Too much donor power

Can you have too much donor power?

That's what some caution against, as you can read at The Agitator in Just Write The Check, Please! and in some of the commenters here at the Donor Power blog.

The caution, if I understand it correctly, is this: Total donor focus could mean compromising rigorous and effective programs. Most donors, after all, are not experts, and they tend to be drawn to simple and emotional offers -- not necessarily the things that really should be done.

Is a donor-powered organization an empty vessel that relies on donors to direct and define them?

Not the way I see it.

A great nonprofit, one that truly makes the world a better place -- and gives donors the most joy, fulfillment, and bang for their charitable buck -- is one that brings something extraordinary to the table.

If your only source of inspiration is what donors want, you won't have that.

Think about it: Six years ago, who needed an iPod? Not me; I was perfectly happy with my portable CD player. It met my needs. If you'd asked me what improvements I wanted, I might have said, "Make it unbreakable" -- something utilitarian and unremarkable.

It took the genius of Apple to create a new thing -- something that was fundamentally different from the portable music players we already had -- better in remarkable new ways. Customers weren't going to lead them to the iPod. They had to lead their customers there.

The remarkably donor-powered nonprofit needs to do that too.

Take Kiva. They didn't originate microenterprise loans, either as a program or as a fundraising offer. But they've added some powerful new twists that make it remarkable and donor powered:

• Donors can choose the specific person they'll help.
  
• Donors get real feedback about what their support is accomplishing -- not in a general organizational way, but from the actual person they chose to help.
  
• The gift really is a loan. Donors can choose to have it refunded to them once its been repaid. Or they can turn it around and lend it again. Or they can turn it into a charitable gift to Kiva. (I wonder how many donors want their money back? I'll bet the number is tiny.)
  
• There are some cool social networking components to the whole thing too.
  

They took a cool, though not unique, program and added features for donors. And ended up with something remarkable.

They didn't create some kind of bogus, pandering fundraising offer that traded effectiveness in the field for effectiveness with donors. But they did have to create donor-centered infrastructure. Donors' wants, needs, and aspirations are built right in to the core of Kiva's work.

Is that too much power for donors?

Technorati Tag: fundraising

Comments

[Jeremy Gregg]

I think that "donor empowerment" programs are likely a good thing -- particularly when it comes to programs like Kiva's, which are highly personal and in which creating that one-on-one relationship actually strengthens the program itself (by creating a sort of mentoring relationship).

However, such programs can create the illusion among donors that they know what is best for the non-profit... or, perhaps more dangerously, that they know how to best evaluate organizations' effectiveness. Here, I am thinking about some of the problems that come from the data provided by groups like Guidestar and CharityNavigator. These organizations make financial information very accessible to donors - in general, a very good thing. One of the hallmarks of a great charitable enterprise is its transparency and honesty with donors.

However, the increasing availability of this data has also fostered a mentality among donors that one of the primary means of evaluating an organization's worthiness is by looking at its overhead and its executive compensation. Although these items are a good first step to determine if there is something fishy going on (i.e. 5% of organization expenses are on CEO), they are hardly the best way to measure effectiveness. These items say nothing about the organization's service volume, outcomes, broader impact or other performance measures.

Jim Collins addresses this phenomenon quite well in his monograph, "Good to Great and the Social Sectors." He argues that evaluating organizations solely on these financial measures creates a situation in which highly effective non-profits cannot develop the necessary oversight and administrative functions necessary to increase their service or improve on their excellence.

Imagine, he asks, that there are two football teams: one loses all of its games, the other wins the championship. If the team that won the championship operated at a higher overhead and paid its coach a little more than the other team, would it be a worse team?

Admittedly, the example is extreme. However, we must also admit that there are some limits to the value of donor empowerment.

I think that a preferred scenario is: donor engagement.

Organizations need to look at their donors as partners in their effort to achieve their mission. This is not limited to including them on advisory boards and volunteer groups, but also involving them in discussions of the broader work in which the organization is involved. Fundamentally, the best outcome will be when an organization can engage its donors in understanding and addressing the root causes of its mission... preferably in partnership with the same people whom the organization was intended to benefit (i.e. "clients").

Donor engagement requires donor empowerment, but with the guidance of an organization's leadership and the involvement of its beneficiaries. Such a relationship will yield far greater outcomes than any effort to simply turn the organization over to its financial benefactors.

[Katie Riker Sternberg]

Too much donor power? Not a chance if the nonprofit stays true to a singular mission while it empowers its best allies and cheerleaders! By doing this the nonprofit itself becomes more effective. Donors are empowered and engaged "missionaries" spreading the importance of the cause on the nonprofit's behalf.

[tom Belford]

Terrific thoughts. Love both illustrations - iPod and Kiva. Building MEANINGFUL donor involvement into a nonprofit's modus operandi is strengthening to the organization and its mission. But the key word is meaningful ... not make-work, not distracting from core strategies, not expecting donors to chart the course.

[mikemuses]

It's getting a balance, I think. We want our donors to be engaged, to go out and tell everyone why we're so damn good, but we need them to remember why we're so damn good. We're pro's, we're dedicated to what we do, and we know what we're doing. So please, let us do it.

For example, I have a donor that wants to give us a significant (for us) sum of money. They want that to be spent in a particular geographic area. We work there. So far, so good. But they've become more demanding. They've asked what we'll buy, and say that they can find it cheaper, so they'll buy it and give that instead.

This is where the problem arises. I know the local financial rules, and the cheque will let us or them get tax back. When we buy things, we have different purchase tax rules to consider then they would, so giving us the money would let us buy more items than they could possibly get for the same amount of dollars.

Our organisation knows the specifications we need, and the things they have seen much cheaper than the things we'll buy simply aren't good enough.

So what's gone wrong? They've got all the power, but none of the buy in. For some reason, despite our best efforts, we've failed to engage them properly to see that in fact, we really do know what we're doing.

Both we and they want the best for our 'clients', but we disagree how to get there.

Sometimes there might be mre to a donors motivations than you can really understand, and while you hope your donors give because they're passionate about how you change the world, they might not all give for that reason.

What's the answer? I'm still not sure. But donor power can only come with real involvement and understanding.

[Jeremy Gregg]

Susan Herr posts some additional commentary on this string here:

http://www.philanthromedia.org/archives/2007/04/will_shareholders_vote_for_the.html

[Jeff Brooks]

Sounds like you have a problem donor, Mike. They're skating on ethical thin ice (possibly unknowingly), and they're keeping you from doing your job right. You probably need to be willing to give up the donation, if honest conversation doesn't turn things right. But don't assume all donors will do this to you, or create policies to protect yourself from them.