Culture of Philanthropy or Fund Raising?
By Dani Robbins
Re-posted with permission
There is $300 billion dollars, on average, given to charities each year in this country. The vast majority of that money is given by individuals. Not corporations. Not foundations. Individuals. Individual gifts and bequests, on average, equal slightly more than 80% of the charitable donations given in this country each year. Just less than 20% is given by corporations and foundations.
Do organizations take advantage of that knowledge? Some do better than others.
I serve on a committee that just this week was discussing the difference between having a culture of philanthropy and a culture of fund raising. The two are pretty different, even as most people use the words synonymously.
Fund raising is about raising money. Philanthropy, or what I usually refer to as resource development, is about ensuring resources. They’ll both raise money and require time but the latter will raise more money in less time.
Cultures of fund raising raise money through membership fees, grants or sponsorships, direct mail, and multiple small events that generally raise less than $30,000 (often less than $5,000), all of which is usually viewed as “begging for money.” You often hear board members and volunteers say “I give my time” or “I’ll serve on the committee but I don’t want to ask my friends for money.” That philosophy is pervasive: staff don’t generally support the agency financially and a portion of the board doesn’t either. There is not usually a fund raising plan or an expectation of board giving; donors are not usually asked for specific dollar amounts and everyone is a little ashamed of having to raise money at all, even as they fiercely belie in their organization and the work it does in the community.
According to “Fund-Raising: Evaluating and Managing the Fund Development Process” (1999) special events, on average, cost 50% of the amount they raise. That is way too much! I recommend my clients do not run any event that cost more than 25% of what it nets, and that organizations include staff time in the count. As you might imagine, multiple small events cost much more than 25% to run and they take an enormous amount of time. That time could be better spent.
Grant writing generally costs 20% of what is awarded. You should never pay a grant writer a percentage of the amount requested; it is unethical and against the fund raising principles as advocated by the Association of Fundraising Professionals, but that’s not why it costs 20%. Organizations only get a percentage of the grants they write. That means they spend a lot of time writing grants they are never awarded. We all do. I recommend you do not write foundation or corporate grants without checking the published funding priorities and – if there is a match – speaking to a program officer about your project and getting the go-ahead to submit. You’re never going to get all the grants you write, but you can at least avoid totally wasting your time.
There are, for any organization, a finite number of grants that can be written. There are an infinitive number of individuals to be cultivated.
Individual giving offers the highest rate on return for the lowest cost (5-10%) to the organization. Individual giving is about one on one relationships that are cultivated – and later stewarded – and require intentional asks for specific dollar amounts.
Cultures of philanthropy raise money through individual giving, one (maybe two) signature event that raises upwards of 10% of the organization budget, and also write grants, and may have membership fees as well. You often hear board members and volunteers talk about returns on investment, impact and sustaining their organization. There is usually a resource development plan, a board process that includes the expectation that board members will significantly (to their circumstances) financially support the organization and also assist in raising additional resources. They operate on the premise that their organization fills a critical need in the community and are proud to introduce their circle of influence to the organizations’ mission.
As mentioned in The Role of the Nonprofit CEO “Resource development functions most effectively in a culture of servant leadership and philanthropy among the board and leadership team, as well as an agency-wide commitment. A community cannot and will not invest in an agency without the investment of the board and staff. Development staff cannot raise money without the support of the CEO. CEOs cannot raise money without the support of the board. Resource development is a group effort, with everyone giving, and everyone moving toward the goal of a sustainable organization.”
Cultures of Philanthropy have a Director of Development who coordinate the asks, manage the information and the event, writes the grants and works with the board and senior staff to ensure the resource development plan is implemented, the money is raised and the organization is sustained.
Cultures of fund raising have a Director of Development who is expected to do it all alone in an environment where fund raising is a dirty word. It’s why they end up with so many special events and grants and so few individual donors. Those are the pieces they can impact and they try to do just that.
It’s up to the Board and leadership to change the equation, expand the reach and change the culture. How?
Start with the board and create expectations – to which everyone commits – to financially give and also to ask, as appropriate. Move to the staff. Do the same. Take a look at your events and see what they really cost your organization to run, including staff time, and decide if it’s worth it. Take a look at your infrastructure and see if it can take you forward. Are there things you need to add or delete? Can you current staff accomplish your goals or do you need to make some changes?
Get your best fund raisers and your most engaged board members and volunteers in a room and start putting the pieces down to create a resource development plan.
80% of all giving in this country is from individuals. Unless your income reflects that percentage, you have opportunity knocking. Get the door!
As always, I welcome your experience and insight.