Philanthropy is about impact and donors want to know that their charitable gift – their investment in an idea or an organization — will have a meaningful and lasting impact.
Flooded with giving opportunities, donors at all levels often ask themselves how they are to choose from the seemingly endless stream of requests. Assessing and evaluating the options is a strategic exercise to, as Brett Stephens states in a jfunders.org podcast, invest in people who have the ideas, with the potential to get things done.
While the trend has been to find “the next big idea”, too often organizations hire young people full of passion and potential, who find themselves frustrated by researching, reporting, and doing just about anything other than what they came in to do. Lean away from organizations that spend so much time trying to make their case that they squander the time, talent, and resources they need to get things done.
Target your charitable giving, by first considering only the organizations that align with your personal interests and values. Then apply the same due diligence you would in your own business; look for capable people with great ideas and assess their capacity and potential for success.
The following 3 key indicators will help you evaluate an opportunity and target your charitable giving:
1 – Organizational Capacity
An organization worthy of your donation should be able to pass the following tests:
- Stable Governance – There is leadership in place to oversee and ensure that policies and procedures are established, implemented, and maintained.
- Financial Infrastructure – A back-office system is in place to ensure that every dollar collected is spent on the work that the organization was established to do. Funds are tracked and internally reported. Metrics for success are established and outcomes measured against intended objectives.
- Functional Delivery System – The organization must have the resources to deliver on big picture goals and expectations. Whether to feed the hungry or clothe those in need, the organization must have the human capital and a manageable plan for achieving their objectives.
- Evidence based Practice – Those running the project have the evidence behind them to justify the direction they are choosing. Evidence based techniques have the greatest potential for success.
2 – People
People give to people and enable them to succeed. People work the systems and people – not money – make the world go ‘round. In the 60’s and 70’s in Ontario Canada, radio listeners regularly heard ads for the Canadian steel company, Stelco. Started in the early 1900’s, they held fast to their succinct mission — “our product is steel, our strength is people.”
By building a company around employees first, Stelco overcame industry challenges and created systems to deliver a quality product. To achieve success, they invested in the people with the capacity to deliver. At the heart of Stelco’s success beat a simple yet defining philosophy – build quality, develop trust.
3 – Trust
The demise of cryptocurrency exchange FTX, was a wake-up call to those who were chasing the next big thing. In Nuseir Yassin’s video, The Most Generous Billionaire, he notes that in addition to destabilizing cryptocurrency markets and customers losing money, “The third terrible outcome is loss of faith in the giving world, in the ‘effective altruism’ world”.
The philanthropic network is built on a trust relationship between donors and recipient organizations. When the people responsible for charitable organizations do what they say they intend to do, they gain trust – and future investment dollars from their donors. Though not every new program meets with earth-shattering success, the process, and the accountability to donors, builds trust. I recently heard Janet Sharkis, in a Bonttera webinar state that “transparency builds trust.” Where donors are encouraged to ask and organizations provide honest answers, trust is strengthened.
Projects may not always work out as planned as circumstances can change from theory to practice. Facing the truth sustains the confidence of donors. Openness and good communication are hallmarks of a quality organization and a responsible team.
BCG, the world’s top consulting firm released a major study, What AI Reveals About Trust in the World’s Largest Companies, in advance of the World economic forum in Davos, Switzerland. As their data shows, trust is pivotal to success, stability and growth. While the study is business oriented, they identify key trust “dimensions”, essential to integrate, honour, and practice by every charitable organization or consultancy. They are:
- Competence — Can the company effectively accomplish a specific task at hand, or in other words, can it deliver on its promise to stakeholders?
- Fairness — How equitable and empathetic is the company in delivering on its promise?
- Transparency — How open and unambiguous is the company’s decision making and actions?
- Resilience — How effectively can the company avoid or recover from challenges and crises?
To make a meaningful and lasting impact, support those who are competent in their chosen area, practice ethics and fairness in service delivery, are transparent in their readiness to share the good (and the bad), and while avoiding controversial or grey areas in their work, are resilient when faced with issues that may arise.
Great people drive great ideas and great people provide the essential investment to ensure those ideas can succeed. The philanthropic world needs investors who have the trust and confidence to let those who can, harness their passion, unleash their capacity and expertise and drive change in communities large and small.
This article was published in EJP online, February 13, 2023