Donors: How You Give Matters More than You Might Realize

Lindsay Louie

Before I began my current role as a program officer at the William and Flora Hewlett Foundation, I was the executive director (ED) of a nonprofit, where one of my main jobs was to fundraise. I found being an ED one of the most rewarding and most challenging jobs I’ve had.

It was the most rewarding for obvious reasons — making a positive difference in the world. But raising the budget every year through donations also made it one of the most challenging. For an organization funded by individual donations and foundation grants, the ED is responsible for meeting the budget every year. My ability to pay staff and deliver on the mission depended on raising money. Succeeding at fundraising alone is no easy task; I went to bed worried about it many nights of the year. And on top of raising those funds, I had to carefully steward them, making sound decisions about how to deploy each dollar while also handling all of the other responsibilities that come with leading an organization.

This tension is one that nonprofit leaders know all too well. It’s important that donors understand it, too. That’s why the Center for Effective Philanthropy’s (CEP’s) new report, Donors: 5 Things Nonprofits Want You to Know, is such a welcome resource. The report is a practical, essential guide for donors about how they can help minimize avoidable challenges for nonprofits, which will free up nonprofit leaders’ and staff’s mental, emotional, and physical time to focus on the work — and tackling those challenges that can’t be avoided!

I recently had the opportunity to hear Adrienne Boissy, chief experience officer for the Cleveland Clinic, speak at a conference. She talked about how the physical, emotional, and psychological harms in healthcare fall into two camps: avoidable harms and unavoidable harms. This is not only true in healthcare and for patients; it is also true for nonprofits and their staff. Many of the unavoidable challenges for nonprofit staff flow from the reasons they do the work — serving clients and addressing challenges that are really hard to witness and even harder to change. But there are also avoidable challenges for nonprofit staff — and some of those are created or exacerbated by donors in how they make their donations. 

First avoidable harm: overly restricting your funding.

Restricting your support, whether only for use on particular expenses or by limiting the amount of “overhead” you will support, creates avoidable harm since nonprofits have to spend more overhead (that you didn’t pay for) accounting for your grant — and fundraising from others to cover those additional costs of the work.

As a program officer, I have made hundreds of grants. In my relationships with nonprofits, EDs have told me incredible stories of how much work some restricted grants create — or how their organization can raise money for all its programs, but can’t raise anything to pay for things like new computers, rent, administrative staff, or even program measurement and evaluation. Restricted grants can also force nonprofits to continually focus on short-term programs and objectives (for which there are immediate, specific funds available) instead of building for the longer term (where more overhead or flexibility may be needed up front).

And yet, this is difficult “truth to power” for any nonprofit to tell a donor. It’s hard for a nonprofit to turn down a grant, even if the restriction creates avoidable harm because that organization has to raise that whole budget every single year!

Please, if you do one thing as a donor, give flexible funding to a nonprofit and do not look at overhead rates or ratios as a proxy for effectiveness. 

Second avoidable harm: expecting only good news and positive results, or viewing any less-than-positive results as a waste of money.

As a nonprofit ED, I worked with many individual donors, and the ones that made the biggest positive difference to me and to the organization were those with whom I could be open and candid. Feeling like I could only share positive news and paint a rosy picture for a donor actually added stress to my already-overflowing plate — an avoidable harm.

The most valuable donors were those who not only celebrated successes with me and the organization, but who were also available when I faced challenging situations and hard days, and who made it clear that challenges weren’t going to deter future funding. This candor needs to go both ways; I deeply appreciated donors who were clear and direct with me. When they weren’t, it created avoidable confusion, uncertainty, and doubt. CEP underscores this in its report: “[b]e open about whether you’ll give to a nonprofit again and provide its leaders reasonable notice if you will not,” especially if you have made several donations over time.

Third avoidable harm: missing the opportunity to give more than money.

Nonprofits are tackling some of the toughest problems in the world today. To do that well, they need every resource and team member possible — not only those on their staff and board, but also their donors. Donors who make an exponential difference with their giving, in my opinion, are those who not only give but are contagiously enthusiastic about the organization they support — meaning they introduce the organization to friends and colleagues who might themselves become donors or have time and expertise to offer. For example, donors who agreed to host and speak at fundraising events and meetings to share why they provided support and encourage others to do the same were invaluable to me. On the days donors did those things, I could sleep better that night feeling that I alone didn’t shoulder the final burden of whether or not we raised the budget.

Having experienced this as an ED, one of the most important things I try to do now as a program officer is make introductions and connections for organizations we fund, especially to other funders. Nonprofit EDs and staff only have so many connections — and so much bandwidth and social capital — themselves. When donors/funders provide support and connections, it expands that bandwidth so that the organization can do more. Think about how you recommend books, movies, and vacation spots to friends and colleagues. You can recommend great causes and organizations you feel strongly about with the same enthusiasm!

Individual donors contribute the lion’s share of philanthropic giving in America (well over 70 percent, per Giving USA). So the very act of giving in itself matters a lot. But it doesn’t mean that all giving is equally helpful. To really maximize the difference you make, and certainly to minimize avoidable harm, remember that how you give matters, too. 

Lindsay Louie is a program officer for Philanthropy Grantmaking at the William and Flora Hewlett Foundation. Prior to joining the Hewlett Foundation, Lindsay served as executive director of the Silicon Valley Social Venture Fund (SV2). Lindsay can be reached at llouie@hewlett.org or on Twitter at @lindsaylouie.

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