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Oct 21, 2011

Donor Relations: Foundations need to rechannel attention back to the nonprofits

For next week’s edition of my Business First column I wanted to focus on the need for donors to help nonprofits build their capacity in management, planning, analysis and governance. For a nonprofit to truly be a reliable provider of a community need, they require more than just money. In fact, I believe this area to be so important that I titled my second book More Than Just Money.

The Center for Effective Philanthropy speaks to this need in their latest report entitled “Rhetoric versus reality: A Strategic Disconnect at Community Foundations.” The report notes that community foundations have been experiencing increased competition for funding, resulting in heavy pressure to attract and retain new donors.

This pressure has led to disastrous effects, as many foundations now view donors as “…An end in itself rather than a means to an end. As a consequence, instead of connecting them to the needs in the community, donor relations are shaped by the personal needs and interests of the donors.’”

Alas, it seems that the donor has turned into the customer. If that is indeed the direction we are heading, we may have to redefine the word philanthropy.

Thankfully though, a notable few are making efforts to shift focus to community need, hoping to rechannel attention away from the personal needs or desires of the donor and back to the foundation.

A shining example can be found in the mindset of the Omidyar Network, the foundation established by Pierre Omidyar (the founder of eBay). The Omidyar Network has embraced the concept that nonprofits need more than just financial help in order to be effective.

Pierre Omidyar has attributed much of eBay’s success to soliciting feedback on what its customers need and has applied this concept to his foundation. By soliciting feedback from its grantees on what is needed, the Omidyar Network is deeply involved in advising without dictating on how the organizations should run.

One official said, “We also want to continue to reinforce our own humility in recognizing that it’s actually [the nonprofit’s] work that’s central to the success of the Omidyar Network.” Bravo.

One key way it does this is by employing a large core of management advisers who provide intensive assistance on an array of topics. To alleviate a nonprofit’s reluctance to reveal its challenges to donors, Network advisers are separate from the people who decide which organizations receive money.

An article by Nicole Wallace in the Chronicle of Philanthropy, which alerted me to the work of the Omidyar Network, interviewed grantmakers and nonprofits that also specialize in capacity building. She found these refreshing tips for grantors to keep in mind if their goal is truly to help the nonprofit sector to be more effective and reliable providers of key community needs:

  • Do no harm.
  • Focus on what the grantees say they need. Foundation-directed plans are seldom put into action.
  • Tailor assistance to the size of the group – and whether it’s a new, established, or transforming nonprofit.
  • Focus on the entire organization, rather than plucking out individual staff members and sending them to training.
  • Acknowledge the power imbalance inherent in foundation-grantee relationships, to lessen its grip and help build trust.
  • Consider general operating support to give charities the flexibility to shore up their operation on their own.

I must confess, I see many donors violating these precepts every day and wonder how much more good could have resulted from their generosity if they had followed the precepts.

I suggest printing this list out and pinning them on your wall as a reminder of what truly promotes improved nonprofit capacity.

The Omidyar Network is an example of good and necessary developments occurring in philanthropy. They recognize the nonprofit expertise in what the community needs at the same time they seek a supportive, non-dictating way to make it a more reliable, capable, and efficient provider to the community. Let’s see if we can make this the dominant trend in this decade.

If your organization’s board needs guidance on how to effectively provide a community need (focusing on more than just money), I suggest a board retreat. These all-day planning events can help assess your organization and devise a specific, tailored strategy best suited to your organization. A retreat will build a better foundation for your nonprofit, and ultimately the community, to rely on.