Friday, September 21, 2007

Form should follow function

Given that giving in the US alone adds up to hundreds of billions of dollars per year, you'd think we'd have some better marketing and shopping tools.

Imagine you've moved to a new city. You need to figure out how to get around - should it be by bike, walking, public transit, car share, or do you really need to buy a car, pay for parking, insurance, and a garage? If you take this question to a car dealer, they will nudge you toward choosing between 2 door and 4 door model cars; they have no interest in selling you any of the other choices. They're not going to solve your transportation problem, they are going to solve your car problem.

Same thing applies for donors. Imagine you've got some money to give away. You've made small gifts direct to nonprofits in the past, but now its bigger than that. You need to figure out what you want to support, whether to use time and money, what to do about taxes, and how much giving away money will wind up costing you. If you go to your attorney, he or she is likely to "sell" you a private foundation, because, lo and behold, that's what attorneys sell. If you ask your investment adviser, they'll suggest whatever product option best allows their firm to continue managing your assets. Your favorite nonprofit, your alma mater, local community foundation, mutual fund company, bank - same thing - they'll help you choose among their products, but they may not solve your giving problem.

This is a key issue for philanthropic capital markets. Many donors know a lot about how they think change happens, what I call "change strategies." What they may not know is how those strategies are facilitated or hindered by certain giving vehicles.

In this conversation over at SSIR about advocacy a small comment shows how important this can be. In the discussion of foundations and advocacy, one person noted:

"Our founders (Steve and Michele Kirsch) created us as a supporting foundation of the Silicon Valley Community Foundation for the exact reason that they wanted us to be able to do policy work and lobbying."

Donors know how they think change happens - and should be asked about it - before they endow a foundation, fund a supporting organization, or purchase a donor advised fund. Because certain elements of those change strategies, such as lobbying, using endowment assets as part of the mission work, spending principal, engaging multiple generations, or being as anonymous as possible lend themselves better to some giving vehicles than others.

Those who buy these products (and, yes, all of the above options - foundations, donor advised funds, supporting organizations - are products) often don't get all the information they need to match their product choices to their "change strategies." Helping donors choose the right options - the ones that meet their values regarding change, costs, tax, and family benefits - is as important to rationalizing the philanthropic markets as is providing good advice about nonprofits to support.

1 comment:

Pete said...

Great observation. Donors may be looking for systems or policy change, but philanthropic advisors aren't geared up to address that concern for them. Reminds me of the point Emmett Carson has made about the tension between community foundations focused on "donor services" versus those that are "community focused." (See, e.g., He argues that those community foundations that stand for something will attract more donors, but too many people fear the opposite, that they'll chase donors away. Extending that from standing for something to also helping donors push a systems or policy change seems like an opportunity for community foundations and others who can plausibly offer to help advance their policy goals. But most in the business of advising donors seem more concerned to market a financial service, essentially, not the broader kind of involvement that, as you point out, donors increasingly may want.