Friday, October 16, 2015

Will philanthrocapitalists and hyperagents really change the world?

"As philanthropy enters a second golden age, real social change is getting lost in the hype of market-based giving," writes Linsey McGoey in Fortune.

The first 'golden age' was the 19th century, the time of Andrew Carnegie and John D Rockefeller Sr., McGoey reminds us. According to her, "From Carnegie’s spending on public libraries to Rockefeller’s investment in biomedical advances, their giving helped to shift charity from the dispensing of alms in a largely unsystematic manner to a business in itself, overseen by paid philanthropic advisors".

One trend in the ‘second golden age’ that is significant, she suggests,  is 'philanthrocapitalism'. This she summarizes as "a more muscular philanthropy that seeks to combine profits with poverty alleviation".  She is not entirely accurate. Matthew Bishop and Michael Green, who coined the term, described the concept succinctly as "philanthropy led by the world's wealth creators... applying business techniques and ways of thinking to their philanthropy".

Paul Schervish, cited several times by Bishop and Green, is the scholar who has, more than any other, studied the philanthropy of US wealth creators. He described one of the characteristics wealthy philanthropists' as 'hyperagency'. Hyperagency means “… being able to construct a self in a world that transcends the established institutional limits and, in fact creates the limits for others”.

Schervish also points out that these hyperagents are the 'producers' of philanthropy in a market where the currency is not money but emotions, and the producers are not troubled by competition.

Another trend in the second golden age, according to McGoey is the effective altruism movement, championed by Peter Singer. Singer has declared Warren Buffett and Bill and Melinda Gates  “the most effective altruists in history.”

McGoey's concern is that the hype around the second golden age is ignoring questions about its effectiveness. "Its progress," she says "often seems to be measured and underpinned by self-sustaining feedback loops". Giving in the US has remained stubbornly around 2% of GDP. 

Foundations are a growth industry in the US yet extreme poverty , meanwhile, continues to rise.

"Today’s philanthrocapitalists see a world full of big problems that they, and perhaps only they, can and must put right," Bishop and  Green wrote. 

Another commentator, Michael Edwards, sets that notion to rights in 'Small Change: Why Business Won't Save the World', his rebuttal of Bishop and Green’s book. Edwards believes that “business thinking and social transformation operate on entirely different logics”.

Finally, McGoey points to an alarming paradox from the first golden age which, hopefully, is not destined to be emulated in the second. She quotes from David Nasaw, Carnegie’s biographer, “Carnegie … became, if anything, more ruthless in pursuit of profits once he had determined that those profits would be distributed during his lifetime.” Then she juxtaposes this tweet from Martin Shkreli, “I donated a total of $5,000,000 to various causes recently. Looking forward to telling you all about it.”  Shkreli is the former hedge fund trader, who was vilified for raising the price of Daraprim - a drug that fights parasitic infections in AIDS and other immune-supressed patients - by 5,000%

Friday, October 9, 2015

Indian Giving

Ninety percent of what is written about philanthropy is based on info from the USA. Yet, philanthropy is but an infant in North America.
The JN Tata Endowment  pre-dates the Carnegie Foundation. There are suggestions that that Rockefeller’s philanthropy was influenced by Swami Vivekananda. In any case, philanthropy in the US did not really take root until the early 20th century.

In Europe, philanthropy is in its childhood. Philanthropy came to Europe from Arabia, in the 11th Century. Ancient philanthropy however, traces its roots back to Islamic and Hindu scriptures. The Laws of Manu (first century CE) are among the earliest quoted by scholars, writing about philanthropy.

Yet, today, if you talk to people in the West of ‘Indian’ philanthropy their faces tell a story, even before they open their mouths: "Indian philanthropy… What, is there philanthropy in India?"
In the course of the last two years I have been interviewing around 30 major philanthropists India.

