There is a great discussion going on at the Tactical Philanthropy blog centered around the new book The Art of Giving: Where the Soul Meets a Business Plan by Charles Bronfman and Jeffrey Solomon who argue that philanthropists (big and small) should take a more strategic approach to giving. The discussion that has followed the three posts so far gives fascinating insight into the reasons that people give. Katya Andresen at Network for Good, nicely summarizes the two broad reasons that people give: 1) for personal return on investment (recognition, feels good, status, increase in network) and 2) social return in investment (make a difference, create impact, solve a problem, etc).
For me, there are three takeaways from this discussion. First, anyone who raises money in the nonprofit sector should read the posts and the comments. They provide fascinating insight into the various motivations for giving to nonprofits. A reading of the discussion gets a nonprofit fundraiser out of the mentality of raising money around their organization’s needs and into the more lucrative mindset of what is compelling to potential donors.
Second, I think that there is an increasing focus by philanthropists on the second motivation (social ROI), as opposed to a past focus on individual ROI. Because of the past philanthropic focus on individual gain, the resulting nonprofit fundraising activities have centered on activities that provided donors an individual ROI, for example capital campaigns that promise a new building with a donor’s name emblazoned on it, or events that provide networking and exclusive activities, or “thank you” gifts. As social ROI becomes more of an interest to philanthropists, smart nonprofits will focus on creating their logic models and demonstrating impact. And when they do this, I would argue that they will actually be more successful at raising money (see Kay Sprinkel Grace’s Beyond Fundraising).
Finally, we will never get to a place where all individual giving is social ROI focused. As the authors of the new book point out, philanthropy is very much an individual sport that is focused on the individual’s values and what they want to accomplish (whether that be personal or societal gain, or a combination of both):
When you give, you get, and we believe you need to focus on what it is that you are getting for what you give. We argue that what you get in philanthropy is nourishment for that portion of the body that is so sacred it cannot be found in any book of anatomy: the soul, where all that is best in us resides. It is simultaneously the innermost self and the one so external it seems somehow eternal—which makes it the natural connection point for our philanthropy, for we give to improve the world in a lasting way and to leave it with our stamp.
Which then begs the question, will we ever get to a place where social problems are solved through capital raised from individual philanthropists? Charitable contributions to the nonprofit sector make up 12% of the sector’s money. Roughly 80% of that comes from individuals. Government money has been declining and so nonprofits have increasingly focused on dollars from individuals to make up the difference. If individual philanthropy will always have an individual return motivation, is that ultimately a problem for a sector that is trying to provide social goods?
I don’t know, but the discussion and questions that these authors have raised will no doubt help propel philanthropy forward.