Sunday, October 25, 2009

A Cultural Shift?

A friend and colleague wrote last week to share her concerns and invite my reaction. She reported “seeing an alarming trend” in the attitudes manifested by “pipeline” prospects, age 40-50. There is, she says, “so much quid pro quo among this next generation of donors.” Increasingly she is asked by these prospects if she can get their son or daughter, or even a neighbor, admitted or get better football tickets or even secure an introduction to another prominent alumnus for business purposes. “This worries me,” she says, “and makes me think a lot about the messages we will need to deliver to hopefully capture this crew at some tipping point in the future. You think a lot about the history and power of philanthropy and how it has changed and shaped our nation in so many fabulous ways. Do you think we are nearing a change in the fundamental concept that has made us great?”

It’s a huge and terribly important question. I don’t know if we are nearing a fundamental cultural shift in our outlook on and practice of philanthropy but I have worried about, and written and spoken about it for some time. I have pointed out that Americans have engaged in an unprecedented and unparalleled voluntary transfer of wealth over more than two centuries. I have characterized it as “the American Philanthropic Revolution” and argued that the good done by it has greatly advanced the ideals borne of the American Revolution and mitigated the prospects of violent social upheavals. In addition, I have explained that the origins of this remarkable philanthropic spirit can be traced back to our earliest roots, to the creation of communal constructs designed to yield civic and social improvements, and that we operated as “we the people” long before that phrase was coined in the preamble of the Constitution. And, when visitors from foreign universities came to me seeking to understand and export American fund-raising techniques, I took pains to point out we owed our success much more to the culture than the tactics of fund-raising. In my seminars and conferences, I say that I and other highly-experienced practitioners could take everything we have learned over decades to another country and not enjoy anything close to the success that we enjoy in this one. So, I have asked myself over the years and now ask openly at the outset of my seminars, why is it that so much of our training focuses on the application of technique and so little on achieving a deeper understanding of the culture that allows it to work.

To me the American philanthropic culture is a like a remarkably rich soil from which many wonderful things have grown, and will continue to if we don’t take more from it than we give back. Widespread fund raising practices that employ hard-sell, short-term, sometimes exploitative tactics slowly leeches our philanthropic soil of the nutrient of good will. Incessant fund raising in pursuit of “more, more, more” robs the soil of the nutrient of trust if those asking do not have a well-thought-out plan to actually do more as efficiently and effectively as possible. And so it goes. Everything selfish and short-term that we do, everything that is inefficient and ill-conceived, depletes the soil that has given us so much. To my friend’s question, I have to ask, “To what extent has the growth of technique-oriented fund raising operations created a jaded consumer?” What if that quid-pro-quo prospect pushes back and says, “If you’ve turned philanthropy into an entitled, incessant clamor for what you want, why shouldn’t I clamor for what I want?” or “If I can’t really see the difference my dollars make (unless I give you millions), why shouldn’t I try to get something out it?” or “How can you fault me for linking my giving to better football seats when your athletic department predicates its fund raising on it?”

If we see Americans becoming more selfish, short-term or demanding in the way they give, we should not only ask if the culture is changing but if we have contributed to change. Change begins with us, the practitioners of philanthropy.

In my next blog post, I will speak to the ways that we can replenish the American philanthropic soil. In the meantime, I invite your comments? Am I being too hard on us? Are we seeing a cultural shift toward more quid pro quo giving and away from selfless philanthropy and, if so, what can we do about it?

Tuesday, October 20, 2009

Reflections From the Field

I had a number of interactions with donors last week which seemed to provide larger lessons about the changing nature of philanthropy.

The first was with a young donor who had pledged a million dollars earlier in the year. The night before I was to meet with him, I read my research brief and was struck once again by how generous a gift it was from one so young. Then I began to wonder, "Is he the youngest person ever to have given a gift of this size to Georgetown?" I sent an e-mail note to my research director asking her to check and, sure enough, he was. That important distinction had not been noted at any previous point. When I sat down to the dinner the next day with that donor, I was able to share the news in the form of a toast. Yes, we have been fortunate enough to receive million dollar gifts from a good number of donors but his gift was unique. Putting it in the perspective of our 220-year history helped him understand just how truly remarkable it was and, therefore, why it was particularly valued. It's important to look for those kinds of distinctions and, if at all possible, celebrate something unique about every major gift, not just lump all of them into one category or giving society. Looking for distinctions within categories -- whether it is the first to give to an important new initiative , the youngest to give at a particular level, giving in proportion to one's means, or giving in someone else's name -- is an important element of effective stewardship and good donor relations.

