The Moral to Our Fundraising Story

Too many leaders of philanthropy-seeking organizations seem stuck in a pre-recession mindset. They treat the economic contraction like an unwanted guest in their once-comfy home, grousing about how long its been lounging about, lapping up the contents of the liquor cabinet and running up the grocery bill. They never actually confront it but hope and pray it will go away.

But even when this lead-footed economy finally trundles off, new realities will remain, realities that have been creeping in on little cat feet for some time, their claw prints barely noticeable on over-stuffed, mortgage-backed recliners.

Consider, if you will, the wise counsel of Bruce McClintock, former chair of Marts and Lundy, one of the most highly-regarded voices in institutional advancement, and one who has thoughtfully and consistently guided scores of institutions, over several decades, to higher philanthropic ground.

McClintock provides real insight into why fund raising performance across institutions remains so uneven. “While the sluggish economy and the re-distribution of wealth are certainly key factors in what we are seeing, “ he says, “I believe a third factor is also impacting results - institutional perspectives and allocation of resources within the advancement program.”

“I am concerned that donor attitudes have shifted dramatically over the past decade and that institutional messaging and engagement has been slow to adapt to new realities,” McClintock observes. “Some non-profits act as though they are simply victims of circumstances beyond their control. Conversely, other institutions are seemingly defying all odds and are enjoying record years. I suspect the distinguishing characteristic between these two groups is the quality of enlightened leadership (within advancement and within the institution).”

“I am also concerned that too many institutions are measuring success in their fund-raising programs on short-term results only – raising the most money in the shortest period of time for the least cost. A few of the unintended consequences of this approach seem obvious to me:

1. The drop in alumni participation (among educational institutions) over the past 15-20 years;

2. A “cash is king” mentality that relegates planned giving to a lower-priority status;

3. An under-investment in identifying, developing and achieving mid-range gifts (six-figure gifts) as an important first step in building long-term principal gift capacity;

4. Fast-tracking (or short-cutting) the relationship-building process with prospective donors (one client refers to this as “speed-dating”); and,

5. Positioning annual giving as the development office’s jayvee program for modest donors and inexperienced gift officers (thereby underestimating and/or undervaluing the potential impact of current support).

Not every institution is a victim. There are non-profit organizations that are way out in front of the others in building strong and effective advancement programs.”

Hmmm. Do I not hear this modern, avuncular Aesop telling us the tortoise of long, broad deep and authentic advancement is running in front of the hare of expediency yet again? The realities may be new but the moral to the story goes way back.

A One-Question Advancement Assessment

Could you accurately assess the health of advancement culture and predict the probability of its success if you had never stepped foot in the organization before and could ask only one question of one person? I think so.

The one person I would ask is the president or CEO and one question would be, “What does it take for an advancement operation to reach and sustain peak performance? “ If the CEO described the keys to success largely in terms of short-term, aggressive fundraising conducted almost entirely or exclusively by the development staff, I would know the organization was well under potential. In addition, I could predict that operation had, or was about to, experience a loss of productivity and a high rate of staff turnover.

The red flags in that CEOs answer include making “advancement” synonymous with “fundraising,” divorcing him/herself from the keys to success, and the failure to relate the activity to a collective drive toward specific institutional goals. Moreover, that CEOs answer does not address the building of a long-term funding pipeline much less the community of understanding that feeds it. This CEO seems to think aggressive fundraising is self-sustaining; it is not.

The CEOs depiction is utterly predictive of present and future advancement functioning because operations shape their strategies and tactics to comport with CEO expectations. CEO expectations over time become cultural assumptions. The longer the CEO serves, the more rigid those assumptions become. If the assumptions are reductive or self-limiting, advancement will be relegated to the role of a hand-off function. In this scenario, the attitude from the top is expressed, in so many words, as, “It’s your job ask for the money. Don’t bother me with that vision and mission silliness. And don’t expect us to support aspects of your operation that aren’t about asking for money or directly facilitative of it. “ In higher education, the relative prevalence of this attitude has contributed to an 18-year decline in alumni participation which, in turn, has left many institutions with shallow prospects pools and diminished chances of securing the support they desire.

