Katya's Non-Profit Marketing Blog | The albino squirrel and the investor: aka the problem with donors

The albino squirrel and the investor: aka the problem with donors

There are two interesting criticisms floating around regarding donors.

The first one says wealthy donors and foundations tend to be fickle in their giving. They’re eager to support innovative and new efforts, but not necessarily good at retaining and expanding investments in what’s older and proven. A couple of weeks ago, I had drinks with some wise nonprofit people and one of them told the story of getting half a grant - because his nonprofit was “too established and successful” compared to startup groups. This is a great example of this problem. Solid isn’t as sexy as new and different. But it should be.

I call this the Albino squirrel problem. This is an Albino squirrel on Q Street in Georgetown, here in DC. I see it many mornings on my way to work. I stopped and paid it attention (and even put it on Flickr) because it was new and different. Maybe one of these days the creature will get a grant.

A recent book goes deeper into this issue, beyond the Albino squirrel and my superficial analysis to the reasons for and toll of “Billions of Drops in Millions of Buckets.” Author Steven Goldberg says we’ve given too much money in too many places with too little impact. He maintains big donors should be more willing to concentrate massive resources in single approaches over the long haul to take promising programs to scale. In other words, think centralized planning for social change. Goldberg urges concentrated giving on national projects, based on an impact index that ranks nonprofits by their effectiveness. An excellent review of this book by William A Schambra of the Hudson Institute’s Bradley Center is here.

While I’m all for developing a greater attention span among big donors so that longer term investment is made in what works, I agree with Schambra’s assesment that this argument for centralized giving goes too far and neglects the local groups and “the small groups - with their intimate understanding of local conditions and needs - that may, in aggregate, do the most good.”

Which gets to the second criticism I hear too often - that individual donors (not just big donors) need to stop supporting any old local organization and act more like foundations, seeking “high impact” giving prospects. There seems to be a movement afoot to demand that donors like you and me insist on less “soft” criteria for giving (like what they love or is personally relevant) and critically examine ROI based on standards like those described by Goldberg. I believe this will never happen among the masses. Most people give for profoundly personal and emotional reasons, and it’s going to take forever to get them to think like philanthropic investment bankers. If big donors go for the Albino squirrels, individual donors go for the pet squirrels. And that’s not going to change any time soon.

I’m not an analyst of social impact, so I’ll leave that to folks like Goldberg. But I will say this: if you’re chasing a grant, don’t forget to show how your approach is fresh and reflective of a foundation’s latest “strategy.” And if you’re courting small donors, show how you’re relevant to them. We’ve got a long way to go before any of that changes. Don’t hold your breath for the deluge into a single bucket.

Posted by .(JavaScript must be enabled to view this email address) on 08/04 at 09:09 PM

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Comments

Geography Matters and Is Personal

That’s the concept that seems to be missing from these discussions about “high impact philanthropy” as if there is a “rational market based philanthropy fund” into which any willing donor pours their money, and they get back the “most improved” community. Sounds great, but the only problem is that it doesn’t exist.

One element is just as you described, the personal element, and a component of that is geography. There are probably albino squirrels in Oregon, but you don’t care about them, you care about the one on your block. Why? Because that’s where you live, or it’s a place that you have an association with and care about. It’s this personal connection aspect that seems to be missing from the discussions about “high impact” philanthropy.

Obviously in a given area, if there are two non-profits with similar missions, the one that does a better job will hopefully attract more support. But what if that’s not the case, what if the donor’s decision is about supporting a non-profit in Anacostia (low income section of Washington, D.C.) or picking a random county from the “100 poorest counties in the US” list? My prediction is that most donors will choose to give to the non-profit located in the area that they have a connection to, wherever that may be.

Regards,
Bill Huddleston
http://www.cfcfundraising.com

P.S. CFC = Combined Federal Campaign, CFC donors are multi-year donors, and if the CFC were a foundation, it would be the 10th largest foundation in the US.

