Tuesday, July 28, 2009

How To Be A Better Donor

All those who give to a good cause should be the object of our collective gratitude. They make the world a better place. And, yet, if their generosity were coupled with deeper discernment, their good works would have even greater impact. It is, then, with that hope that I offer these tips to those who are thinking about giving.

1. Look inside. Don’t be passive and wait for organizations to contact you and tell you why you should care. Ask yourself who or what made a difference in your life, and if you would like to make that kind of difference in someone else’s life. Ask yourself the most important lessons life has taught you and how you can use philanthropy to extend the meaning of your life to others. Ben Franklin, who struggled as a printer’s apprentice, left a portion of his estate in the form of a loan fund for young tradesman to start their own businesses. In so doing, he sought to promote economic development by making opportunities available to others that had been denied to him.

2. Listen to your feelings. When you read or listen to the news, what developments give you the most hope or the greatest pause? What makes your spirits soar or tugs at your heart? Ask yourself which organizations are best dealing with the issues, causes and concerns that affect you most deeply, and how you might be able to help them.

3. Develop philanthropic objectives. How much do you want to give each year? How much of your net worth would you like to give to good causes? Do you plan to give to one or many organizations? What will be the criteria for determining how much you will give to each? To which will you give the most? Why? Thinking all these things through before you engage in specific philanthropic discussions will allow you to sort among many requests and to guide those who you deem most worthy of your support.

4. Seek to fill gaps. Look for the organization that is truly filling the gaps in service or opportunity around the cause you care most about. Give to the organization that best makes a difference where a difference most needs to be made. Give to those who can best demonstrate the difference your gift will make, including precisely who will benefit, how, and when.

5. Avoid replication. Don’t create another non-profit or another foundation, if there are others doing essentially the same work. It is more productive to help make existing organizations better than to start your own and compete for the same resources, especially now. Don’t let your ego get in the way of the angels of your better nature. Look at Warren Buffet, the “sage of Omaha,” who decided to give most of his wealth to the Gates Foundation. His wisdom will be long honored.

6. Set conditions for engagement. As you explore where your support can make the greatest difference, let organizations know how you want to conduct the negotiations. Lay out the conditions under which you will review their proposals, when you will respond, and the criteria you will use to make your decisions. If you are passive or indecisive, you will invite aggression. One of the reasons that so many organization engage in heavy-handed or even obnoxious fund-raising practices is because too few donors say, “I won’t give to an organization that conducts itself this way.” Indeed, if you really want to understand an organization, ask about its fund raising policies and practices, including who does it and how they are evaluated and compensated. If you see a lot of spending on fund raising quotas and little on relationship-building and stewardship, beware.

7. Ask tough questions about institutional planning and performance. See who holds up best to questions the difference their organization is making, and how they plan to make an even greater difference. Again, the reason that so many organizations get away with wishful thinking and mediocre performance is that their donors ask too little of them. Perhaps some donors think of themselves as loyal by not asking tough questions but blind loyalty can contribute to sloppy thinking, poor planning and corrosive complacency.

8. Monitor, don’t manage. By all means, ask the organizations you give to for regular updates on how the project you supported is progressing but don’t try to manage the project itself. Before you give make sure you understand who will be seeing the project through, what is to be accomplished and when, but don’t tell them how to do it.

Tuesday, July 21, 2009

Asking and Answering the Most Important Questions

Donors can help organizations reach higher levels of achievement, and make philanthropy an even more important social force, by asking the right questions before they give. In my estimation, those are:

1. What difference will my gift make?
2. Who will benefit?
3. How will they benefit?
4. When?

Wait a second, you say, “what about vision, mission, goals and objectives? Aren’t those the things that donors should be asking about?” Well, yes, but just asking about them and getting broad answers in return doesn’t yield the most productive philanthropic compacts. For instance, a leader of an organization may be able to articulate a compelling vision for an organization and that vision may be backed up by a thoughtful mission statement, strategic plan, and even a set of objectives. But go to that same leader and ask, “If I brought you a donor capable of making an unrestricted $100 million gift (or even any eight-figure gift) who only wants to know how it will transform your organization and those it serves, what specific plan would you put forward?” In my experience, most leaders of most major organizations cannot answer the question when first asked. Many say, “Oh, I can think of lots of things” but can’t articulate one truly transformational concept. What most do is bundle a set of smaller needs or ideas. Of the very few who can, I have met even fewer who could at the level of detail required by my first four questions. So vision, mission, strategies and goals are of little impact unless we are able to explain how specific gifts will make a specific difference.

