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How to Handle the Slow Death of Strategic Philanthropy

As the hip giving method of the early 2000s goes down in flames, what changes should nonprofits be ready for as they try to impress donors?

The Stanford Social Innovation Review recently published a thought-provoking symposium on strategic philanthropy. If you’re not familiar, “strategic philanthropy” is the movement that got obsessive about metrics, and tried to get children’s ballet studios to demonstrate their success with a bunch of complicated numbers. For a few nonprofits that hadn’t put any effort into finding out if they were actually doing any good, this was helpful. For most, it was immensely distracting and even damaging.

Now, top foundation leaders and consultants are ready to admit widespread failure on this project. Most of the writers in the SSIR symposium suggest that strategic philanthropy doesn’t adequately account for human nature, let alone the nature of humans in groups. The problems of human social networks, and their solutions, tend to be messy and organic, as conditions constantly change and even “root causes” are rarely possible to identify completely.

On top of this, as William Schambra pointed out a few weeks ago in an incisive treatment, the vast majority of nonprofit funding (73%) comes from individuals, not foundations…and after years and years of being told to be strategic philanthropists, 84% of Americans still aren’t. Most don’t pick which nonprofits to support based on objective performance metrics. That doesn’t mean they are irrational. It means they’re motivated to give by factors other than the ones that go into the metrics—personal experience, a relational connection with someone involved in the organization, geographical proximity, an emotional tug, etc.

Yet many of the nonprofits I see are putting a lot of work into keeping foundations happy, rather than tailoring their measurements and communications strategies to the majority of their donors. As some foundations are considering new ways to measure success (like the scary utilitarian “effective altruism” approach), many nonprofits will no doubt scramble to change their ways to match.

But what if they didn’t? The vast majority of nonprofit donors won’t turn into utilitarians any more than they turned into strategic philanthropists; they’ll continue to give based on influences from their personal and social experience. What if nonprofits built their primary communications (and reporting) strategies to impress and retain their primary donor base? What would it look like for them to demonstrate their value in a way that corresponds to how their donors actually think?

The real nonprofit donor base

First, some context for thinking about this: the next generation of nonprofits will be hubs of American civic activism, not specialized initiatives of experts who demand that the rabble fund “their” work.

I’ll say that again. The next generation of nonprofits will be hubs of American civic activism, not specialized initiatives of experts who demand that the rabble fund “their” work.

This is true partly because of social problems. Feelings of isolation and disenfranchisement are increasingly the norm rather than the exception. Social breakdown isn’t just a crucially central cause of the problems nonprofits exist to fund—it’s also a central reason for nonprofit donors’ involvement. For most nonprofit donors today, who often don’t even vote for president in person, nonprofit involvement is their primary civic activity—it gives a sense of meaning and connectedness in a way that almost nothing else these days can.

It’s true partly because of changes in the donor base. Baby Boomer donors (and even more so their children and grandchildren) want to feel a part of what’s going on. Unlike their parents, they don’t want to just write a check once a year. But retirement norms have changed; they also need to be involved in a way that can be juggled with a full-time job, kids, and other commitments—so current volunteer systems, which are built around retirees with World War II-era involvement habits, will need to be rethought.

But these changes only exacerbate a more fundamental reality: the “hub” claim above is true because of the way the human mind works, and has always worked. People get emotionally invested in things that have a personal impact on them (even if it’s a degree of separation or two away). Causes catch fire because people perceive them to be things “everybody is doing,” or everybody believes. And people stay invested in things when they can see practical value for them, and the social currency that comes with it. Total altruism is a myth. The complex organism that is human charity has benefits for everybody when it’s allowed to work naturally (when was the last time you felt bad for being nice to somebody?).

Far from being irrational or outdated, the human connectedness that makes effective, sustainable charity possible is top of the line moral and social psychology; taught in graduate and business schools, written about in bestselling books, and employed by the best-performing organizations out there. The social changes and the human nature behind them are real, and will only be more dominant as the Boomers move into their role as the primary donor base.

The next generation of nonprofits will be hubs of American civic activism for one reason: they have to. The expectations and desires of the people behind 73% of their budget dollars will dictate it.

How to capitalize on it

So, how to capitalize on the looming change? The vast majority of my consulting work involves helping nonprofits answer this question. Unlike Strategic Philanthropy, Effective Altruism, and other trendy solutions from Big Philanthropy, the answer is very different depending on the individual organization; the nature of its work, its location, its geographical rootedness, the nature of its connections with its existing donor base, and other questions. But here are some general questions to consider:

  1. How can you demonstrate value to a donor in a way that allows him/her to feel and see, rather than simply measure, it? Numbers can play a role here, but the closer you can get a donor to seeing what you see on the ground every day, the better. People aren’t computers; their brains are hard-wired for story and emotion. At a basic level, this is a question of content creation—telling your story effectively with stories, videos, etc. At a more advanced level, this can be done through events, in-person volunteer opportunities and other interactive ways to engage your work and its core issues, development of regional support for national nonprofits, and digital vehicles (like a Google Hangout) that can provide a partial approximation of in-person activity online.
  2. Why would a donor feel a part of your work? Simply accomplishing #1 above doesn’t cut it—even the best nonprofit communications are just faking #2 if they’re not supported by real opportunities to get involved; ways that work for young people and professionals, ways that capitalize on and build on relational reasons for involvement.
  3. How can you build infrastructure so that your development people are spending their time building relationships, not keeping up with paperwork? There are creative ways to streamline, outsource, or even crowdsource (with volunteers) administrative development work, especially if re-prioritizing around individual donors is the goal. Find those ways and use them. Then use all that extra spare time to connect with people, and to brainstorm ingenious ways to connect with more people! I’ve seen clients reduce their development director’s workload by 70-80%. Imagine what yours could do with that kind of time, if it were properly directed. Speaking of which…
  4. How can you make involvement social? It’s pretty easy to think about volunteer opportunities socially. But what about giving? What about first contact with your organization? Are you generating content that’s worth John Doe Donor’s time to share with his friends, even if they know nothing about your organization? (If so, then congratulations; John Doe just netted you a couple dozen introductions by sharing your link.) Are you thinking about ways to capitalize on website visitors and introduce them to your organization’s work through email marketing, personal contacts, etc.? Are you creating clever campaigns that give your existing donors incentives (and easy mechanisms) for tag-teaming their donations with friends, so that you’re capitalizing on social networks to grow your donor base, rather than feebly trying to find new people yourself?

Where to from here?

These questions are just a starting point. If you want more things to consider, or want to see more of the history and social science behind these changes, read “Enlisting the Amateurs.” You can also check out my website for a look at how my company can help improve your communications and free up your development director’s time—or contact me to talk about a strategic planning or training session to work through the big picture with your staff or board.