Philanthropy Revolution
The only problem was that many of these meetings, perhaps even most, were disappointing.
I’ll give you an example. A good friend of mine supports an organization dedicated to promoting tolerance and defending civil rights. This friend asked me to meet with the regional and development directors of her organization because these directors claimed to want to honor me at an event recognizing women’s accomplishments.
I’d had nothing whatsoever to do with the organization prior to this news of my honor, and wasn’t even sure that its mission and activities aligned with my interests. I also had yet to learn that this sort of ‘honoring’ almost always involves a donation, a sort of quid pro quo that has you ‘give’ for the ‘honor’ of the honor. We’ll discuss this in detail in Chapter Eight.
Suffice it to say for now that I accepted the invitation to lunch, because it had come by way of a friend. My own parents had once held the organization doing the honoring in high esteem, and anyway, what did I have to lose?
We met at a café I’d recommended in Beverly Hills, and, only moments after the development directors had made their introductions, the fawning started. I looked great, the directors told me. My simple black purse was fantastic. Oh, and they’d heard so very much about me.
It was flattery of a sort that I’d never experienced, and I had to wonder what these women truly thought about rich ladies like me and our egos. We made small talk after that, and they continued to crow about everything they’d ‘heard.’ More praise here for me and my family. It became clear, however, that they really knew nothing about us. They certainly didn’t know what my charitable interests were or what sorts of things typically motivated me to give.
One thing I know about myself is that I’m good at small talk. It’s a skill I picked up in business. At Universal Studios, I served on the first team of executives responsible for establishing the organization’s web presence. I moved to NBC after that, and later established a media, marketing, and technology consulting firm. So, I understand the formula: small talk and then substance. The point of the small talk is to get to know the client (or in this case, the donor) in a deeper way. Why? Well, you want to build a rapport on the one hand, and you also want to find the connection between the client’s interests and your own. That’s how you know how to ‘ask’ them to buy – or even support – whatever it is that you’ve got on offer.
In retrospect, the sad truth of that lunch meeting is that nothing those development directors said, and not one of the handful of questions they asked, was ever going to yield any insight – at least not regarding my giving. I came away convinced that all they knew, and definitely the only thing they cared about, was that I had money. My being a good match with what they were ‘selling’ was beside the point.
I did ask them some specific questions about the work of their organization, questions that had cropped up for me during my review of their website prior to the meeting. Doing research before a meeting is essential, no matter your business, but my line of enquiry appeared to surprise these professionals. Rather than answer my questions, one or the other would launch into a prepared pitch about why I should offer support.
‘Is the anti-bullying program you mentioned being implemented at the local school?’
They didn’t know. Back to the pitch.
‘Does the organization collaborate with nonprofits doing similar work?’
They couldn’t say. More of the pitch.
They might have offered to get me some answers. Instead, they tried to shoehorn their ‘script’ into the hole that had been left by my questions. To their credit, they did eventually offer to follow up with the information I’d requested, but not without also asking me to commit then and there to being honored. Which, as per the quid pro quo I described earlier, also meant a commitment to give.
Needless to say, I ultimately declined.
An Old-School Approach That’s Pervasive
I sat through dozens and dozens of meetings just like this one in my first years of giving, long meetings characterized by the same old formulaic chumminess, the prepared scripts, and only nominal respect for my input. I began to dread the idea of ‘lunch’ – these meetings typically occurred over lunch – because ‘lunch’ meant that I’d be forfeiting my afternoon for another phony interaction with fundraisers. I wanted to spend time with my kids and devote attention to my investment and giving portfolios. I also hated the disappointment. Yet another bad meeting, I’d think, for an otherwise wonderful cause.
Since I consider my giving a direct expression of my values, it’s always been imperative that I give thoughtfully, with attention to how organizations are run. I’m also an unrepentant ‘fixer’. If someone has a problem, I’ll twist myself in knots just to make things right. In the case of the fundraisers who wanted to ‘honor’ me (as well as with the Hillcrest dinner, the temple, and Cedars), I was eager to help. And not just by way of my wealth.
A lot of this has been personal, but I’ve got a business case to make with this book, which I’ll start to lay out in subsequent chapters. In the meantime, I’m well aware of the challenges that fundraisers face on a daily basis. For one, rich people (that demographic on which the sector depends) can be notoriously difficult. Josh and I dealt with this stigma when we first became wealthy, and some friends of ours grew distant because they were certain we would change.
I get it. But I’ve also encountered so many people of means who are incredibly empathetic, generous with their time and money, and brimming with experience and skill. These are the givers the sector needs, just as it needs all those people with lesser means who have yet to find their way to philanthropy.
