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Why Major Donors Need to Ensure Nonprofits Understand Giving Pockets

Date: November 19, 2019

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The world of private philanthropy is often an enigma in the eyes of nonprofit leaders. We create confusion and frustration for nonprofit organizations. We are a puzzle. We speak in riddles and leave breadcrumb trails of paradox. Nonprofit staff spend countless hours in workshops and conferences seeking a better understanding of private foundations and major donors.

Perhaps you are familiar with the Indian parable of the blind men and the elephant. When nonprofit leaders describe major donors, it’s as if they’re standing blindfolded at different ends of the elephant. One feels the big, strong trunk and the other a hard, skinny tail. The elephant trunk can be a feeding utensil, picking up flowers and huge logs. The tail, on the other hand, serves as a capable fly swatter. One moment the elephant is giving and helpful; the next, it’s swatting the nonprofit away.

While nonprofit leaders struggle to understand major donors, those same donors often tell me they are interested in effective giving and impact. And yet, donors seldom understand the importance of the nature of the relationship between themselves and the nonprofit organizations of which they have the highest expectations.

My more than 30 years of experience working with nonprofits and donors has shown me that donors have a definite blind spot about giving relationships. It is clear from CEP’s new research report, Crucial Donors: How Major Individual Givers Can Best Support Nonprofits, that nonprofits understand the importance of building relationships with major donors. But they can’t build those relationships alone. inline

The challenges are even greater when a donor gives from multiple pockets. What do I mean by pockets? Donors may at the same time, for example, serve on a foundation board, make donor-advised gifts from a community foundation, write event sponsorship checks from a corporate account, and make memorial gifts and donations from personal checking accounts. It’s no surprise that nonprofits struggle to understand the donor relationship and its accompanying expectations when there are so many different factors at play.

Many years back, I was on the phone with Patty, a nonprofit executive director who had just received news of a large gift to a nearby hospital, and was now in the dilemma of whether to submit a grant application to the foundation of the family that had just made the large gift. “Well sadly, I guess there’s not much reason to submit a grant proposal this year to the foundation,” she said to me. Perplexed, I told her she should of course submit an application again since the foundation had been supportive of her organization for years.

Insistent that she had done her homework, Patty went on to explain that she had been looking at the foundation’s most recent 990 on GuideStar, and it appeared they had just given all its assets away to the hospital.

“Oh, no,” I replied quickly, “You should submit the grant.” I went on to explain that the family had more than one giving pocket. After some silence, she said, “You mean they have so much money that they can put $18 million dollars into a foundation and still write a personal check for $18 million dollars?” I assured her they could. As we ended our call, I encouraged her to get busy writing the grant proposal.

Thanks to the confidence Patty had to reach out and inquire about how that major gift might affect her organization, she avoided the mistake of making a decision about where to seek funding based on assumptions.

Several times I have also handled calls from nonprofit staff seeking information about how to ask a foundation for another gift even though the check they received had come from a donor-advised fund. I know they were frequently more confused as I tried to explain the many different giving pockets that donors can possess — and how those funds can be accessible to nonprofits.

I view my work managing foundation back-office services as bridge building and maintenance. Keeping the bridge open between foundations and nonprofit organizations is critical to effective grantmaking and communication about the successes and failures of nonprofit goals and strategies. inline An open bridge also requires that nonprofit organizations understand donors’ giving pockets, and more often than not, this is something that requires explaining.

In my early career, I was a nonprofit executive director for 20 years. I attended development trainings and conferences of all types. Every time, one or more speakers reminded the room that we should call or contact the foundation or major donor to learn about their focus and any changes in their direction, as well as so we could provide updates about our nonprofit or answer any questions they might have.

I can’t remember a single instance when a speaker talked about funders’ multiple giving pockets and the importance of understanding them. I only learned about it after joining a nonprofit that did business like a private foundation but was an intermediary for a major donor who funded projects, programs, and organizations through a donor-advised fund.

Nonprofits understand that a relationship with major donors is important. They want an opportunity to put their work into context and explain what they most need to accomplish the most good. Without in-depth discussions between donors and nonprofits, trust will not grow, making it almost impossible for donors to give the right gift, at the right time, toward the right things. And it follows that measuring the success of the gift is just as challenging.

It is up to donors and funders of all types to help nonprofits understand the breadth and complexity of their giving even as they seek to understand the complexity of the problems that the nonprofits they hope to support are working against.

CEP’s research deserves our attention if we are to forge better relationships and find better paths to effective giving and greater impact.

Dawn Franks is CEO of Your Philanthropy and the author of Giving Fingerprints. Follow her on Facebook

Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.

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