us plausible models.

But in the nonprofit domain Kotler and Levy (1969) defined marketing very differently. They saw it as “sensitively serving the needs of society”. And if one starts from that definition one might end up with a very different perspective.

First, the terminology is inappropriate as nonprofits are frequently a response to market failure – so orienting to a “market” is a nonsense. And more fundamentally, to view the relief of human suffering or enrichment of lives as a “market” devalues the essence of what our sector is all about. Rather than market orientation, Mei-Na Liao and I (2001, 2002) posited that a societal orientation might be more appropriate.

Second, the model needs adapting. Rather than focus on customers or donors, it would be better to recognize the multiplicity of nonprofit stakeholders and to adopt a “stakeholder orientation” centering attention on the needs of a variety of different groups. Which groups and to what degree, would be shaped by a dynamic my colleague Mei-Na Liao and I termed “mission directedness”. The selection and emphasis would be driven by the mission.

We also adapted other aspects of the MO model. Rather than see competitor orientation as a route to outperform other organizations, it should instead be viewed as establishing systems to learn from the activities of others to inform one’s own approach. And perhaps rather than orienting to competition it might make more sense to focus on collaboration and establishing systems to ensure that opportunities in this regard are routinely identified and followed through. It was our view that collaboration should be a substantive component of the model.

Fast Forward

Fast forward to the current debates in our sector and it is widely held that donor centricity is the dominant paradigm in fundraising. But for that to be true the majority of organizations would need to have systems and procedures in place to identify donor needs and follow through on their satisfaction. They do not.

Equally, for me to be convinced of the presence of donor centricity, the metrics we use to assess fundraising would be very different and focused on how we make supporters feel when they have contact with our organizations. In general, they are not.

Rather, what I see is a focus on donations and an orientation to technique that will maximize that primary goal. The metrics we use to assess our practice are almost exclusively financial and we care little for our supporters and how we make them feel (Sargeant and Carpenter 2020). If we did we would track those feelings and reward fundraisers on that basis. Rather, we focus on the superficial and claim the label thereafter. We’re donor centric because we celebrate donors as heroes, because we give them the credit and because we have swopped out all our pronouns, banishing all the “we’s” from our communications and replacing them with “you’s.” You will by now appreciate that that is not how the concept was originally envisaged and it has lost much in translation to fundraising. We are not donor-centric.

True donor centricity would require organizations to look to the wellbeing and growth of their supporters. It would also require nonprofits to develop supporter journeys that are respectful of “where donors are” in their understating of the cause and thus employ appropriate messaging to allow individuals to learn and develop. My own work on donor loyalty noted that individuals who perceive they are deepening their understanding of the issue or cause are significantly more loyal (Sargeant and Woodliffe 2005). And massively more wellbeing can be facilitated if donors are offered multiple ways in which they might interact with an issue or cause. All too often we are reduced to “shouting” at supporters with an ask for money and then another ask for money, with little or no attempt to facilitate a journey in love, mutuality and understanding. Philanthropy is at root about love – not money - and fundraising ought to actively steward that love.

I’ll close by noting that orienting to donors does not preclude orienting to other groups or communities. Stronger organizations focus on multiple stakeholders and as a growing literature has demonstrated (e.g. Donaldson and Preston 1995), it is perfectly possible to accommodate strategically the needs of more than one stakeholder group. As I noted above, how one makes those choices and where the balance of effort will be applied, should be determined by the mission.

But if you want to know whether your organization is donor-oriented or not, you could reflect on this list of questions below:

1)    Do you know the words that different supporter segments most commonly use to describe their sense of who they are?

2)    Do you know the difference between the descriptors that people use to describe their sense of who they are as a person versus as a supporter?

3)    Do you know the difference between why people give to your organization and who they are when they give and why that distinction matters?

4)    Do you know what drives the wellbeing of these individuals?

5)    Do you understand where people are currently in terms of their knowledge, understanding and engagement with the fundamental issues raised by your mission?

6)    Have you re-designed your case for supported based on this knowledge and tailored communications accordingly?

7)    Have you reflected on how this intelligence can help you shape your supporter journey differently, to build more loving and fulfilling relationships?

Donor centricity demands this level of understanding. And as a sector we’re not there yet.

Prof Adrian Sargeant

1st April 2021

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