There is no doubt in my mind that, "There is much philanthropy in India".  Nor do I agree with those pundits who bemoan the failure of India's billionaires at philanthropy. Comparisons are odious and, frankly, comparative data simply does not exist. In fact, what is needed is more study, more constructive debate and more enthusiasm for the philanthropy of the wealthy that definitely does exist in India today. I suggest that there are four broad sources of philanthropy currently in India.

The old business families, the Tatas, Bajajas, Birlas and Godrejs, to name some, undoubtedly play an important part in India's philanthropy - as they have done for at least three generations.
Major Indian philanthropy, has emerged from Indians who have made their fortunes through the IT sector; the professional sector, notably financial services; and others, who have successfully grown businesses in emerging sectors, post 1991.

The categories of philanthropy through which these flow, in my view, can be described as institution building; risk taking; 'new’ or 'venture' philanthropy; and major gifts.

Examples of institution building are the founding of hospitals and universities. This is a practice that goes back centuries. Though it predated the British, they encouraged this by awarding titles to prominent philanthropists. To this era belongs the tradition of attaching family names to institutions such as colleges, schools and hospitals. Whilst names may not be as well known today as they were then, second and third generations of these philanthropic families of the colonial era continue to oversee family philanthropic trusts Today’s exemplars of institution building are those founding eponymous universities, such as Infosys founder's, Azim Premji University or Shiv Nadar University. Biocon Founder, Kirin Mazumdar-Shaw has her name attached to the Cancer Center her philanthropy funds.

Risk taking philanthropy is exemplified by organisations founded by individual philanthropists such as the Screwvala’s Swades Foundation, with its unique 360 degree approach; or Padmini Solami's Salaam Bombay Foundation with its creative approach to empower slum kids. These are philanthropists who are applying innovation and entrepreneurial acumen to grass roots challenges.

Venture philanthropy - sometimes irreverently referred to as ‘philanthropy for bankers’ - is philanthropy which emulates financial investment or venture capital structures. It places emphasis on measuring impact and return on investment. A notable example is Ashish Dhawan’s Central Square Foundation, in education.

Major gift donations are made to established organizations such as schools, universities and hospitals, and existing NGOs. Major gifts may support causes close to the giver’s heart, such as alma mater, arts, crafts, historic monuments, or endangered animals.

Today's younger major gift philanthropists tend to differ from earlier more traditional donors by actively overseeing and contributing time to the NGOs they support. 

The practice of any of these categories of philanthropy is not exclusive to one or other of types of philanthropist. Members of business families are involved in both traditional and risk taking philanthropy. Many who have made their wealth through financial services favor philanthropy which emulates investment or venture capital structures.  However, others follow the major gift route.

There are noteworthy differences between philanthropy in India and that of the West. First, and most significant, is that a large amount of philanthropy is dedicated to fundamental, grassroots challenges – education, health, economic uplift - often after some firsthand investigation by philanthropists themselves of the issues to be combated.

American commentators frequently point out that there, much philanthropy is directed at causes from which philanthropists and their families directly benefit. This, so-called ‘consumption philanthropy’ is given to universities, schools and arts institutions the philanthropists and their families attend. This seems true of only a small fraction of philanthropy in India.

In the West, especially in the United States, many philanthropists see themselves as offering an alternative, better solution and a substitute for government funding. They are dismissive of and reluctant to deal with government.  The rationale for enjoying a tax deduction on their donations is that they are saving the government money and doing a better job.

Indian philanthropists seem to follow a much more pragmatic path. They recognize the importance of collaborating with and enhancing government programs. Collaboration, including with other philanthropists and NGOs, is common amongst India’s major philanthropic names.

Tax, in contrast to the West and especially given the absence of estate duties in India, is of little or no incentive to donors.

Most are candid that their primary motivation is their recognition of the enormous gap that exists between their great fortune and the lot of those at the bottom of the pyramid.

It is commonly assumed that much giving in India is religiously motivated. While some whom I interviewed follow religious practices, others claim to be spiritual rather than religious. Few make significant donations to church, mosque or temple.