When ask-obsessed advancement operations begin to falter, the culture concludes quite falsely, “We must not be asking enough!” They then require their advancement staff to conform to more rigorous asking metrics, which turns off donors, leads to gift-accounting mischief and the loss of conscientious staff. There is little one can do to turnaround this kind of situation, short of getting a new CEO who is resilient and patient enough to nudge the culture in a different direction.

If, on the other hand, a CEO with a more expansive, long-term view of advancement creates a clear sense of mission, and fosters a collective sense of commitment to it, much is possible. In this scenario, CEOs lead by example, making sure they do not ask of others what they are not willing to do themselves. Even if there is a lack of tactical or technical mastery, these operations can perform at a high levels because they draw and retain talented professionals who can speak with natural conviction about the organization they represent. That rubs off on donors. And, problems within those organizations can be readily fixed because the search for, and implementation of lasting, long-term solutions is not constrained by self-limiting assumptions. Further, these operations are often highly innovative because the CEO is open to broad ways of thinking.

In human psychology, this phenomenon is called self-fulfilling prophecy. We achieve what we think we can. We go only as far as our assumptions will allow us. The fewer the assumptions and the more we believe in larger possibilities, the more we achieve.

Philanthropy: Past, Present and Future

The book, “Charity, Philanthropy and Civility in American History,” teems with illuminating case studies and object lessons relevant to the present and future. One chapter in that book, “Faith and Good Works: Catholic Giving and Taking,” by Mary J. Oates, has applicability well beyond the subject explored.

“Church charities of the 19^th Century,” says Oates, tended to be local, ethnic and highly autonomous in character. “ To prosper, these charities had to “develop a cadre of loyal friends who were emotionally and financially invested in it. Thus, benevolent society officers, sisters, and clergy offered varied opportunities for parishioners of every social class to contribute voluntary service, as well as money, to the cause.”

The incorporation of volunteers into the workings of the institution “reflected an ingenious division of labor between the laity and the religious orders, as well as an efficient way to allocate limited monetary resources,” she says. “Through it, a working-class church was able to reach out to thousands of needy persons and to address a wide range of social problems. By 1900, the Catholic Church was supporting more than 800 charitable institutions and educating approximately one million children in tuition-free parochial schools across the country.”

Yet the sense of local autonomy became so strong, she says, that it led to intense competition among charities providing similar services. “As charitable institutions grew in number, local citizens – especially those in urban parishes – found themselves beleaguered by institutional appeals,” says Oates. In the face of growing criticism, “bishops across the country moved quickly to centralize charity fund-raising within their dioceses. They immediately outlawed most charity events intended to benefit individual institutions and asked Catholics instead to support diocesan charities by contributing to a single annual collection….This consolidated approach, parishioners were advised, would reduce pressure on institutional boards of directors to raise funds, and it would also benefit local citizens” by ending “a continuing stream of charity appeals throughout the year.”

Further consolidation of authority took place during the Great Depression when the Church saw the need to collaborate with the government to address massive social challenges. But government support meant Catholic charities had “to meet externally imposed eligibility criteria and standards.” Directors of the diocesan charitable bureaus, therefore, “replaced their volunteer staffs with paid professional social workers who would make certain that the charitable institutions qualified for public funding.”

By the 1930s and 1940s, Oates says, charity reformers were warning the Church that “a bureaucratic charity structure and dependence on government funds would inevitably weaken grassroots commitments.” But their words went unheeded, and, by 1984, government funds represented the largest portion of Catholic charity budgets.

In the 1950s, the Church witnessed an upsweep in the size and number of major gifts but, says Oates, “many very rich Catholics had little enthusiasm for giving anonymously, especially for projects that the hierarchy rather than they themselves identified as worthy of support. They preferred to give publicly and to designate their gifts. In return for major financial gifts, they thought it entirely appropriate that the church publicize and reward their benevolence with coveted papal titles and other high ecclesiastical honors.” This approach, while yielding significant gifts, led many Catholics to question the growth of secular incentives and the decline of democracy in Catholic charity.

