I Believe

I believe that:

Fundraising and philanthropy are not interchangeable terms, that the former is dependent on the latter; if fundraising assumes that philanthropy exists to serve it, it gnaws at the generous hand that has fed it so well for so long;

Philanthropy is not “there for asking” nor can it be mobilized for things that have been, or are already being done; it awaits those with the vision and resolve to make a difference where a difference most needs to be made;

The best fundraisers see themselves as agents of philanthropy; they eschew fundraising strategies or tactics that tear at the hope, trust and goodwill that comprise the philanthropic spirit.

The best fundraisers strive to align the aims and interests of their organizations with the passions, principles and purposes of philanthropists; they know that enduring compacts are based on mutual moral obligations;

True philanthropic volunteer leaders do more than oversee the business of an organization; they live the mission through advocacy and action;

True philanthropists donate, in order, their time, talent and treasure; they are thoroughly of and for the causes they support;

True philanthropists subordinate their ego to a cause by working collaboratively and quietly through institutions; they target their investment to service improvements rather than creating new organizations in their own name that replicate existing services;

True philanthropy must be manifest in the mission of an organization, and in the daily dedication of those that lead and represent it; they must not ask donors just to give to their organization, but show them how they can give through it to create a better world; and

The assiduous application of these tenets ennoble and enliven philanthropy-seeking organizations, attract and retain the best staff, and inspire and sustain the support of the most remarkable philanthropists; that “true philanthropy,” when practiced by all, produces the most significant and lasting institutional and societal advances.

For Amber Waves of Grain

A very competent client asked me how to respond to a trustee who wanted to know how many fundraisers needed to be added to the development staff to secure an additional $20 million per annum. He assumed that the mere adding of a fundraiser guaranteed a significant return so it was only a matter of calculating how many it would take to produce the desired amount.

These are the kinds of questions that advancement leaders need to answer with great care. If one responds too literally by giving a projected ROI per development officer without additional context, one buys into, and helps perpetuate a reductive and presumptive worldview of philanthropy – and there’s too much of that out there already.

Here’s how I would answer that trustee’s (we’ll call him Joe) question: “Well, Joe, that’s like asking how much grain can be harvested by hand in any given day. We could calculate how much one strong, experienced laborer, armed with the sharpest scythe, could reap from sun up to sun down. Let’s say that came out to four acres. Then we could say that five similarly experienced laborers, similarly equipped, could reap 20 acres a day. But all that assumes there’s 20 harvestable acres. It wouldn’t make sense to hire harvesters if we hadn’t planted or cultivated enough grain to produce that kind of harvestable acreage, nor would it make sense to go to all the trouble to plant and cultivate the grain, only to send the harvesters into the field before it was mature. So we really have to look at what has been planted and has been under cultivation before we can answer that question. And we need to decide how much time and money we’re willing to invest in developing fields that will provide greater yields in the future.”

I could build on this metaphor, including relating the sharpness of the scythe to the keenness of vision, the richness of the soil to the ethos of one’s alma mater (which translates from Latin to “nourishing mother”), or the warmth of the sun to an institution’s commitment to long-term relationship building. But you get my point.

The simple truth is this: Reductive thinking about fund raising is the greatest reason why institutions fall well short of their philanthropic potential. We assume the grain will always be there or somehow grow on its own; all we have to do is figure out how to bring in the harvest. Conversely, the key to realizing their potential is rethinking and reimagining fundraising expectations in the light of what it takes to create a sustainable culture of philanthropy. As we sow, so shall we reap.

The effectiveness of metrically-driven fundraising is in direct proportion to the assiduousness of the cultural enrichment that preceded it by decades, and the sowing of goodwill and cultivation of relationship that preceded it by years.

The Ultimate Question

At the conclusion my conferences, some in attendance ask me for a “reading list.” They have been intrigued by the ideas and research I share, and want to learn more. When I respond, some are surprised by how few of my suggested readings do not come directly out of the professional literature about fund raising and philanthropy but from history, anthropology, political science, sociology, neuroscience, psychology and business. Indeed, much of philanthropic research and practice is, and should be, informed and shaped by knowledge created outside of it. A good example from my recent readings is, “The Ultimate Question: Driving Good Profits and True Growth,” by Fred Reichheld.