Added to all the above, there is the philanthropy of the middle class and the poor - pointing to a wider-spread story of charity and philanthropy. The Charities Aid Foundation (CAF India) 2012 India Giving report told of a clear majority (84%)of Indians who had given money to a good cause in the previous year.

Indian philanthropy is significant, different and worth celebrating. It is not without its faults and challenges, though not dwelt on here. Ways need to be found to give it more oxygen and light. The media and academia have an important role to play in this endeavour.

[An edited version of this piece was published as 'The art of giving, the Indian way'  in Live Mint on 2 October 2015]


Friday, July 31, 2015

Giving crowdfunding a go

So far, I have never run a crowdfunding campaign. But I'm willing to give it a try. 

After all the Royal Academy turned to crowdfunding to raise the money to bring Al Wei Wei to London. And the Smithsonian is using crowd funding to save Neil Armstrong’s Apollo 11 spacesuit.

Some years ago I worked with an organization in Australia which supported artists and arts groups in their fundraising. One of its most successful programs was to promote crowdfunding, which proved especially useful for emerging artists seeking funds for new projects, or for touring.  Even for young artists seeking funding for study overseas.

Going back to the basics - always a great place to go - why wouldn't crowd funding be a great way to fundraise?

First of all you need a compelling case for support. What about bringing Chinese dissident art great, Al Wei Wei to London? Or saving Neil Armstrong’s spacesuit? Not bad, don't you think?

Then you have to establish your constituency. Whom are you going to approach? Who is most likely to give to this cause? In crowd funding, that decision is pretty well made for you. They will be people already close to you. Your friends and friends of friends. The people on your database, the people who have come to your events, your school or college, made a donation in the past, or signed up to your newsletter.

What are you offering them? You are offering them an opportunity to become further involved with what you do.

You will be benefiting from that fundraising 101 perennial, the Pareto principle. By offering a hierarchy of gift levels much of your targets will come from the small number of donors who have the greatest capacity and inclination. At the same time you will have been democratic and given as many people as are interested a chance to support you.

(The author of a Harvard study has concluded “Crowdfunding has enabled a democratization of access to funding.”)

Most importantly, you will be recognizing and involving your donors. They will get a piece of you, some part of your cause as a thanks and reward for their gift.

I'm not an expert in crowd funding but I'm willing to give it a try. Meantime, here is a blog on 5 Ways to Supercharge Your Next Crowdfunding Campaign, from the excellent 101Fundraising site.

If anyone is willing to give me a go, I'd be happy to help put together a crowd funding fundraising campaign. Send me a message.

Wednesday, June 24, 2015

Has quality of donors been sacrificed for quantity

The month since the death of 92 year old Olive Cooke has been filled with extraordinary commentary and concern about fundraising in the UK.

Nonprofit 'trade' journals have run articles featuring an array of the UK nonprofit sector's biggest names:
  • 'Charities in crisis over Olive Cooke case, Shawcross says' (Third Sector).
  • 'Shawcross and Bubb lock horns over the fallout of the Olive Cooke case' (Third Sector). 
  • 'Rob Wilson writes to IoF asking for greater protection for donors' (Civil Society UK).
  • 'Etherington’s suggestions ‘won’t address public concerns’, says Peter Lewis' (Civil Society UK).
  • 'Fundraisers should need a licence to practise, says former IoF chair Mark Astarita' (Civil Society UK).

A quick guide to the cast of characters - William Shawcross is the chair of the Charity Commission, Sir Stephen Bubb is the Chair of the Association of Chief Executives of Voluntary Organisations (ACEVO);  Rob Wilson MP is the Minister for Civil Society, Sir Stuart Etherington is the CEO of the National Council of Voluntary Organizations (NCVO); Peter Lewis is the CEO of the Institute of Fundraising (IOF). Unmentioned in the headlines yet central to many of the arguments is another organisation, the Fundraising Standards Review Board (FSRB).