“Although the American Catholic community has traditionally been very generous,” Oates says,” its reputation for benevolence has faded somewhat in recent years. Among religious denominations, the Catholic Church currently ranks near the top in the average household income of its members. Yet, relative to income, individual contributions to the church have fallen steadily since the mid-1960s. Nor does the record of Catholic giving today compare favorably with giving by members of other religious denominations. Although there is no consensus on what has led to this slump, one contributing factor is that American Catholics still have little say in how their financial contributions in annual, diocesan-wide campaigns for the support of the church and its charities are distributed. Any explanatory factor is that parishioners have little opportunity for direct involvement in the church’s charities.”

Many lessons for philanthropy-seeking organizations, it seems to me, can be drawn from Oates’ scholarship. Foremost among them are:

1. Philanthropy reaches its highest expression when it arises from, and is sustained by volunteers based in the communities that they seek to serve and improve;

2. Those that enlist and train large numbers of volunteer, then entrust them with significant operational responsibility, ensure a greater delivery of service through the effective management of limited resources, and by providing rewarding outlets for those volunteers’ time and talents, create the conditions that cause them to give a greater portion of their treasure;

3. The urge to control, whether in the name of local autonomy or organizational efficiency, whether to feed ego and seek credit, runs counter to the spirit of philanthropy, which Rotarians have captured perfectly in their motto, “Service Above Self;”

4. Bureaucracy is not a function of size but of an attitude that assigns itself the right to decide the good people “should do” rather than enabling and empowering what good people are already doing or striving to do; and

5. Over-indulging wealthy glory-hunters sacrifices moral dignity, the lifeblood of a rich culture of philanthropy.

The Status Trap

For decades the Salvation Army has ranked as one of the “most respected nonprofits.” It engenders the respect of the American public not only because it provides a valuable service to those in need but because it does so in such an unassuming way. The enduring face of the Salvation Army is the bell-ringer, clad in humble uniform, tending the kettle, often shivering, as Christmas shoppers scurry by.

The unpretentious example of the Salvation Army stands in contrast to other philanthropy-seeking organizations that have slipped, or charged headlong, into the status trap. This includes some nonprofits and some institutions of higher learning. Evidence of this in the recent history of higher education includes too many institutions making poorly-documented claims of “excellence;” assertions of being or becoming “world-class” unsupported by performance goals or specific service obligations; the unseemly jiggering of data to jostle for higher U.S. News rankings; or engaging in “arms races” for faculty stars, cognitively-gifted students, or “state-of-the art” technology and facilities.

The consequences of status-seeking in higher education can be seen in the disenchantment of alumni whose annual giving has declined for 17 years straight. The most prominent reasons for that decline, according to a survey done by Engagement Strategies Group, are alumni feeling as if they paid “enough already” in tuition, that they haven’t been giving a “good enough reason” to give, that donations go into “a black hole,” that their alma maters “don’t need the money” and that small gifts won’t make a difference.

Millions of Americans who toss small gifts into black kettles don’t share the same misgivings. They trust the Salvation Army because of past performance in service delivery and because all its unassuming identity offers proof positive that the money is going to the poor and needy, not to make the salaries of administrators more handsome, or its headquarters more gleaming, or to tangential initiatives intended to make the Salvation Army “a world-class” nonprofit. No, the Salvation Army has achieved status in the most honorable and sustainable way, through humble and effective service. And there is much that every philanthropy-seeking organization can learn from them, especially now.

Claimants for private support can greatly improve their competiveness by eschewing anything that smacks of status and self-promotion, and redirecting all available resources into activities that advance a succinct, streamlined mission. Presidents, CEOs and institutional leaders should embrace and embody an ethic of humility, minimizing the trappings but not the dignity of office, and foregoing travel that has more to do with hobnobbing in luxurious settings with one another or with celebrities than with true institutional advancement. In making a compelling case for private support, every philanthropy-seeking organization should be able to show donors how individual and collective commitments made in a given year will allow the institution to better serve its current constituents, or expand it services, or both.

Oh, and by the way, the Salvation Army now raises close to $2 billion each year. Institutional humility enhances moral authority, which, in turn, strengthens philanthropic appeal.

