With so many nonprofit organizations needing funding fairly desperately right now, this might not seem like a particularly great time to critique philanthropy and philanthropists. That hasn’t stopped people like Anand Giridharadas, David Callahan, Rob Reich, Ben Soskis, Alan Cantor, the folks at Mother Jones, an anonymous op-ed writer in The American Conservative, and many, many others.
And the critics have a long list of grievance: Foundations have too much power. Foundations don’t give away enough. Billionaires are stingy. Billionaires are stepping up, but not enough. Wealth inequality is distorting philanthropy. It’s imperiling democracy. DAFs are the best thing since sliced bread. DAFs are evil.
It feels like there’s a crescendo of criticism lately. And they’ve got a point – there is so much more need, the inequity gap is an increasingly yawning crevasse, and trillions are locked away in philanthropic vaults, ticking up interest and income for investment offices and institutional sponsors. And there are billionaires who could change the course of poverty/hunger/you-name-it with one check (and some, like MacKenzie Scott, who seem to be actually trying).
As they have for over a generation, medium and large nonprofits are focused laser-like on that top tier of prospects and those prospects’ assets are growing by the second, even during this pandemic. Some because of the pandemic. Sometimes I think that small triangle at the top of the pyramid is going to separate and blast off like the SpaceX Dragon.
A small voice in me wonders if prospect development has played some role in this problem of declining donor numbers. Because of our part in the fixation on that nose-cone.
And, to be fair, it has made practical sense, right? When bank robber Willy Sutton was asked why he robbed banks, he said “because that’s where the money is.” Well, yeah.
Have we been myopic?
So yes, we’ve focused on the richest of the rich because they’re the ones with the most money to give away. But is that one (of the potentially many) reasons why our nonprofits have shrinking donor pools? Because we haven’t spent the time to identify and involve the next generation of donors because the low-hanging fruit was just so much easier?
What about the next tier who may not be able to make 7-figure gifts now (or ever), but could make multiple 5 or 6 figure gifts over a lifetime? Have we in PD not done our duty to insist to leadership that those prospects are worth the work so we can ensure that fundraisers working at our organization in 10 years’ time have great portfolios to work with?
Is the scarcity mindset that deeply entrenched in our sector’s collective psyche that nonprofit leadership doesn’t feel it can take the long view to ensure that their nonprofit will be here in 50 or 100 years and needs to go for the quick wins now?
Or, to play devil’s advocate, in this increasingly unequal world is it more expedient (and ethical) for us to have stayed focused on the top of the pyramid to the…maybe not exclusion, exactly, but certainly decreased emphasis on that important second tier? I wish I was sure. That small voice gets louder these days telling me “no”.
Fortunately it’s not an either/or choice. Those critics are airing out the Third Sector’s dirty laundry and it doesn’t smell too rosy. So what we have here is an opportunity for all of us, particularly in prospect development.
So what can we in prospect development do?
We have to start involving people below the Forbes 400 level – now – for all kinds of reasons.
First of all, although their bank accounts are growing at astonishing levels and their numbers are creeping up slowly, ultra-high net worth individuals (UHNWI) are still a tiny subset of the general population. Also they tend to give their support exclusively to large, well-established institutions (the equivalent of the Forbes 400 of the nonprofit world).
Second, I don’t know of too many nonprofits whose constituencies are exclusively over 60, male, and white. All-white boards may have worked in the 1970s, but we all know that style of board should have died out long ago. The fact that the status quo has lasted this long is frankly lazy and embarrassing. Female and BIPOC representation amongst trustees, volunteers, donors, and fundraisers, has to increase and fast in order for nonprofits to stay relevant (and afloat).
And third, donors have an increasing number of giving choices that completely bypass nonprofits and go straight to the recipient. Let me repeat that – donors are bypassing nonprofits entirely (read the embedded-linked article in that last line). Or they give money to nonprofits through vehicles like Facebook, which cuts out the nonprofit/donor relationship. Right now, when people can’t get out to volunteer or to attend events, these options are a way for mid-level donors to make a direct impact. This makes prospect identification, philanthropic-interest research, and engagement all the more difficult for an increasingly important demographic.
And although they may not be 100% correct, the critics care enough about the success of our sector to venture an opinion and point out where we need to fix things.
As a prospect development professional, I can’t fix DAFs, or foundation payouts, or wealth inequality, or the tax code. But there are many things we definitely can do to make our sector – and our own nonprofits – better. And that starts with making the pie bigger.
Elbow-grease prospecting and segmentation are even more critical right now. There are opportunities in every single fundraising database to be found through analytics and wealth screening, peer networks and philanthropy. There are common-sense ways to find new or previously overlooked donors in the communities where we operate and that we serve.
As an industry, we need to figure out how to present newly-identified prospects in such a way that fundraisers will rush to set up a Zoom call. And managers need to find new ways to motivate fundraisers to do that. Great prospects sitting in a portfolio growing cold are the very worst kind of waste. Internally we need to discover ways to communicate excitement and opportunity.
Something that’s been exciting for me is a project we’re working on right now within our Data Insight team: identifying the ways that the research tools we use don’t identify (or appropriately weight) female and BIPOC prospects and building up our own custom appends and methods to counter those deficiencies for our clients.
I’d love to hear your thoughts about any or all of this.