For philanthropy-seeking organizations, the four questions can serve as a great test of your case for support or even an important proposal. Let’s say you set a campaign goal of $180 million and then put together a gift pyramid to determine how many gifts you need at various levels to reach that goal. Can you, for each and every gift level, answer those four questions with a compelling degree of specificity? How specific can you be even for the most modest gift levels on your pyramid? The more specific, the better.

Okay, maybe you’re worked up again. You’re thinking, “Is he really saying that I should be able to make a specific case for a $1,000 gift or even less?” Well, that would be ideal – and I think the organizations that can best show how modest gifts can put to specific use will raise the most money. But, if you can’t make a specific case for a $1,000 gift, can you make one for $10,000? If so, you can show $1,000 donors how they can get you one-tenth of the way toward that goal – and that should be far more satisfying than giving to a fund with very broad purposes.

Remember, philanthropy is about investment; donors want to provide the margin of excellence, to move an organization from good to great, not from intensive to critical care. They want to know that their gift leaves the organization and those it serves better for their contribution. If you can show how every gift will have a specific impact, you will introduce an powerful element to your case for support that will make the statements of vision, mission, strategy and objectives seem so much more appealing and attainable.

Sunday, July 12, 2009

When Fund Raising Undercuts Philanthropy

When I lecture on some aspect of philanthropy, those in attendance express their support for my approaches and proposed innovations but say, "I only wish my boss were here." They then go on to tell me how they are being asked to raise money for institutions that have no real strategic vision and to work in environments where the altruistic spirit of philanthropy has been supplanted by a grim, grinding style of fund raising, one marked by the application soul-less technique and mindless metrics. They say they are expected to ask for money on the first visit to a prospect and to meet unrealistic dollar goals each year. And they know what they are being asked to do doesn't work very well. They "go along to get along" but plan on leaving for what they hope will be a better job at the first opportunity. They refer to these environments "as churn and burn" and shake their heads at its demoralizing effects.

They're right, of course. Such approaches do not work, in the short run or the long run, and, if practiced too extensively, threaten to drain philanthropy of its ennobling spirit and transformational societal impact. The fact that such practices are employed as often as they are is bewildering because they simply are not effective. Sure, the grimmest of practitioners can point to some results but they don't realize that those outcomes may be despite, not because, of what they do. And there is growing evidence that just pounding away on prospects with the drum beat of "more, more, more" is leading to increasingly diminished returns.

Donors give for two broad reasons -- their relationship to an organization (and the web of relationships it provides to them), and the relevance of that organization to their most deeply held beliefs and convictions. Successful philanthropy-seeking organizations must, now more than ever, constantly refresh those relationships and re-establish their relevance to in an ever-changing world.

The churn and burn approach might appear to work for a while because it is applied to long-established donors with deeply held beliefs in the relevance of the institution. And, yet, all this technique does is harvest years of accrued good will but it will soon use up what predecessors have left and will leave little or nothing for the future.

Major donors to colleges and universities, for instance, do not suddenly leap out of the mist of obscurity and drop a wad on their alma maters. I have seen and conducted various analyses to determine how many years an average alumnus will give before making a $1 million gift to their school. Any guesses? From the various institutions I have studied, it averages between 14 and 17 years. For eight and nine figure gifts, it's even longer. This past December, Georgetown received an $80 million gift, the largest in its 220 year history, from an alumnus who had given for 54 years. Those who give large gifts in less time do so, in general, because they see that institution as they best means of making a difference where they think a difference most needs to be made.

The churn and burn approach grubs for what might be available now, often at the cost of something far more significant in the future. And, by being oblivious the power of relevance, it grabs for what is most immediate for the least amount of work. Whatevr it succeeds in getting will be far, far less than what is possible, both in the present and the future.

This "grab and run" syndrome produces a downward cycle. The most talented and successful advancement professionals will feel their ideals compromised and their relationship-building talents minimized. They will leave and be replaced by those who will be more willingly "work within the system." They will most likely have less talent and less of an emotional, ideological or spiritual connection to the institution. With philanthropy, you get what you put out. If you send out fund raisers with selfish, short term objectives, you attract donors with the same outlook. They give less and want something in return. Long-term philanthropic compacts devolve into short-sighted transactions.

If an organization wants to pull out of this kind of tail spin, it must replace the "grab and go" model with a "relationships and relevance" commitment, and it must be prepared to make a significant investment, in time and money, before damage done will be repaired, and significant and lasting returns will be realized.