Reichheld’s research, conducted to assist market-driven companies and corporations, shows the key to sustained revenue growth is assiduous attention to building customer loyalty. He demonstrates, however, how customer loyalty is routinely undercut by many companies’ overly narrow focus on short-term profits. Placing one’s entire attention on financial measures, he says, “creates a one-eyed monster: an organization so focused on profit that it alienates the very people on whom profit depends, its customers.” Can the same thing be said of philanthropy-seeking organization’s focus on short-term fundraising results?

In fact, I see tremendous parallels to the philanthropic world in Reichheld’s findings, observations and conclusions. Below are selected quotes from his book (in italics) with my responses following (in bold).

Customers must believe that the company knows and understands them, values them, listens to them, and shares their principles. On the first dimension, a company is engaging the customer’s head. On the second, it is engaging the heart. Only when both sides of the equation are fulfilled will a customer enthusiastically recommend a company to a friend. Alumni attitudinal research conducted by Engagement Strategies Group on the graduates of the top 100 institutions in the U.S. shows that the majority feeling emotionally disconnected from their alma maters. Schools and universities need to focus on more engagement of the heart.

But of course building high-quality relationships does cost something – often a considerable amount. It requires investment… There is no way to deceive or exploit customers and build better relationships with them at the same time. How many of you feel as if your organization recognizes the validity of this observation and has made the necessary investment in genuine relationship-building? How many of you feel that your organization is exploiting customer loyalty by asking for what it wants rather than committing itself to higher levels of service in return for higher levels of giving?

Bain research teams consistently find that the links between satisfaction-survey scores and customer behaviors that drive profitability or growth are tenuous at best. Detailed analysis of individual customers, for example, typically finds that between 60 and 80 percent of customer defectors score themselves as “satisfied” or “very satisfied” on surveys preceding their defection. Conversely, companies that achieve satisfaction scores of 80 or even 90 percent often experience no economic advantage from the apparent customer loyalty. Satisfaction is simply too low a hurdle if the goal is superior relationships. How many philanthropy-seeking organizations defined donor satisfaction by the absence of complaints (and the occasional compliment) but never measure how many donor relationships fall into the category of “superior relationships”?

Companies get confused about the goal of a satisfaction survey. Are they assessing a customer’s satisfaction with a specific transaction? Or are they assessing the quality of their customer relationships? The former is relatively simple and is best done immediately following the transaction. But evaluating a customer’s relationship with a company goes beyond the sum of all an individual’s transactions. It includes every detail of the customer’s experience…. How many colleges and universities, for instance, have assessed the quality of their student and alumni experience over time?

We surveyed 362 companies and found that nearly all of their senior executives liked to pat themselves on the back for their organization’s treatment of customers. Ninety-six percent said they were “focused” on customers. Eighty percent believed they delivered “superior experience” to their customers. Alas, when we asked customers in another survey to rate the providers of goods and services that they bought from, they gave only 8 percent of companies a superior rating. We promptly dubbed the 80 percent the “believers” and the 8 percent the “achievers.” But whatever the nomenclature, this ten-to-one ratio suggests a startling gap between those who think they are doing right by their customer and those who truly are. What’s the ratio between your believers and achievers?

A young company starting more or less from scratch can build an entire business model around particular end-to-end value propositions aimed at delighting customers and turning them into promoters. Is it ever too late? Can’t any organization reinvent itself and start afresh by committing itself to “end-to-end value propositions”?

Of employees who worked 10 years or more at North American companies, Only 39 percent trust their leaders to communicate openly and honestly. Only 33 percent believe that customer loyalty at their company is appropriately valued and rewarded. Only 28 percent say that their company values people and relationships above short-term profits. … But here’s the real kicker: only 19 percent, fewer than one in five, can be considered promoters – people who can be counted on to provide enthusiastic referrals to the company that employs them. How would philanthropy-seeking organizations fare by the same measures of employee trust and enthusiasm? Reichheld points out that employee referrals are the best source of new applicants and warns that managers must recognize that it is impossible to earn customer loyalty without first earning the loyalty of frontline employees.

Too many companies do kid themselves about their commitment to the customer experience, let alone the Golden Rule. They tolerate great salespeople or great engineers who don’t embody the core values the company nominally espouses. That practice alone tells employees that the values are not their top priority. Values must be lived consistently not merely espoused on occasion.

As it turns out, one of the most powerful drivers of customer delight is simply listening and responding to complaints and suggestions. A company’s commitment to listen and respond proves that it values its customers and takes good care of them – basic requirements for any good relationship. This explains the power of exercises like Georgetown’s Student Discovery Initiative in which over 10,000 alumni have been interviewed in person by current students and the expressions of alumni delight that have followed.

