When most people hear the word “philanthropy,” they often think of large foundations such as the Bill & Melinda Gates Foundation or the Ford Foundation, but individual donors are the lifeblood of the nonprofit sector. Foundations direct less than 20 percent of the dollars that are contributed to nonprofits each year. Most giving — almost 80 percent counting bequests — comes from individuals (Giving USA, 2019).
New research from the Center for Effective Philanthropy titled, Crucial Donors: How Major Individual Givers Can Be Support Nonprofits, sheds light on the value of individual donors. The survey asked nonprofit leaders what they like and what they wish they could change about major donor behavior. The findings confirm many of the assumptions we at the Raikes Foundation started out with when we launched our efforts to reach and support more major donors to give in ways more likely to make a difference. In short, major donors are hugely valuable to nonprofits, and it’s not just what you give, but how you give that matters.
Nonprofit leaders affirm that major donors are better than foundations at providing flexible funding. Though social entrepreneurs and nonprofit leaders have been decrying for decades the need for flexible, multiyear general operating support (or MYGOD dollars, as coined by Vu Le), data show that less than a quarter of all foundation giving is general support. But most major donors understand that leaders cannot run effective organizations unless they can pay their bills, pay their staff, invest in technology, and capture the data they need to improve their effectiveness. According to CEP’s survey, more than half of nonprofit leaders say that most or all of their major donors provide unrestricted funding, while less than a third say that their foundation funders do. In addition, nearly 60 percent of nonprofit leaders say their major donors provide multiyear commitments – a significant number that still leaves room for improvement.
Leaders also say that major donors are more loyal to the organizations they fund, requiring less constant “proof of worth” than foundations. Donors share a passion for the mission of the organizations they support and build strong relationships with leaders. Thus, almost two-thirds of nonprofit leaders say that they would prefer to receive more of their funding from major donors than staffed foundations. Given these trends, and that giving is increasing among those who benefit from current economic trends, many nonprofit leaders plan to expand their efforts to reach out to and cultivate relationships with major donors.
This research highlights the many ways that donors are supporting nonprofit effectiveness. But to fully unlock the tremendous potential donors can bring, we also have some recommendations:
- Learn: Start with a beginner’s mind and the humility to recognize that what we know from our lives and careers does not always translate in the nonprofit sector. Take the time to understand the context of the issues and challenges facing nonprofit leaders. Volunteer so you can see first-hand how organizations work, and use resources like Giving Compass to connect with trusted sources on issues these leaders face. If you want to lean in to giving in ways more likely to make a difference, you’re welcome to peruse these principles and practices, which have been curated by a collaborative that we, the Raikes Foundation, convene. We are iterating on these in an ongoing way as well as field-testing.
- Connect: Build strong relationships with the organizations you support. Avoid interfering, making assumptions, or asserting your power. Instead, really listen to what they need. Then, do what you can to connect them to the talent, skills, and resources that can help them strengthen their work. And connect them with others in your networks who care about the same issues.
- Take action:
- Provide fewer, larger gifts so you can allocate precious time to learn, go deeper, and engage with the organizations and issues you care about.
- Once you have a strong relationship with an organization, make multiyear commitments and be transparent about your plans so nonprofit leaders can budget and plan effectively.
- Give more, and not just in dollars. Leverage your skills and networks if there are areas where leaders have identified needs.
Individual donors may not always have the big dollars or name recognition of large foundations, but your value is indisputable. By unlocking your giving superpowers, you can get to greater impact than ever before. No fancy cape needed.
Stephanie Gillis is director of the Impact-Driven Philanthropy Initiative at the Raikes Foundation. You can follow her on Twitter @SFGillis.
