Strut, don’t simper, when you ask
My favorite pink paper, the Financial Times, had an editorial this weekend by v3’s Robert Egger. Check it out if you missed it.
The gist (and I quote):
In you were savvy enough to have invested $1,000 in Microsoft when it went public in 1986, the value of your stock today would be close to $½m.
But what if you had invested the same amount in a high-performing non-profit group; one that could show measurable, financial impact in your community? All you would have been eligible for is a one-off tax deduction.
Think boldly for a moment. Imagine if there was a way to measure and then reward strategic investments in non-profits in the form of an annual and potentially growing tax deduction based on the same rate of return principle as the dividend. Imagine how that would revolutionise the productivity of non-profits, as well as create an incentive for individuals to seek out and support some of the most dynamic social and economic stimulators in their communities.
More importantly, since Americans donated $295bn to non-profits in 2006, while businesses spent $1.2bn on cause-related marketing to trumpet their philanthropy, a shift like this might also lead to coverage of the sector with the same level of critical analysis that is afforded traditional businesses.
Imagine how this might challenge the entire notion of “charity” in the US and usher in a bold new era of social and economic innovation.
What I like about this kind of idea is it fundamentally shifts the way we think about ourselves. Are we charities seeking handouts or are we the best damn investment anyone could make in their community? Try to put on this kind of mental strut (work it!) next time you compose an “ask” of any kind. Your results are worth bragging about, and they are worth a reward for your donors investors.
Don’t beg. Strut your ROI till the policymakers listen.
One challenge nonprofits have in getting donors to think like investors is the widespread expectation that donors should be able to determine how funds are spent. Organizations appeal to private donors saying things like “99 cents of every dollar goes directly to a starving child,” or “check this box to give save whales, and this box to save dolphins.” Grantmakers have policies such as “we don’t fund operations,” or “we only fund programs that serve children from age 1-5.” Organizations and grantmakers have both created an evironment in which it is acceptable to that donors should be able to earmark funds for specific purposes. If you get 10x the dollars for dolphins that you get for whales, more whales die. If your program serves children of all ages, you have to bend your narrative towards the grantmakers’ requirements. No “investor” expects to tell a corporation how to spend the funds they invest. Instead, investors research the quality of the company leadership, financials, and performance against their personal objectives. As nonprofits, we empower donors to tell us how to spend money and how to market our programs. Then we must document that funds were spent as promised, often to the detriment of the overall health and strength of the organization. The entire nonprofit culture, from grantmakers to private donors to boards and staff would be well served by an social investment mentality. Due dilligence has never been more important for donors, but just because you can guarantee that your $1m went only to programs doesn’t mean that the programs are any good. The checks and balances that make Wall Street safer, not that it isn’t subject to abuse, are supposed to be rigorous and thorough research by indpendent analysts and recommendations by unbiased observers. That might be better than the current practice of adjusting our language and budgets to fit the funders’ requirements, and then often having to go find more funds to cover overhead and operations.