The problem is, if it’s too risky to treat donors like people, if the humanity in this exercise has been depleted by revenue targets, or exhausted by the demands of the difficult rich, where does that leave us? Fundraisers have told me time and again that a single, unwitting slight to a donor can jeopardize years of relationship-building, not to mention that donor’s support. Hence all the scripted, superficial, spiritless interactions that are designed to leave no room for error.
Philanthropy is in trouble, as we’ll discuss in the next chapter. And while I agree that there’s no room for error, what that means for me is the ‘revolution’ of the book’s title – a rethink and a redo of our old-school ways and approaches.
I promise to help you through it. I used to wonder if what I was experiencing in the sector would change once I wasn’t so ‘new.’ Maybe, if I met with enough fundraisers and eventually earned their respect, I’d feel better about the system. But what I’ve described in this introduction continues. And the ‘new money’ I represent? It’s given me a lens that is also new. And valuable. It isn’t just about the business experience (although I bring that to bear in these pages), it’s about being ready and willing to question what the ‘old money’ takes for granted.
When you’re a tourist in a foreign country, you see things that the regulars have long stopped noticing. New York pedestrians don’t believe in red lights. Angelenos wave and nod their thanks when they encounter considerate drivers. The French sit adjacent at sidewalk cafés.
I could go on. The point is, you take notice. You do the little wave and slide your chair over. You adapt.
Or else you don’t. In my case, you write a book.
I hope you enjoy it.
ONE
Philanthropy Is in Trouble
What Those Hundreds of Billions Are Hiding
When we first hired our business manager, not long after the IPO, I asked her how the other clients on her roster went about their charitable giving. These were the Hollywood-types and CEOs known by some segments of the financial services industry as ‘High Net Worth Individuals’ or HNWIs.
‘Lisa,’ she said, looking surprised that I had to ask, ‘most of my clients just don’t give.’
My experiences in the years since have confirmed this. I’ve learned that many people with wealth hold on to it. They consider giving but delay, or else park all their money in a Donor Advised Fund. I worry that, just like me, they’ve been put off once too often by the lack of humanity in fundraising, its outmoded approaches to the ask for money, or its pandering style of donor engagement.
In the next decade, many of our older donors, all those whose generosity has sustained our charities for years, will begin to pass away. And when this happens, if the sector doubles down by continuing to solicit the ‘young’ using tactics designed for the ‘old,’ our newest donors will walk. Ideally, these new donors will start philanthropies of their own. This is a trend that we’re already seeing with organizations such as Swipe Out Hunger, which we’ll discuss in Chapter Five. But, even if the trend continues, where will it leave all those big nonprofits that have helped to define us – not to mention feed our poor, build our concert halls, care for our sick, and fund our research?
Don’t Be Fooled by $427 Billion
On the surface, fundraising looks like it’s doing just fine.
The USA is home to an estimated 1.6 million nonprofit organizations. According to the latest Giving USA report, Americans are giving record amounts, with charitable donations jumping 5% from 2016 to 2017. As a whole, we gave $427.7 billion to charitable causes in 2018, with about 70% of that amount coming from individual donors, and the rest from foundations, corporations, and bequests. Over the past forty years, giving has held steady at about 2% of GDP, taking dips in recession years, and then recovering.
This can and should be a point of pride. As government continues to slash funding for social services, the arts, and scientific research, philanthropy has stepped into the breach. But these numbers hold a hidden truth. While the dollar amounts are up, household giving is down. Data from the Lilly Family School of Philanthropy at Indiana University, the world’s first and foremost school dedicated to the study and teaching of philanthropy, shows this to be the case across all income brackets, ages, and levels of education. In 2001, for example, 65% of households gave to charity, and that rate has been dropping. Already, in 2015, it had dropped to 55%. This downward trend continues, with the steepest decline noted in more recent years among donors aged fifty-one to sixty, the very people that, arguably, should be ramping up their giving (not only because they’re part of the demographic of older Americans, which according to Business Insider, holds 80% of wealth, but also because most of them are earning still, often at the highest rate of their careers).
That many in the population aren’t earning enough, or are otherwise struggling to make ends meet, is clearly a major factor – income inequality and wealth inequity are among the defining challenges of our time. But people aren’t giving for lots of reasons.
How we feel about religion is one of these reasons. Giving to religious institutions accounts for more than 30% of all giving, and givers who call themselves religious tend to be among the most generous to all institutions, religious or otherwise. But according to a report from the nonpartisan Pew Research Center, religious affiliation is way down in America. And with it, religious giving. In fact, the number of Americans giving to religious causes has declined by about 50% since 1990.
Also upsetting the balance, so far as giving goes, are the young. Our younger generations give and relate to causes differently. They might install solar panels, for example, instead of giving to the Sierra Club. Or they’ll give directly by way of online crowdfunding platforms. As we’ll discuss in later chapters, they definitely prefer start-ups to our charitable giants and they also tend to be eager to experiment, so their loyalties shift more frequently than we’re accustomed to seeing in the givers of old.
