Date: Apr 07 2015
With the impulse-inducing holiday season past, we are well into a new year, maybe even with a resolution or two to keep. Most of what happens over the holidays I can only handle once a year, but I do wish that everyone could keep up the spirit of giving and sharing with those less fortunate for the balance of the year, too. This got me thinking: why is it that most of us tend to make donations so impulsively, and, dare I say it, selfishly?
Along with the change to a new calendar year is the need to file a tax return for the last. I am going to go out on a limb and say that those looking forward to filing their taxes are a minority. For me, even the tax questionnaire feels like a lecture from my grandmother on what I haven’t accomplished. Did you get married? Did you buy a house? Did you serve in the Military? For 10 years out of school I shamefully checked “no” next to each while looking forward to the one question to which I could answer yes—did you give to a qualified charitable organization? As if to make up for all the “no” answers above, I would frantically list out all the organizations from the past year and reflect on all the great things they do.
This year is a bit different. I can finally check yes to one of the boxes, but when I think back on all of the charitable organizations I supported last year, I don’t feel so great. I am happy about all the great work the groups have done, I’m happy to have supported my friends and colleagues in their fundraising initiatives, but pouring over a myriad of smaller gifts puts my uneasiness in perspective. The trouble is that save for two or three key organizations, my gifting is really disorganized. $25 here and $50 there adds up to a meaningful amount; would it be better to make a couple well-researched, sizeable gifts rather than lots of little impulsive ones? Maybe.
I realize that I can’t say no to awesome people doing awesome things for others. I want to continue to support everyone running a marathon, participating in an ice bucket challenge, and so on. But the ice bucket challenge really brought our herd behaviors to the front of my mind. Before the ice bucket challenge, ALS Association’s annual revenues were something roughly $29mm, of which $8.4mm was from contributions (ALS Association Annual Report 2014). With the help of a homer bucket and ice water, they raised over $200 million in 2014. How will they effectively put that rapid influx of funds to work? How long will it take? What happens in 2015 if they don’t replicate the success of the ice bucket challenge? Clearly, these are high class problems, and ones that I’m very happy to see a great organization like ALS face, but they highlight one of the biggest issues organizations face: fundraising uncertainty from year to year. How much of the money raised in the viral campaign was given by people who only wanted to join the fun and post a video, rather than those who feel passionately about helping find a cure for Lou Gherig’s disease?
On one hand, any giving, despite the reason, is good. However, I would argue we need more selflessness so people will gift to and support organizations unequivocally year after year. If we can’t say “no” to an impulsive gift, maybe we can adopt a simple framework for evaluating whether a grant will be maximally effective. This is my new year’s resolution, and thankfully the folks at National Committee for Responsive Philanthropy (www.ncrp.org) have already done a lot of work preparing a framework that I can borrow and adapt.
What is this gifting framework of which I speak? Well, for me, it is three things: to make unrestricted gifts, to support organizations I plan to continue to support in years to come, and be transparent about what organizations I’ll support and why (this might be the first step towards being able to say “no thank you” to an impulse grant I deem ineffective, we’ll see). So why should I do this? Simple, to help the organizations I support fulfill their missions.
The first seems obvious, but it is not. We like to say where our gifts went; I supported this great program. We want some tangible impact we can latch onto. This is natural. We don’t want to say that our gift bought an organization a new computer or some pads and paper. But, this is not right. It is selfish. When we make restricted gifts, we are telling an organization we know how to use funds better than they do, and this makes no sense. Saying that we know how better to use the funds is implying that we have no confidence in the organization to use the money wisely; if you have no confidence in an organization why support them at all? If they spend 10 minutes a day looking for a pen that works, buying some pens will have the biggest impact per dollar on what they can do. If the leader of the organization is spending three hours each day answering emails and doing scheduling, an assistant might be more effective in furthering their reach than adding more money to a program budget. If an organization is worth supporting, it is worth supporting with no strings attached.
The second leg of the stool is to start thinking of each gift as the start of a relationship, not a fling. Organizations spend a lot of time and money looking for funding, and when gifts come in one year and not the next it can create a lot of issues for them. Ask yourself if you see yourself supporting this organization for years to come? If this is a one-night stand, why bother? NCRP sees that few foundations make multi-year grants to organizations; a study conducted on 2011 data indicated that 90% of grantmakers were not making multi-year grants (Jagpal, Niki and Laskowski, Kevin. The State of Multi-Year Funding 2011. The Philanthropic Landscape. National Committee For Responsive Philanthropy. May 2013). Why are grantmakers creating such uncertainty in the organizations they support? I am not a private foundation, and my gifts won’t move the needle the way the Gates Foundation will (who, by the way, are leaders in multi-year granting). What I do know is that organizations appreciate knowing they will get the same amount from me each year without having to remind/woo/solicit/pester/inundate me. I want to be in a relationship with organizations.
The last part is to be transparent about what to support and why. If you care more about the environment than human health, or vice versa, spend a few minutes finding the right organizations. If you, like me, are a recovering impulse gifter, put $20 into a jar each time you are solicited and at year end give the entire balance to one or two organizations that stood out. Find some criteria that make sense and try to stick to them. For me, this transparency and discipline is the hardest. I am an impulse gifter! But in 2015, I will do better. And in 2016, I will work in some more of the NCRP’s ideas on how to be more effective in my gifting, like supporting more organizations around advocacy and civic engagement. One step at a time.
William Tickle is a Senior Investment Advisor and the Director of Impact Investing at Ballentine Partners, LLC. He is responsible for market research and evaluating and monitoring public and private investment opportunities for the firm’s clients within his focus areas of real estate, timber, and social impact investing.