Reluctant Rolodex Syndrome

How long has it been since you — or anybody you know, for that matter — used a Rolodex for anything other than to keep loose papers from sliding off the desk? And yet "Rolodex" continues to be one of the most widely used terms among development officers and fundraising consultants — not to mention one of the most anxiety-inducing words in the English language for nonprofit board members and major donors. How could it be that mere mention of a once-critical but today ignored office product — as in, “Can I count on you to open your Rolodex?”— can create both optimism and terror in the hearts of development professionals?

I kid, but most everybody reading this knows exactly what I mean. To the development professional, an organization’s most powerful fundraising asset is its pool of "true believers" — committed friends, board members, donors, and funding partners who are already convinced that the nonprofit’s mission, programs, and effectiveness are worthy of generous support. In a game where getting through the door is 90 percent of the challenge, common sense tells us that an introductory call from a friend will almost always be more effective than a cold call. Think of it this way: how many basketball players will launch a half-court shot when the defense has left the lane wide open for a layup? (Not you, Warriors fans.)

At the same time, many of us understand that our true believers aren't always eager to share the good word about an organization with others or are willing to go out of their way to extend an invitation to their friends and business associates to support — with their time, money, or both — a cause close to someone else’s heart.

Why is it that true believers are so often reluctant to share philanthropic good news with their friends and associates? And what can we, as development professionals, do to reduce their level of anxiety and nudge our board members and donors into opening their Rolodexes a little more readily?

With your indulgence, let me introduce you to a theory I call the Three Big Fears of Major Donors and Board Members — a theory that, in my opinion, goes a long way toward explaining what I call Reluctant Rolodex Syndrome.

Fear #1: The Fear of Being Asked to Solicit Money

It never ceases to amaze me how many people who routinely pitch multi-million-dollar investments to acquaintances or friends break out in a cold sweat when they’re asked to solicit those same acquaintances and friends for a $25,000 gift in support of remodeling a local homeless shelter, providing job training to displaced workers, or some other equally worthwhile cause. Shouldn"t it be the other way around? Shouldn't it be easier — much easier — to ask someone for an investment that benefits others in need than to ask them for an investment from which you and your partners personally hope to profit? Go figure.

The Strategic Thinker-Leader

For those who read my "5 Reasons Why 'Strategic Doing' Beats Strategic Planning" post, it will come as no surprise that I spend a fair amount of time thinking about, critiquing, and doing strategy. Truth be told, strategy is a bit of an obsession for me, more creative art and less a science, despite what the bean-counters and McConsultants would have you believe.

Like other creative arts, truly great strategy is the product of inspiration. And inspiration comes to us in its own good time rather than during scheduled meetings: while we’re arguing with a friend, thinking about a problem, noticing something we’d missed before, even while we sleep. (Okay, maybe that’s just me…)

More to the point, strategy isn't a thing, a plan, a committee, or a document. It's a way of thinking about change — a way of imagining that demands action. Because, at the end of the day, strategy is nothing more than a language for translating ideas into outcomes.

So what makes for great strategy, and how do you get there? When do you know you've nailed it? And, perhaps most challenging, can the art of strategy be taught? I don’t have the definitive answers to those questions. Maybe great strategy is like pornography: you know it when you see it, to paraphrase the late Justice Potter Stewart. That said, allow me to share a few observations from my years in the trenches about the what and how of strategy.

If strategy is nothing more than an organized way of thinking about change, then "doing strategy" should be built through a sequence of cognitive steps — a disciplined intellectual process that transforms what is to what could be and leads to a clear, compelling end-state vision.

So what does that disciplined and orderly thought experiment I call strategy look like? Like any other disciplined intellectual process, strategic thinking is built around a sequence of questions:

The Empowered Leader…or 5 Reasons Why ‘Strategic Doing’ Beats Strategic Planning

One of these days I'm going to sit down and write a treatise on why I believe strategic thinking and strategic leadership are more valuable than strategic planning — particularly, but not only, in a not-for-profit context. I'm going to do it, I promise, but not today. I'm too busy doing stuff.

So apparently was Southwest Airline's legendary founder and CEO Herb Kelleher, who held that "strategy is overrated, simply doing stuff is underrated. We have a strategic plan. It's called doing things." Or, as management guru Tom Peters puts it, "the thing that keeps a business ahead of the competition is excellence in execution."

How many of us were taught that "boards make policy and executives implement it"? Turns out that assertion is both over-simplistic and short-sighted, at least as far as well-functioning organizations are concerned. The empowered leader — whether nonprofit or for-profit — must own and lead both the strategy process and the strategy itself, which is one reason why strategic planning is overrated and often ineffective. Done conventionally, strategic planning empowers the consultant, not the executive. Executive coaching, on the other hand, invests in the development of leaders who then empower their organizations, boards, and staffs to think big and execute well.

I'm not saying that strategic planning isn't important. It certainly is — especially to the legions of pricey consultants happy to have you pay for their thick workbooks and the many billable hours needed to walk the strategic planning team through them. Strategic planning is, after all, a big business. (Don't believe me? Stop by one of McKinsey's hundred and nine offices around the globe and chat with one of the eleven thousand consultants and advisors the firm employs.)

