Thursday, July 1, 2010

What Trends Portend

Until the air went out of the economy, the trend in American philanthropy was “dollars up, donors down.” As long as the former was true, we didn’t seem to worry about the latter, as if the declining number of donors would never catch up with the totals. It was a bit like saying, “Yes, I’m running low on gas but I’m getting better and better mileage!”

Then came the downturn. The increasingly few we had come to rely on could no longer write checks big enough to cover the loss of many. Then it was “dollars down, donors way down.” At that point, it would have been nice to say, “Okay, so we’ll offset the decline in the size of the average gift by getting more to give.” Except our bases had already eroded. We left them unattended, or paid insufficient attention to them because dollars were up. Loyalties migrated. Emotional connections waned. Getting donors back or finding new ones now will require new strategies, significant investment and a serious, sustained effort over many years.

If, on the other foot, we persist with the “get what we can now and worry about tomorrow later” strategies, the consequences will be even more dire. It will be like tromping on the accelerator as the tank hovers on empty. “Now, Jim,” you say, “It’s not as if we’re in any real danger of running out of gas any time soon.” Well, unless and until we do a better job of looking down the road than we have, we really don’t know what will happen. So, let’s try.

The more we rely on fewer donors to provide ever larger amounts, the more fragile our philanthropic future becomes. Even if the very few can cause the dollars to go up, we put our institutions in the hands of ever more powerful oligarchies which, in turn, increases the potential of greater influence being exerted from a more narrow set of interests. I am not suggesting that the exertion of influence will always be in the naked self-interest of the oligarchy (i.e. special access to high-level health care or the admissions of unqualified offspring to schools) or that non profit leaders will always succumb to it. But I am saying non profit leaders will run the risk of developing strategic, ethical and exclusionary blind spots by being forced to spend larger amounts of time with an increasingly select few on whom the future of their institutions have become profoundly dependent.

In addition, paying excessive attention of those who can give the most the soonest comes at the cost of developing future philanthropists. We know, for instance, the vast majority of college graduates who give back to their alma mater in the first few years after graduation will persist in that habit for the remainder of their lives but most of us spend too little of our time and resources nurturing their interests. We also know that those who give the largest estate gifts are often loyal yet modest annual contributors. But if they give for 15 straight years, their probability of giving a major portion of their estate increases dramatically. Yet, these loyal unassuming donors rarely capture the same level of institutional attention as those who give large outright gifts. It only stands to reason, then, that inattention to building the long-term base reduces the size of the garden from which loyal givers are grown which, in turn, diminishes the probability of significant estate gifts in the future.

And, finally, consider the consequences already visited upon us as a result of the “get it now” approach. College and university alumni participation in annual giving is at an all-time low with no real prospect of reversal any time soon. Far too many alumni have concluded that their alma mater doesn’t really need the money, allows contributions go into a “black hole,” and doesn’t do enough to build emotional connections with them. At the same time, a majority of Americans believe that non profits are too large and poorly managed. The way we have raised funds, often by being far more ambitious in what we asked others to do for us than in what we actually obligated ourselves to do for society, has diminished the stature of many institutions, and that is the most worrisome erosion of all. So, no I don’t think we’ll actually run out of gas but I do think many of us will run so low that we will be forced into making difficult and painful changes. And, when we seek to refill the tank, we will have to spend more dearly than ever before to even have a chance.

Institutions, by definition, bridge generations. They are a means of transferring something of value from one to another. Anyone who works for an institution, no matter how long, is but a temporary occupant. Their work, therefore, must build on what they have inherited so they can bequeath as much if not more to future generations. For the sake of the institution no generation can be in it for themselves on only for their time. Many of this generation will fail in their obligations to the future but huge opportunities and great rewards remain for those who subordinate a portion of today to build a better tomorrow.

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