Friends,
Monday's Chronicle of Philanthropy Daily Update reported that the Financial Times posted an article discussing the fact that donors are now expecting considerably more accountability from the nonprofits they support. The article quotes Stuart Danforth, an investment consultant in Boston:
“Strategic philanthropy is broadening from the corporate realm to the personal realm. It’s about individuals being more strategic in their giving –- they’re not just giving money to a good cause, they’re trying to effect change for a reason.”
There are many reasons why this is happening—some covered by the article, others not. Largely, business professionals are accustomed to seeing tangible, measurable benefits from investments. Also, entrepreneurs want to play a greater advisory (even supervisory) role in how dollars are used strategically. Younger people, too, want to have a greater hands-on role in the nonprofits they support, and far more donors are cognizant of scandals affecting charities (see last week's MajorGiving: The Blog).
I also think that smaller nonprofits are suffering because they lack sophisticated oversight by their grass-roots boards. In my own town of Winchester, Virginia, several groups immediately come to mind—organizations that live hand-to-mouth and would crumble under wide-spread donor scrutiny. I don't claim to have immediate solutions for these small groups—but historically, they often fold and are replaced by something similar. For the groups I do work with, there are some important lessons to be learned:
Transparency—if you don't make your financials and activities truly transparent in an easily accessible way (i.e. Your website), donors might suspect you're hiding something.
Education—if what your organization does falls out of the pale of understanding of the general public (I think of the cutting edge theater whose board I sit on), then you must demonstrate in more complex ways how your programs provide an otherwise unserved need to your community. Perhaps, too, as is the case of this theater, you must work overtime to show that what you do has an impact on the region's livability and desirability as a destination.
Board Development—all too often this is ignored. It's one of the most important roles of the CEO (some say the most important). Boards are there not just to raise money but to provide invaluable expertise in fiduciary matters and to serve as community barometers. I can't tell you how many organizations I've worked with that don't have board orientations, handbooks, or clear succession plans.
These are just a few thoughts that come immediately to mind. This is a very large issue that is going to consume the time of many people like myself who worry about the future of the Nonprofit Enterprise.
Talk to you soon!
Bob