So what's a better option? You guessed it: focused and well-executed executive coaching. One-on-one coaching can be a valuable and effective alternative (or, even, precursor) to a full-on strategic planning process, especially for the already overwhelmed and over-burdened executive who is worried about the cost, in terms of time and money, of the latter.

Multi-Generational Models That Work

This is the third post in a three-part series. Click here for part one, "Going Long: Building a Legacy of Family Philanthropy," and part 2, "Raising the Next Generation of Givers."

If you have not read the first two posts in this series, I encourage you to take a few minutes to do so now. In this final post, I will compare three alternative models for structuring family philanthropy, each of which — properly planned and managed — can produce meaningful and satisfying long-term results, and will conclude with a few practical tips. But before diving in, allow me to note the obvious:

The information provided here is general and educational in nature and is not intended to be, nor should it be construed as, legal or tax advice, neither of which the author is qualified to provide. Readers are strongly encouraged to consult with their tax advisor or attorney before making significant charitable decisions or establishing a charitable giving program.

Now that we've gotten the disclaimer out of the way, let's compare some of the key features and benefits of donor-advised charitable funds, private/family foundations, and supporting foundations — three popular structures for managing current giving and/or multi-generational family philanthropy.

Donor-Advised Charitable Funds

A donor-advised fund is a charitable savings account of sorts, established within and managed by either a traditional public charity, community foundation, or, more recently, a nonprofit subsidiary of a commercial financial institution (Vanguard and Fidelity being among the largest in this category).

Donors can brand their donor-advised fund and name successors or charitable beneficiaries, while contributions are placed into separate donor-advised fund accounts where they can be invested and grow tax free.

The donor-advised fund allows individuals to make charitable contributions, receive an immediate tax benefit, and then recommend grants from the fund over time. (More on that later.)  Contributions are irrevocable, and donors can contribute to the fund as frequently as they like and then initiate grants to their favorite charities when they are ready, with no minimum annual distribution requirement.

Raising the Next Generation of Givers

This is the second post in a three-part series. Click here for part one, "Going Long: Building a Legacy of Family Philanthropy."

In my experience, accumulated over the course of a professional career working with and observing philanthropy and philanthropists, I believe there is a strong argument to be made for multi-generational philanthropy based on the notion that wealth accumulated over multiple generations or through the extraordinary success of one generation ideally should be used to build social capital with long-term, recurring benefits.

Paraphrasing Warren Buffett, a philanthropist-friend once told me that he intended to leave enough for his children and grandchildren so that they could do anything, but not so much that they could do nothing.

Creating a legacy of shared family giving is one of the best available ways of preparing future generations for leadership roles in their communities, based on an understanding that inherited wealth is not only a means for personal gratification but carries with it a responsibility for advancing the public good.

There are of course legitimate first-generation concerns about whether their children's values and charitable priorities might well diverge from their own. And the jury is certainly out as to whether members of the "entitled generation" now coming into their own will share their postwar, baby boomer parents' commitment to collective responsibility and sacrificial giving.

There is reassuring news, though, for those concerned about passing on charitable assets for their children to steward. Not only is there much that can be done to train the next generation in the art of philanthropy and social responsibility, but the process can produce enormous psychic benefits for both generations and bring families together around a core of shared values while respecting diverse generational interests and priorities.

Going Long: Building a Legacy of Family Philanthropy

For a substantial number of wealthy Americans, establishing charitable foundations and family funds has become an attractive and tax-effective way of channeling their philanthropy, and as a result the proliferation of such vehicles has reached unprecedented levels.

In the United States alone, roughly 100,000 private foundations and 250,000 donor-advised funds today hold some $1 trillion in assets. (For perspective, that's more than $2,500 for every man, woman, and child in America.)

The bulk of these assets typically are set aside in long-term portfolios whose income underwrites charitable grants in — their founders hope — perpetuity. Let's call this the going long strategy. Increasingly, however, spending down of charitable assets during one's lifetime — going big — has become an attractive option for growing numbers of philanthropists.

"Like Bill and Melinda Gates, some believe they can make deep investments to address today's biggest problems," says Elliot Berger, managing director at Arabella Advisors in New York City, "and that other donors will emerge in the future to tackle the problems of tomorrow." Or so the argument goes.

Hundreds of Google citations on the subject testify to the increasing frequency with which family and public foundations, large and small, are deciding to "go big" and spend down their charitable assets rather than entrust future generations with the keys to the "philanthropic safe."

"Going Long" or "Going Big"?

As reported by the Bridgespan Group, only about 5 percent of the total assets of America's largest foundations historically has been held by entities in the process of spending themselves out of existence. By 2010, that number had climbed to 24 percent — and, presumably, has grown since.

What are the implications of this shift? What might it mean for the long-term well-being of society if some of the great philanthropic fortunes of our day were to spend themselves out of existence? Is there evidence that accelerated spending today can solve social problems to a degree that will reduce future funding needs?