Women, giving circles reshaping giving sector

By Todd Cohen

The giving sector should pay more attention to the increasingly influential role that women and giving circles play in the charitable marketplace.

Women are shaping the future of charitable giving, while giving circles are making a bigger impact in giving.

Those are the conclusions of two new studies that suggest nonprofits should be investing more in getting to know and engaging women and givers who pool and give away charitable funds through donor circles.

A study by Fidelity Charitable Gift Fund says women are playing a prominent role in philanthropy in their households and communities.

Nearly half the women surveyed say they make the decisions in their households on how much money to give to charity and which charities to support.

“Women have always had a hand in their household’s charitable outreach,” says Sarah C. Libbey, president of the Fidelity Charitable Gift Fund. “But that role is evolving as women increasingly create their own wealthy and become the beneficiaries of wealth transfers because they live longer. As a result, women are stepping up to take on more philanthropic leadership roles.”

And a new study by the University of Nebraska at Omaha, the Forum of Regional Associations of Grantmakers, and the Center on Philanthropy at Indiana University says givers who take part in giving circles say they give more, give to more charities, give more strategically, and know more about nonprofits and community problems when they take part in giving circles.

Members of giving circles also are more likely than other givers to give to groups that serve women and girls, ethnic and minority groups, and for arts, culture and ethnic awareness, the study says.

With the recession stressing them and sending them scrambling for donations, nonprofits should make sure they better understand the givers who are reshaping the giving sector and get them involved in their organizations.

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Nonprofits’ attraction to stimulus funds could prove fatal

By Todd Cohen

Smitten with their new best friends in government, nonprofits need to be careful not to betray what makes them essential to a healthy democracy and civic marketplace.

The job of nonprofits is to take on social and global problems and make our communities better places to live and work.

To do that, nonprofits need to deliver effective services, find innovative ways to address both the symptoms and causes of problems, and ride herd on government lawmakers and policymakers.

But with Democrats controlling the White House and Congress, and spending billions of dollars to build the capacity of the giving sector and stimulate social innovation, nonprofits face a big temptation and a run a huge risk.

Seeing a chance after years as outsiders to get a piece of the action, both in federal spending and influence with policymakers, nonprofits risk losing the independence and incentive that have been essential to their work as civil society’s conscience and research-and-development arm.

On the political left and right alike, experts on the giving sector warn that nonprofits should not to abandon or abdicate their role as social innovators and government watchdogs.

Rick Cohen, a left-leaning watchdog who is national correspondent for The Nonprofit Quarterly and former executive director of the National Committee for Responsive Philanthropy, says keeping quiet about the Obama administration and Congress is the worst thing nonprofits can do.

“No, there’s something worse,” he writes in The Cohen Report, a publication of the quarterly.

“We can transform into an uncritical handmaiden of the handful of insiders who have grabbed the ‘nonprofit expert’ roles in the new administration, rather than doing what the nonprofit sector should always do, which is to stand apart, critique, mobilize the communities we represent, and demand social justice.”

Howard Husock, vice president for policy research at the right-leaning Manhattan Institute and head of its social entrepreneurship initiative, wrote recently in The Wall Street Journal that the Edward M. Kennedy Service America Act that President Obama signed into law threatens to stifle the social-entrepreneurship movement that has flourished in recent decades.

Standing in “notable contrast to established, large organizations – from Catholic Charities to the Salvation Army – which, in many cases, have come to rely on government contracts,” the social-enterprise movement has been fueled by “new, inventive nonprofits established and operated with little or no government support, says Husock, former director of case studies in public policy and management at the Kennedy School of Government at Harvard University.

But the Kennedy Act “will throw so much money at nascent programs that these otherwise independent efforts will lurch after federal dollars and bend toward government directives,” he says.

Nonprofits are known as the “independent sector” because their effectiveness in serving people and solving problems is rooted in their separation from government.

Nonprofits indeed stand to gain from a closer partnership with government that would generate more investment in the giving sector and give nonprofits a greater voice in shaping public policy.

But nonprofits should be careful that in chasing government money and access to power they do not devolve from entrepreneurial watchdogs into lazy and dependent lapdogs.