Interestingly, though, these generations hold sway. We’re now starting to see that their ways are contagious, attracting new ‘giving converts’ from Generation X and even (I’ll attest to this) among Boomers. The thing is, these generations aren’t very keen on established models. Yes, they’re beginning to give. And they’re definitely engaging in a manner that’s unique enough to inspire donors like me to take notice. But Millennials and Gen Y tend to give to the smaller and scrappier nonprofits. Or, they’ll start their own nonprofits, a few of which we’ll explore in later chapters. In either case, our traditional charities aren’t seeing a lot of their charitable dollars.
An Unsettling Reliance on the Few
The truth about the increase in dollar amounts going to charities is that fewer people are giving more. This might continue to sustain some organizations, but it’s also precarious, as it puts the responsibility for philanthropy into the hands (and subject to the whims) of the mega-rich.
As per the latest US Trust Study of High-Net Worth Philanthropy, 90% of households with incomes of more than $200K or assets of more than $1M (excluding primary homes) donated an average of more than $29K, up 15% from 2015. US households gave more than 1,800 gifts of $1M or more in 2015, worth over $19B – a big jump from previous years.
Philanthropists such as J. K. Rowling (who fell out of the billionaires’ club because she gave so substantially) and Warren Buffett (who encourages the mega-rich to divest of their wealth) might have us believing that system is sound. But it’s deceptive, since the richest among us are really only giving a tiny percentage of their total net worth.
As The Givers author David Callahan concedes, ‘Yes, affluent Americans have been giving more. But they’ve also been earning more, and it’s far from clear that their giving has kept up with their new wealth accumulation. The top 1% has assets of $30 trillion, about a third of all household wealth. But these Americans gave away less than a half of 1% of their total wealth in 2016.’
THE UK ISN’T FARING MUCH BETTER
A Barclays Private Bank report published just last year has found that there are too few major donors outside the US, and the situation is having a significant impact on UK charitable funding.
‘Barriers to Giving: Research into the evolving world of philanthropy’ reports that as many as 47% of multimillionaires outside America donate less than 1% of their annual income to nonprofit causes.
Commissioned in partnership with The Beacon Collab-orative and the Institute of Fundraising, the whitepaper also reports that philanthropic donations amount to just 0.5% of the GDP in the UK, compared with 2.1% in the US.
‘Barriers to Giving’ mentions an ‘us and them’ mentality between the wealthy and charities, the product of little understanding and poor communication. And, significantly, charities’ current methods of ‘engaging’ with high net worth individuals (or HNWIs) are identified as considerable barriers to major giving.
Additionally, the findings tell us that 75% of HNWIs believe philanthropy is a responsibility of those wealthier than themselves, and 42% believe that making extra donations wouldn’t be enough to have a significant impact.
It’s important to consider, too, that the Warren Buffetts of the world are skewing our numbers. Those who give in the billions make up for all the millionaires who only ever part with a couple of thousand dollars. That average of $29K a year in charitable dollars might be acceptable for people at the lower end of what constitutes high-net worth, but the minute you’re looking at your boat and your multiple homes and all the investments you don’t want to part with – it just doesn’t seem right.
My overwhelming sense is that many who have the privilege of occupying this space, people who frankly look a little like me: they’re not giving what they should. I could go on for days about the reasons why (and I will, in subsequent chapters) and I’ve already made the point in these pages that purposeful giving takes time. Some people hire philanthropic advisors when they don’t have the time, or they set up foundations that others can run – and good for them for doing so. It’s the ones who plan to give eventually, or who decide to let their kids sort it out when they inherit; these are the folks we need to get on board.
We’ll look in detail at what motivates donors in Chapter Two. It’s enough to say for now that those who lack motivation are missing out. Despite my issues with the sector, seeing our money help others has been one of the greatest joys of my life. So very often, I get to be living proof of the studies (ubiquitous these days) that tout the physical and psychological benefits of giving for the giver.
Unfortunately, I’ve also become acquainted with some ugly truths. For one, I’m convinced that people aren’t giving as much because the process of giving is fundamentally flawed, unproductive, and often downright unpleasant. It’s probably been flawed forever. But our donors have changed where the system hasn’t, and the disconnect is apparent – it’s even expressed by donors when they’re surveyed. So, the question is this: if today’s fundraising tactics actually preclude connection, instead of fostering it, will people continue to give?
It’s Not Just Me
I’m about a decade in, philanthropically speaking, and my sense of wonder has become one of alarm. But, again, I’m an unrepentant fixer, and when I started questioning accepted practices in fundraising, I also started talking to friends and colleagues. I asked the nonprofit professionals I now knew, as well as other donors, to be candid about their experiences.