The second was with a prospect who had become intrigued by a phrase in our President's vision statement --"to produce leaders who make a disproportionate difference in the world." This donor thought that goal was quite important and was considering a million dollar pledge in support of it but he wanted to know how we proposed to identify those potential leaders. He believed that those who would make a disproportionate difference in the world were likely to have overcome
disproportionate adversity or taken on a disproportionate challenge early in life. If we simply looked for the same old criteria -- very good grades, high board scores and evidence of leadership -- we might miss some very unusual talents or late bloomers, he argued. This prospect was seizing on a key element of our vision statement and challenging us to challenge our own assumptions about how we might get there. Being able to say where an institution is going and why is essential to building philanthropic support but, increasingly, we must be prepared to show how we propose to achieve our goals and to consider innovative means of getting there. Every element of a vision must be backed up with a set of specifics to show how that goal is to be reached, and we must be willing to incorporate different ideas from different donors on the best way of achieving it.

The third was a prospect who liked the idea we had put to him, that of underwriting a distinguished speaker series in one of our schools, but he questioned if we really needed the endowment we were asking for. He wanted to see how we came to that number, including how much the school had spent on distinguished speakers in the past two years (including travel, lodging, security, etc.). He suggested we should carefully calculate those annual costs and then ask for an endowment gift that was twenty times that amount not just pull a nice round endowment number out of the air. When I asked the development officer in that school for the supporting budgetary material, he confessed that the proposal was more "concept-based" than "budget-based." My advice to him and to all of us is that all future proposals, especially when we are seeking commitments, must be budget-based.

Our everyday interactions with donors provide any number of insights into where the world is going and how philanthropic patterns are changing. If we listen, respect and adjust, we'll keep up and maybe even stay ahead.

Saturday, October 10, 2009

Appropriate To The Times

The ways in which organizations pursue their philanthropic goals may vary but all must develop fund-raising strategies appropriate to the times. And, in these times, when donors are living with less and worrying more about their financial futures, it essential for these organizations to address their fund-raising aspirations in the context of cost-containment. To prove this point, let’s take a closer look at the dilemma of educational institutions.

When the economy suffered a dramatic contraction, virtually every school, college and university realized there would be a corresponding demand for new levels of financial aid. Urgent appeals were issued and poignant cases were made to help donors understand that more and more families were struggling to pay for their children’s education. Yet, those appeals were often made to prospects whose net worth had precipitously contracted. Above and beyond the obvious problem of asking for more from people who had less to give was the issue of whether additional money would make any real difference if tuition was not capped. After all, if schools continue to increase their costs, the need for financial aid will rise in direct proportion. The only way for new financial aid dollars to make a significant difference is to keep costs from increasing.

Tuition payments have become an ever larger portion of the average family income and, in the case of many prominent schools, now exceed that benchmark. So, without cost containment, what becomes of ever larger amounts given in the name of financial aid? If the answer is, “Well, it will keep us from falling even farther behind and slow the rate at which we price ourselves out of more and more markets,” few will be motivated to give. The only satisfactory answer is, “We will contain costs at the same time we seek greater financial aid support to ensure access to students from a greater socio-economic range.” There’s a greater goal to be reached, a difference to be made, therefore, a reason to give.

Philanthropy, as interpreted through the American cultural lens, is about making something better, about helping worthwhile organizations and causes to go from good to great, not from survival to mediocrity or to prevent them from lapsing from greatness into something less. We don’t make large investments in organizations that are struggling, whose expenses are out of control, or in decline. So, the best case that can be made for an organization that finds itself with fewer resources or greater expenses is that it will contract strategically to maintain focused excellence. And this is exactly what we see universities like Princeton, Cornell and Duke doing.

When so many business have had to make strategic cuts in hopes of emerging stronger and so many families have had to reorder their priorities or give up on some dreams, it makes little sense for philanthropy-seeking organizations to claim they need more without first showing they have done all they could to reduce their overhead and focus their resources on doing the fewest, most essential tasks as well as they possibly can.

Saturday, October 3, 2009

The Latest on Student Discovery

As many of you know, one of the innovations of which I am most proud is the Student Discovery Initiative at Georgetown. It is featured in the most recent issue of CASE Currents and has been covered in the Chronicle of Higher Education.

To date:

Over 6,000 alumni in 42 states and 17 countries have been interviewed

20 percent of those alumni made their largest gift ever after the interview was conducted

Giving by those interviewed rose 43 percent in the year after the visit

The interviews yielded 1,000 new career mentors, 500 new alumni-admissions interviewers and 200 Regional Club and Class Committee volunteers

570 new major gift prospects, 63% of whom have a capacity in excess of $100,000, were identified.