Too many managers have come to believe that increasing shareholder value – their prime directive – requires exploiting customer relationships. So they raise prices whenever they can. They cut back on services or product quality to save costs and boost margins. Instead of focusing on innovation to improve value for customers, they channel their creativity into finding new ways of extracting value from customers. A recent analysis done by Moody’s shows tuition increases from 1990 to the present have outpaced all other price indices (healthcare, energy, housing, etc.).

The foundation for good business is the ability to organize relationships into voluntary associations that are mutually beneficial and accountable for contributing productivity to the surrounding community. This why philanthropy-seeking organizations must recast their cases of support so they don’t ask donors merely to give to them but through them to create a better world, and show how they have created alliances with community-based organizations or service providers to deliver on that promise.

Lacking a credible measure for relationship quality, managers forget its importance. They fall into the trap of thinking that their only goal is profits, because that’s how their performance is assessed. Is this equivalent to fundraising managers who focus only on metrical achievement?

When a company focuses in (customer loyalty measures), by contrast, its employees are happier. They’re proud to be part of a community based on Golden Rule principles. Their job content is richer, and they enjoy better relationships with colleagues; they have more opportunities for advancement because their companies are growing. I am thrilled beyond expression to hear this coming from a prominent business consultant. It’s a beautiful professional creed, one we should all live by. That creed is further elucidated in the following quotes that I will not comment on since they speak so beautifully for themselves.

When an organization earns the loyalty of its constituents, it increases the resources available to them, and it can have a greater impact on society.

When you put all of these simple ideas together, you come to the inescapable conclusion that the best way for an organization to grow profitably is to build strong relationships among customers and employees – relationships worthy of loyalty because they are governed by the basic set of ethical standards defined by the Golden Rule. It is truly radical to think that the more ethical a company becomes, the faster it can grow and prosper. Yet the data is hard to ignore. Companies that have earned the highest loyalty are winning the battle for market share in most industries.

Perhaps the most revolutionary idea in this book is the proposition that it is at least as important to measure the quality of relationships as it is to measure profitability.

The growth of any organization is simply the accumulated growth of the individual relationships that constitute it. Partners will invest to create better, more mutually valuable relationships when they are a part of a community in which members hold each other accountable for building relationships that meet Golden Rule standards. Relationships are the crucibles in which values creation takes place.

Worst Practices

For the past few weeks, an interesting LinkedIn online discussion among Professional Speakers on Philanthropy has revolved around “worst practices” in philanthropy. Here are some thoughts offered by experts with decades of experience:

The practice that traps so many nonprofits is looking for new donors rather than focusing on their current donors and stakeholders, and especially looking for rich people, when the people who are already connected to them could be turned into major donors if they were thanked well and engaged more deeply in the organization

Recruiting board members for reasons other than their utter passion for the organization's mission. "We need some big hitters on the board" = kiss of death.

Hiring a professional fundraiser and then expecting that person to raise three times as much as they ever have before and to do it without board or senior leadership involvement...guaranteed to fail...

Many small organizations warp their missions chasing money. It's easy to get diverted when it's possible to successfully pitch a grant for an ill-fitting program or a shotgun partnership encouraged by a funder…"Any dollar" is not necessarily a "good dollar" if it derails the organization or subjects it to the whim of a self-serving donor.

Another common mistake is using anecdotal "evidence" to guide decisions. I see many organizations that are too eager to grease the squeaky wheel when that squeak is coming from just one or two constituents. Often, these constituents have limited involvement with the organization and mission, but they exert outsized influence on the board and executives, because they make the most noise. If complaints raise concerns about organization practices, programs or policies, it's time to gather real evidence to guide decisions rather than to respond in a knee-jerk fashion to a constituent who may just be a jerk.

The lack of being very definitive of expectations when recruiting Board members. Plus, allowing members to serve for too many years - terms. On the flip side, someone who has served the Board well, including the fund raising process, should not be "dismissed" after reaching the maximum number of years of service. Give those productive individuals an "emeritus" title and invite them back for periodic updates on what is happening - - in essence don't lose that good advocate!

One of the worst practices is the lack of a definitive and complete "case for support" that has the vision to excite in both the short and long range and the proper financial expectations and resources to make the organization successful in the eyes of the donors and other stakeholders. This would apply to small and large organizations.

