Bottom Line: Philanthropy Culture Improves Fundraising

Do you wear your values as a sign, or live them?

 

“Philanthropic culture is a key driver of fundraising performance.”

— Adrian Sargent, Institute for Sustainable Philanthropy

Is a culture of philanthropy just something that’s ‘nice’ to have? Does it simply make people feel good? Or might it actually affect your bottom line – making it ‘necessary?’

I know I’ve worked with organizations who looked at the notion of developing a philanthropy culture a bit like doing staff morale building or sensitivity training. It certainly sounds good, and who can argue with reports from pioneering organizations like the Walter and Evelyn Haas Jr. Fund (see Underdeveloped, Beyond Fundraising: What Does it Mean to Build a Culture of Philanthropy, and Fundraising Bright Spots) and Sea Change Strategies (see Inside-Out Fundraising) that embracing a culture of philanthropy (COP) will bring all sorts of benefits, including recruitment and retention of talent, stronger development plans and infrastructure, a better understanding of the board role in fundraising and a shared understanding of the importance of fundraising across functional siloes.

“As a sector, we need to elevate the importance of fund development as a leadership issue, invest in a stronger talent pool, and strengthen the ability of nonprofits to develop the systems that enable fundraising success.”

— Jeanne Bell, CEO of CompassPoint, co-author of Underdeveloped

“Generally, a culture of philanthropy is one in which everyone—board, staff and CEO—has a part to play in raising resources for the organization. It’s about relationships, not just money. It’s as much about keeping donors as acquiring new ones and seeing them as having more than just money to bring to the table. And it’s a culture in which fund development is a valued and mission aligned component of everything the organization does.”

— Cynthia Gibson, author, Beyond Fundraising

“Without tackling internal issues head-on, we believe the prospects for major fundraising progress are limited. In most organizations, fundraising is limited more by organizational culture and structure than by lack of strategic or tactical know-how.”

— Alia McKee and Mark Rovner, Founders, Sea Change Strategies

Despite the impressive research that’s been done showing the value of a philanthropic culture, too many nonprofits have simply assumed they had one by virtue of merely existing within the social benefit sector. Or even if they understood achieving a true COP took work, they just never moved this from the back burner to the front.

“Many charities are so wrapped up in the process of doing – delivering, raising income, adapting to the panoply of changing circumstances that can radically alter day to day activity – that establishing a truly philanthropic culture might not be high on the list of priorities.”

— Adrian Sargent, Institute for Sustainable Philanthropy

It’s Time for a Change

There is an internal ‘systems problem’ in most nonprofits. Short-term vs. long-term thinking. An adherence to status quo norms. A clinging to sacred cows. A gazing outward rather than inward stance. A rigidity and complacency. A failure to plan strategically, informed by research and data. A refusal to hold folks, especially leaders, accountable. Unaddressed issues around power and inclusion. Unsustainable work expectations that lead to stress, crisis mentality and burn-out. A scarcity mindset that assures people compete rather than collaborate. And an acceptance of fundraising as a dirty “necessary evil,” distinct from the real, pure “mission work.”

A systems problem requires a systems change.

Change (1) Hearts and Minds, (2) Behavior and (3) Structure

Some years ago I was fortunate to participate in a mini-retreat facilitated by the Haas Jr. Fund around the issue of how to instill a culture of philanthropy broadly across the social benefit sector. At that time I had the privilege to meet Alia McKee and Mark Rovner, who introduced the group to the Robert Gass “Wheel of Change” transformational model. It had been an “aha” moment for them, and it was for me as well. It argues real change comes only from weaving these three interdependent spheres together.

• Hearts and Minds. Invisible, deeply-entrenched attitudes, beliefs and judgments which drive a great deal of behavior. Within the social benefit sector, these include conflicting emotions about money and wealth (e.g., the belief among non-fundraisers that fundraisers are sleazy “money grubbers;” the hatred of “rich white donors.”).
• Behavior. What people actually do. Who communicates with whom? How people collaborate…or compete? Who’s in the meeting and who’s left out? How are conflicts resolved?
• Structure. The organizational chart, strategic plans, technology infrastructure, spending budget, personnel policies, donation attribution rules, and fundraising targets.

Robert Gass 2013

Gass argues a major cause of unsuccessful change efforts is the failure to address organizations as integrated comprehensive systems. And this makes total sense. Because, like the game of whack-a-mole, when you make a change in just one little corner a new problem is likely to pop up some place else.

What happens when you don’t proactively commit to doing systemic change work?

“At their worst, institutions can frustrate our aspirations, stultify our creativity, drain our energy, and even numb our spirits.”

— Robert Gass, author, Transforming Organizations – A Guide to Creating Effective Social Change Organizations.

If you feel your organization is underperforming in any way, it’s time to consider what can be done to improve your situation. Not just with piecemeal band-aid solutions, but with something holistic and transformational. Would your organization be more likely to do the hard work required to instill a true, organization-wide culture of philanthropy within your nonprofit were it to be shown this not only had benefits for mission and morale but also improved your financial bottom line?

A recent Institute for Sustainable Philanthropy study sponsored by DonorSearch, Windmill Hill Consulting, and Bloomerang, ‘Development Plans and Fundraising Performance,’ takes the qualitative and theoretical work of COP one step further by finding clear, quantifiable links between planning and fundraising performance. Significantly, the most definitive finding is how important philanthropic culture is to fundraising performance.

This impact on bottom line revenue should, once and for all, move COP from the ‘nice to have’ to the ‘must have’ column.