On Money and Mission

Let’s start with what seem to be unimpeachable assertions:

The purpose of institutional advancement is to advance an institution’s mission; and

The best way for advancement to do that is to secure larger amounts of private support.

Sounds right, right? Ah, but those assertions fall apart if the raising of money isn’t synchronized to the design and delivery of mission. Allow me to explain through analogy: Let’s compare an institution to an ambulance whose mission is to preserve life until patients can be delivered to the hospital. Will securing more and more private support for that ambulance automatically lead to the saving of more and more lives? Well, let’s see.

Let’s say your job is to raise more money for that ambulance. You’re told that your goal for the coming year is $100,000. “It should be a breeze,” your boss says, “We have the most important mission of all -- saving lives.” Yet, when you make your calls, loyal supporters raise concerns, including one who says:

“I’ve given generously for five straight years. I mean, I get nice thank you notes and a glossy annual reports but no one ever shows me how MY gift made a difference. I keep hearing is ‘Thank you for your last gift but now we need more’. No one tells why or what it’s for.”

You persist but keep running into donor concerns. Some question whether you need the money given how fancy the ambulance has become, not to mention how much the hospital has expanded after that last hugely successful campaign. Others say they fear the money is going into a “black hole.” Still others, as you get to know them better, reveal personal misgivings. One says, “I don’t think you’re even servicing my area any more.” Another says, ‘If I’m so important to the hospital, why is it that I only hear from fund raisers?’

Realizing that you can’t raise substantially more money without responding to these concerns, you go back to the office to bone up on how private funds have been used and why more are needed. You learn that donations been used to equip the ambulance with the latest technology. Yet, one of the drivers tells you that much of it is to diagnose and treat injuries they rarely, if ever, see. You ask, “Then why was it purchased?” The driver says, “Because other ambulances were getting it.” Further, the new equipment has added significant weight to the ambulance making it slower and significantly less fuel-efficient. You dig further and discover that the ambulance has been responding to slightly fewer emergency calls each year, and the survival rate of patients has declined modestly for five straight years despite the receipt of more private support each year. You realize the facts don’t work in the favor of fund raising.

Being of good conscience, you take your concerns to higher ups. “We could raise more money,” you say, “if we lightened the ambulance and conducted a logistical analysis to make sure we’re using the best routes to speed patients back to the hospital. And, we have to make sure we don’t withdraw service from areas where we’ve enjoyed the greatest philanthropic support.” Your higher ups, with varying degrees of acidity or amicability, say, “What does that have to do with advancement? Aren’t you supposed to raise money?”

“But I could raise much more,” you say, “if I could show prospects and donors how more money will allow us to increase response time, shorten return times, reach more people in need and drive up survivability.”

“We don’t want donors intruding in our affairs,” say the higher ups. “Our costs have gone up, therefore we need more support.”

“But, but, but…. “ you say, searching for the right words, “donors won’t give to offset our costs.”

“What???” say the higher ups, registering great incredulity.

“They give because of what we .. we…do. If we don’t do more – either serve more people or save more lives or both, how can we ask them to give more?”

“Because we’re in the business of saving lives,” say the higher ups. “And that’s very, very, very important.”

You ask if you can make your case to the CEO but are told he’s under a lot of pressure from the board to raise more money, especially for the ambulance because its costs keep going up. The board, it turns out, doesn’t give much, especially to ambulance and doesn’t think it’s important to look at response times or the survival rates of patients. They think it’s important to balance the budget and build an endowment. When they hear the cost of ambulance service has gone up, they pound the table and say, “We need to be more aggressive in fund raising.”

You find yourself in a conundrum. You’re expected to raise more money but you realize that can be done without changing the ambulance and rethinking its routes. And you don’t want to mislead donors. You didn’t get into the business to raise money for its own sake; you wanted to help save lives. So you start looking around for a job at another hospital, one that understands that the more mission relates to advancement, and vice versa, the more money you can raise which, in turn, will make it possible to further advance the mission and the credibility of the institution.

If you succeed in finding such an institution, you will discover that when mission and money are tightly aligned, donor, fund raiser and institution stand a far greater chance of living happily ever after.