Posted by Bill Huddleston on 08/06 at 03:58 PM

I agree that human services would benefit from larger concentrations of resources into expanding and building upon what works. We do actually know a lot about what works, and I was shocked recently to find that many, if not most, programs that have been rigorously evaluated are discontinued after that, even if they are found to work. The researchers I spoke with thought it was because funders move onto something new.

To me, there is only one word to describe this state of affairs: tragic. Today, I came across an organization that provides one-week job training to young people coming out of the juvenile justice system. Hopefully, there is more to the program than was described, because one does not have to be an expert in youth development to know that a one-week job training program is woefully inadequate to getting kids work, keeping them employed and preventing recidivism beyond that first week.

I don’t think it’s OK that parents and young people who are promised help to get their lives in order are served by programs that are unable to fulfill that promise, especially not when they could have been served by better programs. I don’t think it’s OK that money goes to poorly implemented programs when those resources could have done some good elsewhere.

You are right, of course, that individual donors are concerned with donating to causes they feel passionately about, to their neighborhoods, etc., but do they realize the opportunity costs and potential to cause harm if they donate to weak organizations? I don’t think so. I think most donors, and even many nonprofit staff (I used to be one of them), believe that whatever they contribute will make some difference, even if it is a small one.

We owe it to the people who need our help to change that perception, because there is a lot at stake. If a young person contracts HIV because a prevention program was ineffective; it is a tragedy. If a student drops out of school because a program was ineffective, it means poor life prospects. If a poor, inner-city teenager gets pregnant, it means that mother and child both risk a host of negative outcomes in the short and long term.

It’s OK (good, even) to give locally and to causes one feels passionately about, but within that context, there is a lot of room for considering which organizations are most likely to make a difference. Hopefully, Charity Navigator and others can, down the road, fulfill a role of helping individual donors identify organizations most likely to make a real difference. I’m crossing my fingers.

I agree that we mustn’t neglect small and local groups. But our most important obligation is not to the nonprofits; it is to the people who need their services.

Ingvild Bjornvold
Director of Advocacy
Social Solutions

Posted by Ingvild Bjornvold on 08/14 at 04:27 PM

Terrific blog, Katya. I look forward to meeting you at the Bradley Center in DC in September to explore this important issue.

Reading your entry about my book, I was struck by how little disagreement I think exists between us. I agree that “solid” should be “as sexy as new and different”; I support “developing a greater attention span among big donors so that longer term investment is made in what works”; I agree that performance-based giving “will never happen among the masses” (nor do I think it should) and that “most people give for profoundly personal and emotional reasons” (which is fine with me). Bill’s comment puts it well when he says that “most donors will choose to give to the non-profit located in the area that they have a connection to.” I certainly agree there will never be a “deluge into a single bucket” or anything close to that. I would venture to guess that more than 95% of giving will always be made for personal reasons, and I acknowledge how important that is for enriching civic engagement in the U.S.

I do think you misread me when you suggest that I’m advocating “centralized planning for social change” and that my book “neglects the local groups.” Rather, I’m advocating some modest experiments with collaborative funding in amounts greater than venture philanthropy can support to see if there might be opportunities for growth-ready “mid-cap” nonprofits that are starved for growth capital to extend their proven innovations and make significant headway against pervasive social problems.

I agree completely with Ingvild’s comment, especially her point that “there is a lot of room for considering which organizations are most likely to make a difference.” Bridgespan estimates that the total amount of U.S. nonprofit growth capital per year is less than $200 million. If only 1% of total giving—$3 billion—were carefully invested in larger, longer and less-restricted grants to outstanding nonprofits working closely and collaboratively with communities, researchers, evaluators, subject matter experts, management consultants, and financial intermediaries, we might be able to capitalize (pun intended) on the tremendous innovation and civic participation we’re seeing in the social sector today.

Regards,
Steve Goldberg
Author, “Billions of Drops in Millions of Buckets: Why Philanthropy Doesn’t Advance Social Progress”
http://www.billionsofdrops.com

Posted by Steve Goldberg on 08/19 at 10:03 AM