Does it make sense for consumers to view non-profit organizations differently from for-profits when making a decision to ‘purchase’?  Some have suggested that “buyer-beware” does not apply to the non-profit sector.  In a recent conversation with several individuals working in the non-profit charitable sector, one noted that when dealing with charities consumers don’t need to have the same concerns as when dealing with the private-sector.  This idea was met with general agreement in the group.  I can’t say that I’m onside with this perspective.  Although I think that individual’s working in charities may be held to a higher standard of behaviour there is a need for diligence in any financial transaction.

Donating into deprivation

An extreme idea – that someone would donate to charities and put their personal financial stability at risk.  Unfortunately, with increasing age this can be an issue.  It often is the result of some health change, along-side life changes.  The older donor who has been a loyal supporter of a charity may no longer be able to maintain their same level of financial support, even if they wish to.  Increasing longevity may mean that some older adults are drawing income from a decreasing level of net worth and are close to depleting their nest egg.  As the nest egg decreases in size, the income withdrawals accelerate the descent into financial trouble because there is less financial capital available for growth.  Also, older individuals may be less willing to invest their capital in growth instruments such as equities and therefore the nest egg is not growing and still working for them from an investment perspective.  The money sits dormant while the cost of living increases.

Late Life Marital Status Changes

Widowhood can result in lower pension income if the pension-holder is the one who passed away.  There also will likely be a decrease in the level of government entitlements.  Divorce has an even greater negative effect on personal finances resulting in a total loss of some income streams.  Charitable giving at the same level may be impossible.  Charities that have personal relationships with their donors need to remain aware of this possibility and confirm with older donors that their over-all financial health has been reviewed since the loss of a loved one has occurred.

Marital Status from age 55 to age 80 % Income at age 80 based on level at age 55
Remained married 83%
Widowed 79%
Divorced 73%

Source:  Statistics Canada

Dazzled by Donation Opportunties

The increasing promotion and marketing skills of charitable organizations has resulted in some attendees of fundraising events to feel obligated or even pressured to make a donation.  Loneliness and isolation in older populations is a risk factor and the attention from charitable organizations may overwhelm the older adult, resulting in less-carefully considered financial donations.  There needs to be a ‘cool off’ period between charity events and donations to give the individual a chance to consider the transaction in the context of their entire financial situation.  The face-to-face nature of these events can increase the emotion of the situation and a charity will risk being seen as manipulative if they proceed in accepting donations without caution.

Deteriorated Decision-Making

A well-intentioned older donor may, due to issues such as depression, cognitive change, or low financial literacy, place the charity’s needs ahead of their own.  Giving to charities that represent important causes is powerful.  For some older individuals, this may be one of the only ways they have to exert independent decision making and influence.  It is up to the charity, when they have personal contact with donors, to recognize if a donor is able to fully appreciate the consequences of their donation actions.