Prompted by the latest $2.7 (€2.3) billion tranche of charitable gifts from American writer MacKenzie Scott, we ask what philanthropists really want from their giving. Featuring insight from major giving experts across Europe, we explore the changing world of philanthropy and what nonprofit organisations can do to appeal to today’s big givers.
Last month, the American philanthropist and writer, MacKenzie Scott, announced her third colossal tranche of donations, taking her total giving over the past year to an astounding total of over $8.6 billion (€7.3 bn).
While the size of the most recent funding allocation is certainly significant, the selection of 286 ‘historically underfunded and overlooked’ nonprofits is remarkable too, with Scott choosing to support the nonprofit sector itself, including philanthropy infrastructure organisations among the beneficiaries. What’s more, rather than directing how those funds are to be used, she opts to give nonprofits a free rein, writing in her blog:
“Because we believe that teams with experience on the front lines of challenges will know best how to put the money to good use, we encouraged them to spend it however they choose. Many reported that this trust significantly increased the impact of the gift. There is nothing new about amplifying gifts by yielding control. People have been doing it in living rooms and classrooms and workplaces for thousands of years. It empowers receivers by making them feel valued and by unlocking their best solutions. Generosity is generative. Sharing makes more.”
We explore whether this could be indicative of a broader shift among philanthropists away from project funding to a more strategic and long-term approach.
Addressing systemic challenges through philanthropy
As the resource development director at the Association of Community Relations in Romania (ARC Romania) and an independent strategic philanthropy adviser, Madalina Marcu works to help major donors direct their giving. She explains that philanthropists in Romania have been moving towards more strategic funding decisions for a few years now, but that the movement has been accelerated because of systemic problems with the national education system.
She says: “Young people are dropping out of school and those that stay rarely get a high quality of education. Over the years, it’s become a systemic issue – a problem that impacts the whole of Romanian society and our future workforce.
“Major donors – often entrepreneurs and business leaders– are working hard to drive change, putting pressure on the government to tackle the issue and coming up with their own solutions to address the root cause. They are thinking hard about where they can invest to have most impact and they understand that this is a problem that cannot be fixed overnight – it will take time. This recognition is a major shift for philanthropy here.
Marcu adds: “We’re still in a place where philanthropists want to see a lean team – NGOs with few staff and overheads, but their business thinking is carrying through into their approach to philanthropy. They set KPIs, they want to see a process that can be monitored with measurable outcomes and outputs. And, so long as they can see signs that it’s working, they are prepared to wait.”
She gives the example of one of the country’s largest donor families, who chose not only to give, but to set up and fund an award programme through the Romanian Business Leaders Foundation to recognise good practice in teaching, aiming to reward high standards, rebuild confidence in education and attract more talent into teaching. Five years on, the programme is working well and so the family has increased its investment in the scheme and is working in partnership with other nonprofits.
Investing in core and sustainable funding
Similarly, Lars Erik Svanberg, head of financing and framework conditions at the Norwegian Trekking Association (DNT), agrees that philanthropic partners – ranging from commercial organisations to foundations and high net worth philanthropists – are increasingly looking for a longer-term strategic approach.
For 150 years, DNT has been working to promote trekking and to improve conditions for all who enjoy Norway’s broad range of outdoor attractions. The organisation has over 300,000 members, manages 550 cabins and 22,000 km of paths for public use, also running programmes and activities linked to the public health agenda, designed to entice people of all ages and backgrounds to be active and get outdoors.
He says: “We’re seeing a shift – rather than giving small sums to a plethora of different projects with short-term goals, partners increasingly choose to award larger amounts over a longer-term period, wanting to make a bigger impact. We want our supporters to recognise that we can achieve more when we’re not rushing from project to project and having to start again each year. In this respect, the longer-term perspective is a selling point – they can get more for their investment.
“These partnerships give us a better opportunity to plan ahead, build capacity and to have the flexibility to use the money where its needed most. It’s not just a case of working towards longer-term goals, but having the opportunity to spend that money more wisely; to invest in more sustainable programmes.
“Sustainability is becoming more important for all of us and that’s a key focus for our work over the next 10 years. Ultimately, we want to take care of what we have, rather than building new; and this resonates really well with our funding partners.”
Making a transformational and tangible difference
Indeed, a more entrepreneurial style of fundraising and income generation can be influential when it comes to inspiring philanthropists to give. Nathalie Bousseau, director of Fondation CentraleSupélec – a French graduate engineering school, part of the University Paris Saclay, says:
“We’re planning some big projects for the future and we’re going to need considerable investment, so we’re working to develop with new ways to generate income. That includes applying to foundations, taking out a loan to invest in housing for students near to the campus, which is generating rental income already, and even investing in start-up businesses created by our students. This kind of thinking and long-term planning can be all the more appealing to entrepreneurial donors.