I needed to first understand if I was an outlier. Was I overeager? Too intent on connection? Too focused on business? Too interested in truth?
No, as it turns out. I wasn’t. I’ve spoken since to dozens and dozens of philanthropists and development professionals, and nearly all of them corroborate my experiences.
Part of the issue is what I was getting at earlier. The sector is profiling donors (and interacting with them, too) based on criteria that are no longer relevant. Or at least not relevant in the main. When we had our IPO, for example, stockbrokers and real-estate agents found us and approached us immediately. It took most charitable organizations a good year to do the same – and we’d already made significant gifts!
I’ve heard similar stories from others, those who don’t fit the mold of your typical giver. I’ve talked to Asian American philanthropists who constantly get overlooked, despite the fact that they give in the arena of hundreds of thousands of charitable dollars, if not more. In my home state of California, Chinese Americans gave more than $50 million in major gifts in 2017 to UC Berkeley, UC San Francisco, UCLA and UC Irvine. In fact, donations from Chinese Americans accounted for 1.2% of all major US philanthropic gifts between 2008 and 2014 – a percentage that was roughly proportional at the time to their population of about 4 million.
Often discounted, too, are women philanthropists and donors of color, with the latter group so lacking in recognition that a movement was initiated almost a decade ago to designate August as Black Philanthropy Month. The idea was to draw attention to centuries of generosity among people of color – a donor population that many nonprofits continue to ignore.
Young people don’t fare much better. My older kids have joined a funding network called Resource Generation, where young people with wealth take the time to really consider where they give, and how their giving can be part of a more equitable system. I’ve spoken to my kids’ peers, however, about how often thoughtful Millennials like themselves are relegated to ‘junior seats’ on boards. They’re courted and coddled (often patronizingly so) and their volunteerism is welcome, as is their money. But do they get a voice? Not often enough.
When I took on our giving portfolio, I was shocked at the number of professionals who insisted that Josh (surely the holder of our purse strings, in their arcane world) come along on our lunches. Some of them even tried to go around me to get to him. Many of my girlfriends have comparable stories, and they’ve shared their feelings of frustration about sexism in the sector in general. It’s about all those ladies’ luncheons in the middle of the workday, the chaperoning husbands, and the old-school fluff – just thinking about it makes my skin crawl.
As for the phony relationships, I figured out quickly (though not quickly enough) that nearly any time I received an invite from a fundraiser – for breakfast, lunch, a cocktail or a playdate with kids – I would get pitched. It exhausted me: trying to figure out which of these dates were social and which were business. Of course, fundraising is built on relationships. A power imbalance exists within these relationships (we’ll look at this in Chapter Three) and that makes them challenging. But why are we pretending we’re ‘besties’? Why can’t we just be straightforward?
FUNDRAISERS AREN’T HAPPY EITHER
On average, a development director will spend just eighteen months at any given organization. Some studies put that tenure at sixteen months and suggest that the vacated positions are hard to fill. There are many reasons for this. The high demand for qualified talent, for example, means that good people get headhunted. And a major issue is under-resourcing: these professionals often get little support from their organizations and nothing in the way of career development, all while managing serious expectations related to revenue, and a whole lot of pressure to connect personally with donors.
A recent survey conducted for the Chronicle of Philanthropy and the Association of Fundraising Professionals revealed that 51% of fundraisers said they’ll leave their current nonprofit with the next two years, while 30% said they’ll leave fundraising altogether. A full 55% of them felt underappreciated often and (maybe worst of all) 21% agreed that the negatives outweighed the positives when it came to their jobs in fundraising.
Development directors of organizations large and small spoke to me with great candor about the pressure they feel to develop close ‘relationships’ with donors. They told me that sometimes (perhaps even often) the connection is real. When it isn’t real, however, or when it hasn’t had time to show itself yet, these professionals have to feign friendship – even if they share little in common with the donor, or worse, the donor treats them like crap.
You start to see (or I did, anyway) why fundraisers might put their guard up, not realizing that being clear and professional – as opposed to unclear or artificially personal – is so much easier on donors. It lets donors know where we stand.
My friend Peter, who comes from a philanthropic family and has been in the game for years, told me he almost always feels he’s got a target on his back. He’s used to it and continues to give, but he’s also become really cynical. He wonders why he stays with it.
Miriam, a passionate businesswoman and major donor, described how she’d invested in a mentorship project whose focus was young women in business. The organization running the project shut Miriam out of any discussions about the project after she’d made her donation. And it broke her heart, she said, to realize that the fundraisers’ initial interest in her perspective was simply their way of humoring her. They didn’t want her ideas, or even her experience; they only wanted her money.