Neither being successful in one's professional career nor having a personal stake in the mission nor being "connected" are enough to make someone a good, skillful board member. But those are often the key criteria by which board members are identified to govern. For-profit professional experience is only vaguely related to nonprofit board governance, and yet many (not all) successful professionals feel as if they come to the table as turn-key board members. Their well-intentioned ignorance can manifest in many ways.

I see some organizations replicating and expanding practices that have not been show to actually produce good results, or at least not better results than other practices they could be doing instead.

Breaching donor intent after gifts are made or "changing our minds" about key funding opportunities having pitched case initially.

In monitoring this important discussion, I was intrigued to see how many comments focused on boards – especially board recruitment. Yet, I agree that if one is looking for either best or worst practice, the wellspring is the board of directors. For that reason, my nomination for “worst practice” would be that board that sees advancement as an out-of-body experience, something they look down on but have no influence over. In healthy environments, board members do far more than evaluate or, even worse, flog the CEO and/or advancement leader. They understand that leadership is not a matter of telling people what to do or demanding that things be done; it is a matter of holding themselves to the highest standards, demonstrating what needs to be done, then asking others how they can help them accomplish the same. Human achievement does not flower in us-them environments but it does when “we the people” commit our lives and fortunes to forming “more perfect” societies.

If

If you did not know me and I approached you on behalf of a good cause, would you write me a large check, say the equivalent of one month’s rent or mortgage right then and there? If you did, you would be most unusual. Chances are you would not give more unless or until you got to know me and, through me, the cause I represented.

If I asked you to give me a list of your loved ones and closest associates so I could solicit them, would you immediately comply? Chances are you would not no matter how much you admired the cause. You wouldn’t like it if your friends did that to you so you apply the Golden Rule.

If I asked you if I could use your good name to solicit others, would you agree? Chances are you would not despite your belief in the cause. Since you did not know me, you would have no idea how I might use your good name.

If, on the other hand, I approached you on behalf of good cause and asked if you might lend your talents to it, might you not be inclined to ask exactly what I had in mind?

If I were able to show how you could make a difference to that cause and, in so doing, a concrete difference in the lives of others, might you not be willing to learn more?

If I involved you in that cause and you were able to see the difference you could make, might you not naturally share your joy with your loved ones and closest associates? Would you not readily lend your name to that cause without qualm especially if the person who brought you to it proved to be so emblematic of it?

If, through your involvement, you could see where your money would make a difference, might you not be more than willing to write a check that was the equivalent of one month’s rent or mortgage? And the person who brought you into the cause and showed you the difference you could make before asking for your support, would you describe him/her to others as a “fundraiser” or as an agent of a most worthwhile and rewarding cause?

And, finally, if you were asked to help raise money for the cause that had become so important to you, would you just go ask others to write a big check?

Just asking.

Fund Raising Carts and Relationship Horses

The vast majority of philanthropy-seeking organizations profess a desire to “build a relationship” with those that might support them. All too often, however, the only part of the institution professing it is the fund raising arm. That places a powerful condition on the proposed relationship. The real message is, “We want to have a relationship with you if and as long as you give.” Or, to put it even more baldly, “We want to have a relationship with you as long as you do what we want.” Change those “we’s” to “I’s” and imagine the same thing being said on a first or second date with someone with whom you aspired to have a second or third date. If you were on the receiving end, I submit it would not warm the cockles of your heart or cause you to want the courtship to continue. How many of us would enter into, or stay long in, such a one-sided, conditional relationship?

It is one of the greatest and most prevalent weaknesses of many philanthropy-seeking organizations. They profess the right things but behave like a bad date. They advance their conditional agenda before a relationship has had a chance to form. Ironically enough, all the evidence shows organizations will raise far more money and over a longer period of time if they lead with the relationship horse but many continue to put the fund raising cart before it. It makes for a useful mental image – a lot of nags nudging errant but ornate carts from behind while being routinely out-paced by a few horse-driven carts, with the caption over the former saying, “Do they have better carts than us?” rather than musing “Maybe this would work better if we pulled these wheeled things behind us.”

