(Betsy Brill is the founder and president of Strategic Philanthropy, Ltd., a Chicago-based global philanthropic advisory practice that helps individuals, families, and closely held businesses more effectively manage their charitable giving. This is her first post for PhilanTopic.)
We were helping a wealthy couple define their legacy giving. They wanted to name a small charity in their will and I advised them to start funding capacity building during their lifetime. "Capacity building?" asked our client, a former CEO. "Why fund capacity now when the gift will come sometime in the future?"
"Imagine," I replied, "that you wanted to scale up a small business to serve a much larger market. You would expect to make investments in management and management systems to prepare the company to meet market demands. It's no different in the nonprofit world. We refer to the necessary investment in infrastructure and resources to ensure stability as 'capacity building'. It makes sense to do this work before they receive your legacy gift so that they are prepared to use it well."
It’s All About Perspective
This story illustrates a common misunderstanding inherent in many donor and nonprofit relationships. The nonprofit wants, or should be able, to ensure that it has the ability to meet current and future challenges in pursuit of their mission. The donor, however, is more focused on his future gift and what it could do and has given little or no thought to whether the organization has the capacity to support his intent and will be able to make those results possible.
Fortunately, our client quickly recognized the correlation between the business example and the nonprofit and understood the value in making capacity-building grants. In fact, he went on to fund a strategic plan and board training in addition to an annual contribution for general operations.
While this was a positive outcome for all parties, I have seen similar instances where the donors chose to disengage, not fully understanding the nonprofit's need. Recognizing the distinct perspectives that donors and nonprofits bring to a relationship is a key component to reducing the chance of miscommunication. Indeed, just as donors need transparency from the organizations they support, nonprofits need to understand where donors are coming from so they do their best to maintain the relationship.
Communication and the Current Environment
The current economic environment puts pressure on both sides of the philanthropic relationship. Nonprofits are seeing grant revenue from foundations diminish and are turning to donors who have fewer resources. As donors and nonprofits negotiate relationships at a critical time, the need for clear communication could not be more pronounced. Here are a few ways in which donors and nonprofits can bridge the communication divide:
1. Clarify Intent -- Before making a request or making a donation, both nonprofit and donor need to be clear about what they hope the interaction will accomplish. There is no harm in an organization requesting funds to meet a specific need or to fill a gap in the budget. Not only does this help the donor understand how the funds will be used and to what end, but it also builds relationships going forward. Similarly, donors need to be clear about their intent before making a gift: Why are they giving to this organization at this time? What do they hope to achieve?
2. Communicate Intent -- This may seem like a forgone conclusion, but too often nonprofits and donors forget to include the other in their thinking. Nonprofits may struggle with questions such as how to ask a donor to help with a budget deficit, for example, or donors may not state that a particular gift does not reflect their ability to give in the future. However, if these types of considerations are "on the table," rather than silent forces guiding the conversation, both sides of the philanthropic dialogue will benefit.
3. Understand Context -- With the environment changing rapidly for both donors and charities, it's more important than ever to maintain an atmosphere of transparency. Donors may be willing to support a new initiative if they understand how this initiative relates to the organization's mission or what the "back story" is behind formalizing the initiative. And if donors find themselves in a situation where they cannot give at the same level, communicating this information to the organization enables it to plan and better understand the importance and value of the gift made, whatever the amount. Similarly, the nonprofit should communicate how it is navigating through the economic environment and alert donors if there are problems, before the problems become overwhelming.
4. Ask Questions -- Informed philanthropists are the most enthusiastic and committed -- long term. They want the nonprofits they support to succeed, yet they are becoming more discerning about where they give their money. They are engaging in more deliberate due diligence before writing checks. Organizations that anticipate the questions that will be asked of them are more apt to receive grants or contributions. Organizations should also feel free to ask donors questions.
Especially since the Bernie Madoff Ponzi scandal came to light, it's important to know as much as possible about the people and institutions helping to secure the financial strength of an organization -- what are their motivations, interests, long-term commitments, and desire for involvement?
The recession has created new terrain for both donors and nonprofits. Nonprofits face falling revenues and rising needs while donors manage reduced incomes and asset values. But urgency is too often a ripe environment for miscommunication. Successful philanthropy is a partnership between donors and nonprofits. Partnerships take work and require both partners to be good listeners. Now, more than ever, donors and nonprofits need to hear what the other partner is saying it needs and wants.
-- Betsy Brill