Let’s Review Culture of Philanthropy (COP)

Before going further, it’s useful to define our terms. While many others (including me) have outlined key COP indicators, today I’m going to use the six core indicators described in the afore-mentioned Report to identify a philanthropic culture in action.

1. Donor Centricity. Donors are part of the mission, not a means to an end. Their well-being is as much a moral “good” as other aspects of the mission. Their needs are taken into account in all donor communications and fundraising strategies. Gifts follow.
2. Philanthropy as a Core Value. The definition of the word is, literally, “love of humankind.” Everyone comes from a place of love. Staff, board and volunteers are all brokers of love and philanthropy facilitators.
3. Significant Board Support for Fundraising. Volunteer leaders must embrace their unique role and responsibility, personally demonstrating the organization’s value by walking the talk to assure the organization has the resources and community support needed to survive and thrive.
4. Respect for Fundraising as a Profession. There is an appreciation for the skills and judgement of development staff that matches the admiration for program staff. All are equally mission-oriented in their work.
5. Emotional and Compelling Case for Support. This speaks to the “why” of your existence rather than the “what” or “how.” Everyone can articulate the case for what would happen should you cease to exist. It would mean pressing problems – problems your constituents passionately care about — left unaddressed.
6. Innovation Orientation. In the face of volatility, uncertainty, complexity and ambiguity, organizations must be nimble and creative or face decline or irrelevance. They must be willing to learn new things, take calculated risks and make investments to secure the future.

Perhaps at one point your organization engaged in a values building exercise. Perhaps you have these neatly listed on a piece of paper that lives in your employee handbook, or maybe they’re even posted somewhere on the walls of your institution. But… how are you living these values? And do they embrace a philanthropic culture?

Evidence Culture of Philanthropy (COP) Improves Fundraising Performance

The Development Plans and Fundraising Performance Report operationalized fundraising performance as (1) revenue growth, (2) donor retention (first year and subsequent), and (3) fundraiser confidence in their ability to achieve fundraising objectives. And while they found a positive correlation between planning and fundraising performance (those with written plans are much more likely to track performance), they also found what management guru Peter Drucker famously said is true in spades:

“Culture eats strategy for breakfast.”

— Peter Drucker, author, Managing the Nonprofit Organization

What happens to good strategic plans, absent COP?

Per the Report, and not surprisingly, organizations with written plans significantly outperform those who operate more reactively or from gut instinct. However, even organizations with written plans fail to maximize their fundraising effectiveness.

• Plans don’t necessarily hold folks accountable for performance. Accountability is a cultural issue.
• Plans drive implementation more than evaluation and reflection. Learning, and changing future plans as a result, is a cultural issue.
• Plans do not drive a high level of involvement from the Board. Board buy-in to fundraising, or not, is a cultural issue.
• Plans don’t necessarily lead to philanthropy being seen as a core value of the organization. Assuring staff and volunteers understand their role in philanthropy facilitation and stewardship, and feel a sense of team spirit, is a cultural issue.
• Plans don’t necessarily drive innovation. An innovation mindset is a cultural issue.

What happens when COP is layered on top of good planning?

Per the Report, philanthropic orientation demonstrably improves fundraising performance. This is true even when other good practices (e.g., written strategic plan; formal planning process; fundraising planning integrated with budget planning; performance accountability, tracking and analysis; resource allocation, and senior management involvement) are in place.

• First-time donor retention is increased by 4%.
• Subsequent donor retention is increased by 6%.
• Confidence in meeting fundraising goals pre-Covid-19 was increased by 9%.
• Confidence in meeting fundraising goals post-Covid-19 is increased by 13%.
• The odds of anticipated increased revenue in the coming year is 90% higher (this correlates, especially, with an innovation orientation).
• The average fundraiser’s tenure increases by 15%.

“The development of a philanthropic culture should therefore be an immediate priority for any organization looking to markedly increase its fundraising income. The degree of donor centricity and the quality of the case for support are particularly important for donor retention, while factors such as Board support and the extent to which fundraising is viewed as a profession are important in driving fundraiser confidence.”

— Development Plans and Fundraising Performance Report, 2020

Bottom Line re Culture of Philanthropy

If you don’t nurture a philanthropic culture within your organization, you’ll leave money on the table. This is money that could help more people, animals, places and things. Or that could help those you’re already reaching in qualitatively better ways. Perhaps no one will know if you don’t do it. Perhaps no one will hold you accountable.

But just because you can get away with resting on your laurels, sticking with what you’ve always done, and ignoring the fact you could do better, is it the right thing to do? If there’s one thing that’s constant, it’s change.

It’s time. There’s evidence now that COP is not just kumbaya. It will help you grow your mission and reach your ultimate vision.

That’s worth some serious consideration.

7 Clairification Keys To Unlock Your Nonprofit’s Fundraising Potential

How much time do you spend being genuinely thoughtful about your goals and objectives? And do you take as much time as you would like to think strategically about your plan to achieve these ends?  Not just mindlessly editing or tweaking last year’s plan, but really digging deep into why you’re doing these things? Unlock your nonprofit’s fundraising potential through a series of “clairifying” worksheets and exercises. (1) Values. (2) Stories. (3) Brand. (4) Social Channels. (5) Support Constituencies. (6) Engagement Objectives. (7) Resources and Systems.

All Clairification products come with a no-questions-asked 30-day 100% refund guarantee. Seriously, if you’re not happy I’m not happy.