On reading this you might be surprised at the number of worthy sounding bodies and their titled representatives and wonder how fundraising in the sceptred isle could have fallen into such disarray. Here is a brief sypnosis.

A 92 year old lady, known to have complained about the high volume of charity appeals directed her way was found dead beneath a 245 foot high bridge. The media instantly linked her death to the pressure of the incessant fundraising approaches made to her. Within days the British Prime Minister, David Cameron urged action be taken. Both the FRSB, the independent regulator of fundraising, and the IOF, a professional association for fundraisers and fundraising, responded to the incident and ensuing media pressure. The FRSB launched an inquiry into charity fundraising approaches.  The IOF announced strengthened rules for its fundraiser members.

The media pressure continued, notably in the tabloid press. The Mail on Sunday for example ran a story written by an undercover journalist who underwent training with telephone fundraiser, Listen Ltd. The journalist described  how "staff are trained how to cynically squeeze cash from potential donors including 98-year-olds and cancer sufferers." Several household name charities such as Oxfam, Cancer Research UK and the RSPCA were forced into defending their links with the telephone fundraiser. A commentator described the entire ongoing saga as a “a pent-up stream of concern and complaint” [12].

The debates signalled by the trade press headlines above are indicative of the discomfort of the charity sector. NCVO chief executive, Etherington pointed to the conundrum of “The Institute of Fundraising’s dual identity, being both the champion of fundraisers, and a body with a key role in regulating fundraisers". He noted that the IOF as the representative of fundraisers sets the code which the Fundraising Standards Board adjudicates fundraisers against". The players, in other words, are setting the umpire's rules.

The commentary has been joined by the academic and research community. Jo Saxton, chief of an independent  a research consultancy, NfpSynergy wrote: "The sector needs to get its house in order, providing donors with a much better sense of their rights when it comes to giving".   He reminded fundraisers of an apparently forgotten 'Fundraisers Promise", published on the FRSB website.

Among the Promise's statements are: “If you tell us you don’t want to be contacted in a particular way, we will not do so” and “we take care not to cause undue disruption or nuisance”.

Plymouth University’s fundraising think tank, Rogare, is responding by bringing forward a project to develop new ‘normative’ fundraising ethics.  The core of the new norm will be presented at IOF’s Scotland conference in October.  It is that, "ethical fundraising balances the duty of fundraisers to ask for support, with the rights of other stakeholders not to be put under ‘undue’ pressure to donate", says Rogare Director, Ian MacQuillin.

Most interesting to me, of all the various opinions expressed, is one by a veteran of  charity fundraising, Chris Washington-Soare. In a blog he bemoans fundraisers "have fallen for the growth-over-quality revenue generation model for far too long" [16].

In the future, Washington-Soare argues, "Our focus needs to be on nurturing high-quality, high-value donor relationships and slowing down the hamster wheel of growth".

A version of this blog first appeared as an NPQ Newswire on 22 June 2015

Sunday, June 7, 2015

Building profiles is good fundraising

What are we to make of this announcement in the Sydney Morning Herald

"Elite private schools are using sophisticated technology in order to tailor their fundraising pitches."

The piece then went on to say that schools use software that:

"Builds profiles on each donor, using census data to estimate wealth based on the average wealth of their suburb and the likelihood of them donating to the school.

"It stores every email a parent or donor has ever sent to the school's fundraising body, their payment and donation history, their volunteering efforts, event attendance and community involvement, to build a profile of the donor and measure their propensity to give."

In other words, schools identify and research fundraising prospects. This is exactly what schools, universities, cultural organizations and other charities ought to be doing if they are serious about fundraising, especially if they are serious about attracting major gifts.

Alfred A. Blum, Director of Advancement at Boston College Law School is cited as the source of the following fundraising maxim:

“The best solicitation occurs when the right prospect is asked for the right gift by the right solicitor at the right time in the right way... For that to occur, research is essential”. [For non-North Americans substitute 'ask' for 'solicit'!]

