Beyond Feel Good

on in Fundraising

Big donors need data...

Big donors give from the heart…

Big donors want to be left alone…

Big donors want to get involved…

About the only thing that’s never said about big donors is that they give randomly, with no rationale for their gift.

While nonprofits can hope against hope that a mega-donation will descend from the sky, that’s about as likely as winning the lottery (or even less so).

Now, a NY Times article on mega-donation investments shows how focused a “big-bet” philanthropist (defined as over $10m gifts) can be. 

Private equity investor Paul Salem, a major donor to the youth development charity Year Up, talked about his approach to run-of- the- mill gifts:

You get bombarded by amazing opportunities to invest in charities that come in over the transom. You can give $5,000 here or $2,000 there. I still do that, but I consider it being nice.”

In contrast, Salem decided to pursue an intentional philanthropic strategy:

“My wife and I decided we wanted to focus our giving on something that matters. It’s the way we like to invest money.”

Note the difference between bestowing “niceness” gifts – mostly in response to being asked – vs. actively seeking out social change. And the emphasis on investing – the conscious advancement of social return.

It’s a different language than “giving.”

Investing implies engagement with outcomes, not just the feel good glow that accompanies altruism.

What’s the ROI? What, exactly, am I going to get from the money I’m sinking in?

It’s an approach that’s very much of a piece with start-up angel investing in the for-profit sector.

“Show me the path to profitability” – is the mantra for for-profit start-up ventures.

For not-for-profits? It’s the path to eradicating, or at the least making a real dent in, intractable social problems.

This approach changes the case for support in a subtle but profound way. Instead of social need determining intervention strategy (young people have a hard time focusing on schoolwork in chaotic home settings, so we provide a supportive study environment which leads to higher GPAs and a lower dropout rate); ROI investing starts with impact and then backs in to the investment required to achieve that impact (20% increase in selective college admissions for first-generation students requires $20,000 per student in additional guidance over 4 years, resulting in $100,000 additional income earned over that person’s working life).

Investment vs. Giving. A correct read on what kind of donor motivation you’re dealing with, is critical to fundraising success.

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