“Now, because of the COVID crisis, we find that our major donors are more aware that it may be difficult to raise money in the future. They seem to be more willing to invest in the organisation, rather than just funding particular projects and they are responding well to our own strategic approach and diversification of income streams. This is particularly true for those supporters that have been with us for a long time. They want to know that we will survive and to have a voice in our future.”
According to Marta Redondo, legacy & major donor manager of Cris Cancer Foundation in Spain, major giving isn’t that well established in Spain, but it is starting to grow. She says:
“What we can see is that donors don’t simply want to give and move on. They want to know where the money goes and the real impact their gift is making. I dare say, most of them are not interested in events, presents or publicity. They want results.
“So, we work with supporters to identify what areas are most important to them and aim to offer a turnkey project; a funding opportunity that fits with their motivations and aligns with our mission. This might be a case of creating a grant for a specific type of cancer.”
While individual philanthropic drivers and needs can be wide-ranging, experts agree that, ultimately, big givers are looking for the opportunity to make a transformational and tangible difference to causes they care about.
Dr Beth Breeze, director of the Global Challenges Doctoral Centre and Centre for Philanthropy at the University of Kent (UK) says:
“Over the 15 years I’ve been studying philanthropists, I don’t think this core goal has substantially changed but perhaps the way of reaching it will change in the light of role models such as MacKenzie Scott, and also as a result of changes in grant-making during the pandemic.
“Charities have always preferred, and hoped for core funding, and have long felt frustrated about the need to ‘project-ise’ their work into fundable chunks. It is increasingly clear that core, no-strings attached funding is the best way for donors to provide the most-valued support, and to give in a way that demonstrates greater trust and partnership with those they support.”
Supporting wealthy people with their giving
There is of course no singular mould for a philanthropist, but a broad spectrum. As such, philanthropy experts emphasise the importance of taking time to develop those individual relationships and to support donors with their giving.
Cath Dovey, co-founder of The Beacon Collaborative – a collective impact movement working to grow philanthropy across the UK, says: “Sometimes we forget that philanthropy can be really daunting, particularly for those who are new to it. It doesn’t matter how rich you are, there can be a great deal of fear about losing money. Philanthropists want to get it right and make sure their donations go where it’s most needed. But there’s no established pathway for that.
“It’s so important to support donors through the process, educating them around how it works and what to expect from you. And that’s what they will remember when they go into the next phase of the relationship.”
Being sensitive to the high levels of anxiety that wealthy people may feel about their wealth and spending is just one of a series of a barriers to giving identified in Beacon’s recent report, The Giving Experience – Overcoming the barriers to giving among the wealthy in the UK.
She adds: “High net worth donors can be so easily misunderstood. Often, they are highly successful business people wanting to engage as partners, but the world of philanthropy has completely different timescales and expectations. If a donor calls to ask what’s going on, they are sometimes perceived to be demanding or ego-driven, when usually it’s just that they are busy people with busy lives, wanting to be helpful. They are looking for reassurance that their support is having an impact and it takes time to establish that trust.”
“At the end of the day, rich people are just people – they have the same hopes, fears and dreams. They want to understand how they can help, the impact of their gifts and to feel a sense of security that they have done the right thing. So, it’s all about managing the relationship, sharing information about what you’re doing and helping them feel that they are part of the solution.”
Appealing to today’s philanthropists
Sharing their views on what nonprofits can do to appeal to wealthy philanthropists, experts highlight the importance of offering strategic and sustainable funding opportunities, setting goals with clear benchmarks to monitor progress along the way, communicating regularly and openly, and involving the board of trustees.
“Regular communication is really important,” says Dovey. “We always encourage charities to go beyond the brochure, inviting donors to join events and come together with other supporters, creating opportunities to really get to know them better.”
Bousseau highlights the importance of transparency, saying: “High net worth supporters expect us to be honest with them and that means ensuring that fundraising teams are comfortable answering questions not only about a charity’s mission, but about the finances and future of the organisation. I also think that involvement from the board of trustees is key, conveying how much a philanthropist really means to the organisation.”
Marcu agrees that board support is critical, concluding: “Often the best way to start those relationships is to ask for advice and listen to what they have to say long before you ask for money. Treating a philanthropist as an adviser not only enables them to give you their feedback and to help create solutions that they will want to invest in, but teaches you to speak in their language.
“It can be really hard to build major donor relationships from zero, so having board members that are willing to open doors, that have the business expertise and experience to speak as equals with the people you’re approaching, is so important.
“After all, it’s all about relationships– philanthropists will invest in those they believe and trust.”
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