Giving-sector should raise its advocacy voice

By Todd Cohen

Fear of offending giving-sector powerbrokers, and a lack of resources, are muzzling nonprofits.

But supporting nonprofit advocacy, policy and community-organizing work can yield big returns.

Those are the conclusions of two new reports that underscore the need for greater investment in helping nonprofits to be stronger advocates.

While supporting a cause is central to their mission, a lack of funds and staff, along with concern that that speaking out will upset donors and board members, often keeps nonprofits from raising their voice on policy issues, says a new report by the Nonprofit Listening Post Project at Johns Hopkins University.

“Nonprofits are supposed to be the agents of democracy and give voice to the powerless,” says Lester M. Salamon, director of the Center for Civil Society Studies at the Johns Hopkins Institute for Policy Studies. “But their ability to do this is hampered by limited funding.”

Participants in a roundtable discussion on the topic suggested nonprofits take a more strategic approach to advocacy, integrate it into all aspects of their organization, encourage foundations to support advocacy, build long-term relationships with government, and use social-media tools to support their cause.

A separate report by the National Committee for Responsive Philanthropy says $20.4 million invested over five years to support advocacy and community organization by 13 groups that work with underrepresented constituencies in North Carolina yielded over $1.8 billion in benefits, or $89 in benefits for every $1 invested.

An earlier report late last year found that $16.6 million in advocacy funding over five years for 14 groups in New Mexico generated $2.6 billion in benefits, or a payoff of $157 for every $1 invested.

“When nonprofit organizations and foundations tackle urgent issues in the state,” the National Committee for Responsive Philanthropy says in its report on North Carolina advocacy, “they can achieve tremendous success – especially when they use public policy advocacy and engage affected constituencies in the problem-solving process.”

The report says “philanthropic best practices” to fund advocacy and community organizing in North Carolina include providing grants for “core support” and over several years, soliciting input from nonprofits and helping to build their “capacity,” exercising leadership on issues, and reaching out to other funders to expand available resources.

The giving sector can be much stronger advocates to address the symptoms and the causes of the social and global problems the economic crisis only is making worse.

Nonprofits need to know their givers better

By Todd Cohen

Nonprofits could raise a lot more money if they paid closer attention to retaining their best givers over the long term.

That means understanding what their givers want, an approach that requires investing in the kind of market research the for-profit world has developed to retain customers.

That is the view of Adrian Sargeant, the Robert F. Hartsook Professor of Fundraising at the Center on Philanthropy at Indiana University.

Speaking to 100 people who attended a Philanthropy Journal lunch ‘n’ learn workshop April 23, Sargeant said the single-most-important factor in determining whether givers continue to give to a particular charity is how the charity’s fundraising staff treats them.

Givers who are more than just satisfied with the way they are treated are much more likely to give again, Sargeant says.

And the “lifetime value” of givers who continue to give can be significant, he said, particularly among those who give at higher levels and whose giving often can culminate in a huge gift they make through their estate, Sargeant says.

Increasing loyalty by just 10 percent among givers can increase the lifetime value of a nonprofit’s fundraising data base by up to 200 percent, he says.

Yet while 60 percent of givers who give to a charity for the first time typically do not give a second time, and those first-time givers typically make only small donations, many charities focus much of their energy on retaining those givers, often by emphasizing the impact their organizations have on their clients.

While focusing on their impact is important in helping givers understand their value, Sargeant said, charities could generate a much better return on their investment by focusing instead on higher-end givers, understanding those givers’ values and needs, and engaging them in the organization.

Many nonprofits, however, short-change their fundraising operations and staff, he said, and allocate to them only those funds, if any, that remain in their budgets after other spending has been determined.

Instead, he said, nonprofits should develop fundraising strategies likely to generate lifetime giving, and should invest the resources those strategies require.

Fundraising is a critical part of a nonprofit’s business, and charities need to move beyond business as usual, stop treating givers as automated teller machines, and recognize that a worthy mission and success in addressing social problems are not enough to attract and retain givers.

Like the customers of any business, givers respond to good customer service.

And like any business, nonprofits must invest in building their customer base by investing in fundraising strategies that focus on knowing, engaging and serving their givers.

“The quality of service they receive as donors is the key driver of loyalty,” Sargeant says. “And yet precious few organizations actually measure it.”