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Oct 5, 2012

Affluent Donors and Gift Restrictions

Forbes magazine and Credit Suisse recently polled 264 donors with investable assets of a least $1 million, reports the Chronicle of Philanthropy.  The report had 6 major findings.

1. Wealthier donors were more likely to give through their own foundations and were more likely to support capital projects.

2. The vast majority were guided by personal values in determining their giving.

3. Over half seek advice from other donors about where to give.

4. Geography matters.  About 40 percent of wealthy donors in Asia Pacific and the U.S. gave the most to religious institutions, compared with 20 percent for European donors.  In contrast, 40 of European donors gave the most to medical research, compared with about a third of Asia Pacific and U.S. donors.

5.  Wealthy donors find giving to be challenging, particularly in meeting their own philanthropic goals.  They set specific expectations for their giving and do not want failure rates of over 50 percent, but the wealthiest donors would not tolerate such a high failure rate.

6. Nonetheless, they are willing to be patient:  one-third would allow 10-19 years to realize their goals, although 44 percent want results in less than 10 years.

These survey results suggest that nonprofits are not seen as the visionaries or thought-leaders for what society needs and how those needs should be met.  Instead our major philanthropists feel that the ball has been placed in their court.  They see other philanthropists as the source for ideas on issues to address and approaches to use.  Implicitly the nonprofits enter the process as implementers or contractors.  Is this the best way?  Are nonprofits not at the idea and approach development stage because they are reluctant to come to that table?  Because they aren’t invited? Or because they have not brought much to the table?

Have nonprofits fallen into the rut of focusing their donor relationships on talking about money rather than talking about the needs of the community and new ways to address those needs?  Are nonprofits more focused on helping themselves rather than engaging in a dialogue that may identify a problem and solution that can be better addressed by another nonprofit and thereby steer a donor’s philanthropy to another nonprofit?

The Forbes results suggest that philanthropists feel they are on their own in figuring out how to solve the world’s problems.  What would it take to bring the nonprofits to the table so they are consulted as routinely as our philanthropists’ peers?

I wonder if this is another example of the erosion of trust between donors and nonprofits, which I wrote about in the challenges of philanthropy chapter of More Than Just Money.  Nonprofits must avoid the image of mendicants that are always holding out their hands for alms; they must rather project the image (and the reality) of organizations that have a clear view of community need and how their key mission activities fulfill that need in a special and highly effective way.

Creation of the reality of this image must start at the board, which should develop and maintain a laser focus on mission, strategy, and how well it links mission to money.

When I facilitate retreats, I make sure the outcome of that retreat is a clear set of decisions on key mission, supporting activities, and sustainability.  With that vision, a nonprofit has a better chance to engage the philanthropic community on how to address our society’s needs.  In time, I hope that clear set of decisions will give the nonprofits something to bring to the table when philanthropists seek advice on what needs their philanthropies should next address.