You as a competent fundraiser will also be able to justify good prospect identification and research from a donor's point of view.  How would you as a donor feel about sitting and listening to a pitch from a fundraiser for a project or cause in which you have absolutely no interest? What if you were asked for an amount that would be impossible for you to consider?  Or, conversely, you were approached for a small gift for something toward which you are strongly motivated and would like the opportunity to be significantly involved with?

Good prospect identification and research stops fundraisers wasting the time and effort of donors (as well as their own time and effort). Good prospect research builds a portrait of a door that tells us their interests, their ability to give and their links with your and other organizations. Good fundraising requires keeping and constantly refreshing this information. Most fundraising software provides ways of doing this.

Additionally, there is a heap of web-based software and searchable databases, freely available or paid for, that can provide valuable information to answer the questions you need to ask about someone's interests, ability to give and linkages.  From this information, you will be able to carefully plan your fundraising approaches so as to not waste the precious time and good regard of people.

The most important consideration though is to once again put yourself in the prospect's shoes.  Every time you record and retain some data about a prospect ask yourself, "If I saw or heard that this was being kept on my record how would I feel?"

If you have any doubts about storing information remember these five principles (adapted from the  Association of Professional Researchers for Advancement Ethics and Professional Standards):

  • Keep confidential information protected
  • Be sure data is accurate
  • Be sure data is relevant
  • Be clear about the purpose of your research
  • Take responsibility and be accountable for your actions as a professional fundraiser

Sunday, May 17, 2015

No idea where to start interacting with your prospects?

"I have to start raising funds from individuals in a country where HNWIs have a very poorly developed culture of giving.

"...We have no idea where to start interacting with our prospects"

This message could have come from any number of schools and universities that I know of and, I suspect, a large number of other nonprofits. It has certainly been true of several organizations where I have worked either as a manager or a consultant. I've seen the problem, heard the challenge and felt the anxiety. Or you might say "Been there, done that and bought the T-shirt!"

In my experience there is a simple solution. Get out there and start talking to these HNWI prospects. It's not as difficult as you might think. The second part of this reader's problem – "a very poorly developed culture of giving" – could be precisely the hook on which to start the conversation.

The process starts as with almost all fundraising by identifying and researching the people whom you want to go and meet with. The criteria that you used to identify such people will vary according to your situation. However, in some way it will be related to their capacity to give (not just money but also experience and networks) and the strength of their connection to your institution or cause[1]. Writing this causes me to hope you are reflecting on the importance of fundraisers or someone on your fundraising team doing proper prospect research.

Having identified and qualified a list of prospects with whom you have some connection then the message I suggest you send them goes something like this:

Dear Name

You are one of our most significant supporters/friends/alumni and we are very proud of our connection with you. We know we haven't spoken with you a lot in recent times and now we would like to do so with a very specific purpose.

You, I am sure are aware, that institutions such as ours thrive, grow and make a difference in the community because of the support we receive from many quarters.

However, we recognize that one area where we have a challenge is that we have a very poorly developed culture of asking for gifts.

The purpose of this letter is to ask if we can come and talk with you to get your advice on how we might begin to approach this challenge. We feel that because of your experience and success in your field you will have faced similar challenges and will have a great deal of wisdom to offer us.

I will telephone your office sometime next week to see if I can arrange a time when we can meet you.

Yours sincerely

Of course the actual wording of such a letter will vary with your specific situation. However, the basic structure suggested above is:

  • One or more opening factual statements showing that you identify with the reader.  Put yourself in their shoes. What is true about them and what is important to them enough that they will continue to read the letter?
  • A short phrase summarizing your mission or case for support.
  • State the specific problem (note the re-frame as “asking” not “giving”. Us not “them”).
  • A request for their advice (remember the fundraising adage, "Ask someone for money and they will give you advice. Ask them for advice, and they will give you money")
  • Timeframe and an indication that you intend to follow this with an action.