Oh, and did I mentioned that before these alumni were interviewed, they received a letter from the President reassuring them that they would not be asked for money? All of the results above came from the asking of opinions, and nothing else. Here’s the rest of the story.

The idea was a classic case of necessity being the mother of invention. I was new to Georgetown and found myself with 25 open positions, most of them in the upper echelons of my operation. For every person who had left, dozens if not hundreds of alumni and donor connections had been broken. Frustrations were piling up and I was trying to figure out how I could let our alumni know that we cared about them and were racing to repair the breaks in communications. I knew it would take more than a year to fill all the open positions so I began thinking about other assets that might be available to me. Then, while someone was reciting impressive statistics about Georgetown, it hit me. I was sitting on a huge resource – one of the most selectively admitted student bodies in the country. Over 18,000 applied, 1600 were admitted. Once a degree was conferred on these students, they were highly sought after by employers in the public and private sectors. I began to wonder how many of them might work for me before they graduated and how I might best use their abilities. Since information is so important to a new leader, it occurred to me that the best thing I could ask students to do was to help me gain more insight into how our former students would like to reconnect with their alma mater.

I learned that only 4,000 out of our 150,000 living alumni had ever had face-to-face contact with a representative of their alma mater and then began to imagine what might happen if we were to hire 100 students and ask them to interview 10,000 alumni over three years. What if we could more than double our interaction with alumni in a few short years? What might we learn about their interests and passions? And, if better armed with those insights, how much more effective might we be in designing our communications and outreach?

And how much would I need to spend? I wasn't exactly rolling in the dough. I thought, “What if we asked students to interview alumni in their hometowns when they returned for Christmas, Easter or summer break?” Since they were already going home, I wouldn’t have to pay transportation only for their time. I did the calculations and concluded I could offer students the handsome sum of $50 for each interview conducted. Such a deal, eh? The question then became, “Would anyone take me up on the offer?

They did indeed. Of course they did. They were (and are) very smart. They saw the value of getting in front of successful alumni and the opportunity to represent the University in a pioneering effort was far more than the $50 dollars we were offering. Some of my colleagues at Georgetown and at other universities warned me that I was taking too much of a risk, that I was asking students to take on responsibility beyond their years and that some would disappoint us by their poor judgment or inappropriate behavior. But none did. There have been no such incidents, not one. The students were carefully selected and put through rigorous training, both in the art of the interview and in steeping themselves in University facts and figures.

Our market research showed that many alumni craved a closer connection to their alma mater but felt the University had only one interest in them – as donors. Further, some of those who had met with development officers felt that they were in the presence of “hired guns,” there for the sole purpose of extracting commitments but were not well-versed on the latest developments or higher aspirations of the University. We knew it would be important to send a far different signal through our students.

When the first group of student discoverers began their work, they found not all of our alumni were willing to meet with them and those that were often met them with initial skepticism. However, after the alumni realized that there was no hidden agenda, they were touched by the fact that the University had deployed someone for the sole purpose of learning more about them. The alumni took to the students immediately, often asking if they could drive them to the next appointment or take them to lunch. Then I began to receive letters from those who had been interviewed. They said, in so many words, “You couldn’t have sent a more impressive representative to meet with me.” It was working. Human bonds were being strengthened when current and former students met. The students said more about the University and its future than any brochure, speech, video, or event ever could.

In Matthew Lambert, I was fortunate to find the right leader to implement my idea. He, in turn, surrounded himself with other strong leaders, including very talented students. One student, Tim Foley, conducted over 500 interviews over one summer. We hired him immediately after graduation. He worked for us for two years and now is in law school.

As I have said on other occasions, the program has been “a win” on every conceivable level. The program has brought forward wonderful students who helped bring many accomplished alumni back into the fold. The process of discovery proved an invaluable educational experience for our students and helped develop their personal and professional skills. As a result, they grew even closer to Georgetown. I expect many, in not most, will be our alumni leaders of the future.

Philanthropy is not produced by fund-raising. It is rooted in the common interests and mutual benefits of a well-developed community. If we are to achieve philanthropy’s highest and best purposes, we must attend to the constant building of the web of human relationships and the defining of the causes that unites us. Our students did more than interview or discover; they furthered the growth of a community, strengthened the sense of common cause, and helped us all better imagine how we might work together to achieve something greater. We continue to learn from their experience.