Sunday, January 3, 2010

Reminding Ourselves

I can think of no better way to start the new year than to reflect and remind ourselves that philanthropy is a social compact, an unwritten, culturally-held agreement between donors and doers to get something of mutual interest done. For that compact to work, both parties must be very clear about what each thinks is possible at what cost. The less unrealistic and self-serving each party can be, the greater the chances of success.

Ways in which organizations can be unrealistic include:

Overstating its aspirations. For instance, no one is going to cure cancer in the next few years. Wouldn’t it far wiser to tell donors exactly what can and can’t be done to increase the comfort and survivability of those stricken with cancer in the next five to ten years than to promise something that sounds nice but offers nothing tangible to anyone anytime soon?

Touting a purpose without a practical plan to make it happen. Whether it is becoming more green, global or diverse, a donor should be able to ask, “What are your short-term and long-term goals? What benchmarks or milestones are you driving toward? How is this organization using the uniqueness of its brand to make a significant and sustainable difference?” And organizations should be prepared with specific satisfying answers.

Expecting great support without a great idea. Throughout my career, I’ve met leaders who hoped to secure large gifts – including some in the nine-figures – but had no idea, project or plan that would justify a gift of that magnitude.

Expecting great support without putting forward a great effort. Yep, even with a good idea and a great cause, a great effort is required from the leader, the board, the advancement team and all those who hope to benefit from philanthropy. Everyone must be willing to knock on a lot of doors, listen to a lot of potential donors and to adjust their plans according to what the philanthropic market will and will not bear.

Ways in which organizations can be self-serving include:

Asking on the basis of institutional “giving levels” rather than budgeted project need. We all like nice round numbers, like one million, but a well-developed case for support is built on a well-crafted budget. An exact budget shows that an organization has thought carefully about, and is asking only for, what it needs. If there’s any rounding to do, let it be done by the donor.

Expecting loyalty to be the donor’s primary motivation. Organizations should ask for support on the basis of what might be, not what is or was. Expecting loyalty is really assuming that an organization has already done enough to keep a donor’s support. In fact, the best way to sustain support is to show the donor how continued giving will produce ever more impressive results.

Believing a noble cause is enough. Nobility of purpose or goodness of intention is no substitute for the relentless pursuit of better, faster, more economical ways of delivering more value to more constituents. Indeed, one could argue that the greatest of causes should hold themselves to the highest standards of practice.

Asking for money without being ready. Donors want their money to be put to work, whether it is to build an endowment or a new structure, to launch a new program or augment an existing one. They want their money to make a difference. When an organization fails to expend donated funds in a timely manner, for whatever reason, it owes the donor an explanation of why the delay occurred and when it will be overcome. It should never hold “current use” gifts to generate earnings.

Wanting too much in reserve. I know I’ll arouse the ire of many but I think too many organizations put too great an emphasis on building overly-large endowments. Yes, little or no endowment can leave an institution vulnerable but too large an endowment can leave it complacent, or even smug, which, in turn, make it less adaptive to necessary change and responsive to emerging opportunity.

Asking for more to avoid tough decisions. I wish I could tell you how many times in the past year I have heard donors say, in so many words, “My business has had to really tighten its belt and make some very tough decisions but I see little or no evidence of that from organizations asking me for money.” In too many cases, the criticism is warranted. Some organizations seek to raise more, even in a contracted economy, to keep from upsetting internal stakeholders, rethinking outmoded assumptions and making necessary but painful decisions.

Failing to ask, “What would our donors think?” Whether it is determining the payout rate for endowments or deciding how much to spend on a holiday party, organizations, especially when they are about to make a decision that benefits internal stakeholders, should ask themselves this question and search their souls for the right answer. Even when considering such questions it is wise to imagine a donor in the room, the kind that we all hold in great regard, and ask ourselves if we would be comfortable advancing the idea with he or she present. That, I believe, is true stewardship.

A healthy, well-led organization is able to ask itself if these tendencies have crept in and, after earnest reflection, will begin to do its part to restore and re-balance the social compact. Thoreau said, “To regret deeply is to live afresh.” I would say those organizations that reflect deeply on these kinds of issues can accomplish the same and, in so doing, refresh their authenticity and reestablish their relevance with each passing decade.

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