A Strategic Path Out

Although most nonprofit fundraisers are feeling as pessimistic as ever about their prospects for raising money in 2009, all hope is not lost.  There is good news to be found:

• The majority of corporations and corporate foundations expect their giving in 2009 to stay level or grow, according to a new study by LBG Research Institute.
• The LBG Research Institute is projecting that any decrease in overall corporate giving will be less than the 12.1% decline in the 2001 recession.
• 80% of corporate givers say their giving this year will be more strategic and more closely tied to their corporate goals.
• The most recent research on high-net worth individual giving from Indiana University’s Center on Philanthropy found that the main objective for the biggest individual gifts in 2007 was to provide general support and make a long-term investment in the organization.
• Also according to the Center on Philanthropy study, individual giving reflects the values and goals of the giver.

It appears, then, that fundraisers must redouble their efforts to make a clear connection between the impact their organizations are having and a donor’s values and goals.  As I discussed in a previous post, the ask cannot be about an organization’s need.  It has to be about empowering a donor, through your organization, to make a positive impact in an area of the community that meets their values.  This is a critical distinction.

So fundraisers can make an opportunity out of a difficult fundraising climate by being smarter and more strategic, but at the same time philanthropists need to change as well.  There has been a lot of talk about how foundations should be responding during this difficult time.  I did an earlier post on that topic here.  There are a couple of interesting ideas floating around.  One, that foundations be required to bump their payout requirement from 5% to 10%.  Martin Kearns makes this argument in a recent post:

Today without raising taxes, or impacting our deficits, the new administration could stimulate a massive amount of activity by forcing the hands of these foundations. Many…foundations are already spending down. They are stepping up to help in this economic crisis well above the minimum IRS allocation. However, for those that wish to sit out (and sit on assets) at such a time when our society and the nonprofit sector need them so much seems unacceptable. A small change in a regulatory rule affecting so few and benefiting so many seems in order…this forced move would inject real horsepower into nonprofit organizations at a time when they could create the most change.

And Nathaniel Whittemore, in his Social Entrepreneurship blog, had some great ideas for the Gates Foundation, arguably the largest and most influential foundation.  Nathaniel would like to see three things from Gates, which if adopted, could really set the tone for a much more strategic philanthropic sector:

1. Create a social investment fund of $150 million to invest in social enterprises.
2. Focus on education policy to scale solutions.  Move away from simply funding charter schools and invest in policy reform that will take the lessons learned into wide scale approaches to education reform.
3. Create an innovative bottom-up program measurement approach that collects data from those to be impacted by the program.

If the Gates Foundation took on even one of these new approaches it could have tremendous ripple effects through the foundation community and within philanthropy as a whole.

Just as fundraisers need to become more strategic, philanthropists do as well.  We have fewer resources and more complex problems.  Thoughtful, strategic approaches are the only answer.

Related posts:

1. A Strategic Approach to Generating Revenue
2. A Better Way to Fundraise
3. Maybe Things Won’t Be So Bad After All
4. Foundations Can Lead the Charge Toward a New Philanthropy
5. Changing Nonprofit Finance: The Other Side of the Story

Tags: Foundations, Fundraising, Gates Foundation, Indiana University Center on Philanthropy, LBG Research Institute

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