THE BLOG

Do You Give in the Dark? Some Scary Philanthropic Realities

10/27/2011 03:19 pm ET | Updated Dec 27, 2011

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Following is part of a blog series to help you make your giving--in any form or amount--more meaningful to you and more effective in addressing the problems you want to solve. My hope is that the ideas, resources, knowledge, and tools presented here and on my website (www.giving2.com) will inspire, educate, and empower your philanthropic journey. "Giving 2.0" exists to catalyze you to become more ambitious, innovative, and effective in your giving, enabling you to create a bigger impact with whatever you have to give.

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"An investment in knowledge pays the best interest."
- Benjamin Franklin

How many times have you given based solely on the fact that your heartstrings have been tugged? Perhaps it was by an online video or a late-night television commercial? Perhaps in response to a disturbing photo in a mail solicitation? Or, simply because a friend, colleague, or community member asked you to give to something that's important to them.

Often, when you make a gift in this way, you have no idea where the dollars will end up. You hope they'll go to the starving child, the homeless family, or the disabled veteran. But the organization may provide no information about how it will use your resources. So how will you know if it's been successful or what precise support it will give the people you want to help?

You also don't know what percentage of your dollars will go to the people featured in the advertisement or solicitation letter (that is, the little girl or boy, whose name and age they tell you). You have no idea whether part of your gift goes towards paying the celebrity endorser, the mail-house solicitation company, or the telethon company. To often we're happy to receive thanks from the nonprofits we fund, accepting gratitude instead of feedback or performance measurements.

This approach is wrong. Philanthropic investments are investments in the future of individual lives and our world. Having gratitude be our only return on investment leaves a huge chasm between intention and impact-both for those of us who give and those we want to help.

In a 2010 Hope Consulting study, 85 percent of the American donors surveyed said that nonprofit performance was "very important." Yet only 35 percent said they did any research on their gifts--only 35 percent! Among those who did research, only 5 percent said they used their research to assess the quality of the organization's team. This is both worrying and puzzling. After all, leadership and product quality are two of the most important criteria to consider when making for-profit investments. Yet we seem to ignore them when making nonprofit investments.

This is what I call "giving in the dark." When you give in the dark, you fail to grasp the meaning of your generosity. And an understanding of the impact you ultimately have is what makes giving meaningful.

When thinking about how to make your giving more meaningful, it's important to consider both sides of the giving transaction. One side is defining and assessing the impact of your giving portfolio (all the resources that you give-time, expertise, networks, and dollars) over time and in its entirety. The other side is defining and assessing the impact of the nonprofits you support and the contribution they make in providing services, creating social change, or building awareness of a social or environmental problem.

The Philanthropic Sweet Spot

Passion is, of course, important. But after you've determined your philanthropic passion, I urge you to balance that against public needs. That's when you'll find that philanthropic "sweet spot," and once you've hit on it, you'll need to consider what types of resources you have to give and what your goals are within the scope and breadth of those resources.

Once you've created your giving goals, think about the steps you need to take to achieve them. These include identifying the right nonprofits to fund (that is, organizations whose strategies and missions align with yours) and how they'll determine if they are successful in meeting your shared objectives. Finally, you need to consider whether their measurements of success are sufficient to meet your own assessment criteria.

Different organizations measure success in different ways. Some use anecdotes and stories. Others use short-, intermediate-, and long-term success metrics. Some commission external evaluators to conduct reviews that include both hard and soft data. Some base their work solely on the immediate feedback of those benefiting from their services.

You need to decide which of these measurements is acceptable for the situation at hand. But whatever you decide, you should demand the same kind of accountability from your social investments as you would from your for-profit investments. And greater accountability will only help the nonprofit sector refine its programs and services to become even more effective.

In fact, if an organization you're considering funding has no internal evaluation processes or resources, you could also fund that internal capability, instead of programs. While not as "sexy" as directly funding food for the hungry or housing for the homeless, this kind of funding can enable a nonprofit to increase its efficiency and enhance its fundraising efforts since being able to demonstrate measureable success is extremely compelling to today's donors.

A Funding Gap

Assessing nonprofit performance is not easy-either for you or for the nonprofits themselves. Even in the foundation sector, only a small percentage of philanthropic institutions have sufficient staff and infrastructure to conduct formal evaluations.

That should not stop you, however. Do an assessment before and after you make a gift, determining what specific indicators or events a nonprofit will use to tell its donors how their money contributes to a mission. Say you're funding immediate needs at a local food kitchen. How many families came to the church to collect food, for example? How many bags were passed out, what types of food were in the bags, and what was their dollar value?

Results in the social sector are tangible and intangible. It may take years before you have concrete evidence of the change your gift is helping to bring about. So be patient, and stand firm on the accountability measures you consider important. What you're looking for in terms of measurability is probably similar to that of other donors. So a small investment to help nonprofits measure their work more effectively could be the catalyst for significant future investments by other donors.

Partnering with the organizations you fund to track their success more effectively is a win-win-win. The people or causes you want to help win because accountability and effective tracking leads to greater impact (especially if the results, successes and challenges are shared). The nonprofit you fund wins, because its ability to monitor its success more effectively will help it attract other donors. And you win-twice, because you'll understand how your generosity translates into social change and you can have a bigger impact by using your gift as leverage to attract others.

Nonprofits are the intermediaries between generosity and social change. If they succeed, we succeed. If we continue giving in the dark, good intentions may never be translated into great impact. But if we partner with nonprofits to understand their success, we can shed greater light and take action on the best ways to transform our world.

Laura Arrillaga-Andreessen is the author of Giving 2.0: Transform Your Giving and Our World (Wiley/Jossey-Bass, November 2011). For a host of resources to make your giving matter more, please visit www.giving2.com.