• Stein Strategies LLC

Should donors give to "wealthy" organizations?

Updated: Mar 8

I recently read a blog post from a highly respected consulting agency that asked this exact question. It led with a smaller college’s tagline that encouraged donors to give large gifts to smaller institutions, insinuating large institutions have enough and a donor’s money would go so much further at their school.

The conclusion of the article was that it depended on the subjective understanding of donors as to what “doing the most good” really means, and it’s the donor’s money – so how they choose to spend it is up to them. The end.

I honestly felt that the article didn’t go far enough. There are so many nuances to major and transformational gifts. They ultimately should align with the donor’s passion and desire to see a specific change in society / the world / an industry / demographic. That is paramount. However, it’s not uncommon for donors to give a substantial gift and end up dissatisfied. We can see that in the industry’s abysmal average retention statistics.[i] Donor retention continues to fall (see AFPGlobal’s 2020 take). We have statistics that show many donors rescind or reduce legacy commitments.[ii] It’s commonplace (I speak anecdotally here), where donors could’ve given multiple large gifts, and don’t due to a variety of factors.

There’s a flip side to this too. In the industry, we constantly hear about organizations pushing frontline fundraisers to rush major gifts and there are numerous professional development opportunities that address just this. Yet, we see fundraising turnover often cited as one of the biggest challenge organizations face – with fundraisers sharing they leave due to unrealistic expectations, overwhelming workloads, and value differences.[iii]

Something tells me donors feel that same since of chaos and value misalignment that frontline fundraisers do.

So, what do more sophisticated donors do? They make test gifts to an organization to see how their gift is utilized, how much impact it has, how they are stewarded, and test how the relationship unfolds. Smart.

Ultimately (and where I wish the article had gone), I think donors should give wherever their heart leads them, but they should do so well-informed as to how the money will be utilized, consider whether the gift restrictions are in the organization/program’s best interest, give test gifts, look at the financials of an organization closely, be familiar with the organization’s turnover, and put significant thought into whether their money really will do the most good. Donors should (and often do I think) view the major gifts as an investment. An investment in a program or the organization itself. Maybe that’s a wealthy organization, maybe it’s not. But it’s not just simply a gift from the heart – it should be a lot more.

[i] The average donor retention rate is hovering around 40-45% and is widely accepted as such. [ii] IUPUI, Dr. Russell James, and Penelope Burk’s work have incredible conclusions as to how common this really is. [iii]

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