What do you think? Am I being unfair? Well, let’s look at higher education. The colleges and universities that have done the best job of building relationships with their students and sustaining them with their alumni enjoy the highest rates of annual alumni giving year after year, decade after decade. There is so much to be learned from them about creating and perpetuating communities of shared purpose and shared rewards. Yet, as alumni participation across all institutions of higher learning has declined for seventeen straight years, notwithstanding some creative accounting done by some to improve their rankings by U.S. News & World Report, most of the institutions going in the wrong direction have not studied the exemplary learning communities or surveyed their own students and alumni to gain an honest assessment of the state of those relationships. I cannot feign insight into every institution or pretend that I have studied them all but I have interacted with hundreds in conferencing , training, consulting and researching capacities; there the trend is quite pronounced: The fancy carts continue to draw far greater attention than the magnificent creatures pulling them.

Yes, I know institutions have to be practical. Those that lead them have to be wary of investing in abstract ideals at the expense of practical return. They can’t go around building relationships with anyone and everyone and hope it will bring in more support. But if they do well by the constituents currently within their fold, if they listen to them and attempt to respectful and responsive in building communities of shared purpose, and if they selectively and substantively sustain engagement with those who believe they have an obligation to society, they will realize the greatest returns. Doesn’t it make sense that the better we care for our horses, the faster and farther our carts will go, week and after week, year after year, decade after decade.

Where Philanthropy Begins and Ends

“Charity begins at home” is often interpreted, somewhat literally, to mean that the first order of altruism is to take care of those closest to us. If we wanted to reveal more of its meaning by re-stating it as a sterner injunction, it might be “Don’t do for others what you have not done for your own.” In that light, we can see that charity that did not begin at home would be hypocritical – and hypocrisy not only connotes a breach between word and deed, or belief and behavior, but the doing of things for self-serving appearance rather than selfless service.

While I agree with these primary interpretations of that famous proverb, I would hope our reflections wouldn’t stop there. There are layers of rich meaning within it that are worthy of exploration and mining. For example, it can also mean that the example and inspiration of charity begins at home, that a charitable home is the fount of a virtuous cycle, that the progeny of such loving homes carry the example forward and express it throughout their lives. It also means that the intention of charity should begin at home, that if we do not believe it is more blessed to give than to receive, and live out that belief, we are not worthy recipients of the generosity of others. If we ask for charity or philanthropy, we must provide something of commensurate societal value in return. The more we ask, the more we must return. It means that we cannot take more than we give or ask of others more than we have given or are prepared to give. Therein lies an essential ethical compact, the basis of every sound relationship and the foundation of any well-functioning community, society or civilization. It is a compact that was deeply comprehended by the greatest of our founders and the most impressive perpetuators of the American ideal. It is at heart of the American philanthropy, a revolution that has brought about the greatest voluntary transfer of wealth in human history.

Philanthropy is charity’s far-seeing cousin. It, too, begins at home. Philanthropy-seeking organizations, as the very first order of business, must establish creeds and back them up with deeds that demonstrate a love of, and service to humanity, in part or whole. They cannot, by virtue of the creed alone, feel entitled to philanthropy of others. They cannot expect to receive what they have not given or are prepared to give.

So this is my concern: In too many instances, fund raising has become detached from institutional intent and institutional commitment. Too many institutions have fallen into the habit of asking more without defining who will be better served – or how and when – if more is given. They have rested their claims on noble-sounding causes or high-toned but self-important purposes like “excellence” without holding themselves to explicit performance standards or precise “services to be rendered” in return for the support they so fervently seek. “Excellence” is defined as the act, condition or quality of being “eminently good.” For philanthropy-seeking organizations, the question is not what they aspire to be good at but in service to whom.

“Fund raising” and “philanthropy” are not synonyms, though they are often used as such. Even though fund raising owes its existence to, and is animated and actuated by philanthropy, we can see the self-serving cooption of the former in the name of the latter. Short-sighted fund raising seeks to have institutional purposes served while institutions (or organizations or causes) practicing true philanthropy work to define shared purpose with those who have and might support it so that “we the people” can work toward a more perfect union and strive, in ever more tangible ways, to make real our pledge of “liberty and justice for all.”

I believe those that practice true philanthropy, the kind that begins at home, will attract the best leaders, the most dedicated workers, the most conscientious and accomplished fund raisers and, unsurprisingly enough, the most astonishingly generous donors. Those that do not, that seek to raise fund for their own purposes and aggrandizement will deprive philanthropy of its deeper meaning and higher purpose. The former is not more idealistic than the latter; it is far more practical, attainable and sustainable proposition.