As we head into October, like clockwork it is that time of the year again – the fall annual appeal. This time every year, non-profits send out millions of solicitation letters nationwide hoping that generous donors will once again answer their calls for support. For performing arts organizations, contributed revenue can be upwards of 80% of an organization’s budget, and for most, the majority of gifts from individuals come in the last quarter of the year. As December rolls around, we hope that the pocketbooks of our donors will open more freely than Mr. Scrooge’s did.
But, it is also a moment for reflection and a moment to ask – did we earn the gift that we are requesting? Sometimes it is hard for non-profits to admit that we are not entitled to receive any philanthropic support particularly when trend studies show that in many communities competition for support is increasing. Take Milwaukee for example. In 2014, the Public Policy Form authored a report entitled “Give and You Shall Receive” on the state of the non-profit sector including revenue streams and philanthropic support. One finding caught my eye – since 1989, the arts experienced the most severe decline of any philanthropic category dropping nearly 50%, while at the same time the Greater Milwaukee metropolitan area experienced a 147% increase in the number of arts non-profits. Giving to the arts as a percentage of charitable giving tightened while the choices available to donors exploded begging the question — why should a donor give to your organization?
Below are the questions that donors should consider when contemplating a gift…
- Is the organization fulfilling its mission and does the mission align with your giving priorities? Non-profits have a single purpose – to fulfill their mission – and presumably, a donor gives to a non-profit that can best fulfill a mission that aligns with their priorities. When considering a gift, donors should research an organization’s programs and inquire about how much of an organization’s revenue goes to programs. This is not to say that a portion of gifts should not go to overhead, only that a reasonable amount be appropriated reserving the majority for programmatic advancement.
- Can an organization demonstrate a return on your investment?
As a Managing Director of a theater company, my job is to work closely with donors to ensure a maximum return on their investment. And let’s not shy away from it – a donation is an investment and donors should expect a return, not for financial gain, but gain for the community the non-profit serves. Sometimes arts organizations are not as good as we should be on determining impact in part because it can be difficult to measure the intrinsic impacts of the arts, but in other cases it is because we don’t utilize rigorous assessment tools to a large degree. I believe that if it is important and can be measured, arts organizations must measure and track, otherwise we cannot demonstrate progress toward mission fulfillment, impact on our targeted populations, and importantly a return on a donor’s investment.
- Is the organization financially stable and managed well?
The leading charity evaluator in the world, Charity Navigator, states on its website that “financially healthy organizations – those that are both financial efficient and sustainable – have greater flexibility and freedom to pursue their charitable mission.” Put another way, as a donor, you should know where your money is going. If an organization is financially healthy and well managed, gifts can be put to immediate use to fund programs rather than to pay down debt or eliminate structural deficits. If an organization is constantly in crisis, there is probably good reason and is that where you’d like to invest? In the arts world, a classic case study can be found with the Washington National Opera in Washington, DC. After years of financial instability, even its rock-star leader Placido Domingo, arguably the most notable opera singer in the world, couldn’t convince donors to continue to invest in a company that was constantly in crisis as donors came to realize their gifts weren’t going to good use. Major donors made the decision that instead of throwing good money after bad, they were going to allow the only opera company in the nation’s capital to go bankrupt. Luckily, the Kennedy Center came to the rescue.
- Do you trust the leadership of the organization?
Once you give a gift, you are trusting that the leaders of the organization will use it well. So donors should ask themselves, particularly when making a major gift, a few questions:
- How well do I know the leadership of the organization and are they worthy of my trust?
- Do the leaders of the organization conduct themselves in an ethical manner?
- If you have confidence in the leadership team, will they be around long enough to steward your gift?
- Does the organization have a strong board, as ultimately the direction of any non-profit organization rests with the board of trustees?
- Has the organization stewarded you well?
As a donor, how has the organization recognized your contribution? Do you receive a hand-signed gift acknowledgement letter thanking you for your generosity within a couple weeks of your gift? Do you have a personal relationship with the staff and/or leadership? Perhaps it is because I grew up in the Midwest, but I put a premium on personal touches. I take the time to get to know each of the donors in my portfolio. We send flowers for life’s big moments, like the arrival of a new baby. I start my morning writing thank you notes. And we find meaningful engagement opportunities. If an organization demonstrates care in stewarding its donors, usually they demonstrate a commensurate level of care putting donations to good use.
Bottom Line: Donors shouldn’t give to a non-profit because they need it. All non-profits need philanthropic support. Donors should be selective in their approach and make strategic investments in non-profits that have earned their support through exceptional programs, demonstrated impact, managerial excellence, ethical leadership and meaningful stewardship.