Then, do follow-up. Make a time to go and talk. When you do have the conversation remember another important piece of fundraising wisdom: "you have two ears and one mouth - use them in that ratio!" You will learn more and develop a better rapport by listening. 

Ask them what they think about you. How well do they think you are performing? What could you do differently? What would they do in your shoes? Who else do they know who it would be worth having a similar conversation with?

Then you will exit by saying “Thank you for those important suggestions. I will keep you up-to-date on our progress and, if I may, come back and bounce a few ideas of you at some other time.”

Of course, this is only the start of a relationship. However, you will have broken the ice. In all likelihood, you will come away having gleaned some valuable nuggets of information about the prospects, her interests, values, and connections.

This first interaction should only be the beginning of a series of interactions which you will use to bring that person closer and closer to what your organization does. If you treat their ideas and connections with respect you will undoubtedly when their support and that of others like them.

In another blog, I will suggest some ideas on how to continue to bring major prospects closer and closer.

[1] Your target here will be someone who is one of the “wealthy, wise and well connected”.

Monday, April 27, 2015

Don't research, don't ask

One university Vice Chancellor whom I have worked with takes the view "just ask!"

Luckily for him, his fundraising team doesn’t take this to heart.

Many years ago, when I should have known better, I accompanied another Vice Chancellor on a visit to ask a prospect for a seven figure gifts. I had only been engaged by that particular university a few days previously and didn't think it politic to dissuade him from the ask. The ask was made around a boardroom table with several other people in the room. The temperature dropped several degrees and had a pin hit the floor it would have sounded like a dropped dumbbell.

I should have known better because as a newcomer to major gift fundraising I had the good fortune to share an office with a then, little-known breed of professional called a Prospect Researcher. Until then I hadn't known such a job existed. Since then I have been enormously grateful to the skills I learned from her and a growing number of other professional prospect researchers with whom I've worked.

Success at major gift asking depends on you asking (or as I prefer to say offering an opportunity) for a gift that will make a significant difference in an area which is central to the giver's moral universe. Research will help you understand that person’s moral biography[1].

Research also help you know the size of gift that a potential donor is able to make. This is likely to be a product of their past giving record, where the opportunity that you are offering fits within that moral universe, and their wealth (assets and liquidity).

Research will also help you identify the prospects social and professional networks. This will help you work out whom to involve with you as you begin to draw the prospect towards the opportunity to give and who can help you weave the narrative of your case for support.

It will also help you know the prospects social and cultural tastes and enable you to plan a series of events and moments which are likely to develop the bonds of friendship between the donor and your organization.

To be more concrete, this is what you want to discover through prospect research

  • Basic contact and demographic details, including addresses, occupation, family circumstances, age and education.
  • Networks and affiliations such as particular recreations, clubs and societies professional and personal), professional networks including board and trustee roles
  • Already existing philanthropy (ideally including amounts given) and volunteering
  • Income, which can often be inferred from occupation and other indicators; and wealth, which is often much harder to know and seldom has a basis in appearances.
It is my belief that the majority of major gift prospects will expect you to have done this homework. Not doing it and wasting someone's time with an ill judged ask is a major discourtesy. 

The biggest ask I've managed was the leading gift to a medical research institute.  The final stage was a dinner hosted by the chief executive of the organization, in an exclusive and hard to obtain historic venue. There was live classical music (another of his interests) and a formal presentation by the leading researcher and a full table of the institution's leaders and existing supporters. A proposal that had been carefully shaped to conform to the giver's well known tastes and inclinations had previously been submitted. We knew this was what the donor expected.

It was the discourtesy of not doing research that resulted in the frosty silence that I first described above.

[1] Moral biography’ is the term used by Paul Schervish, the leading researcher of HNWI philanthropy. The term moral biography refers to the way that individuals conscientiously combine in daily life two elements: personal capacity and moral compass (Schervish, PG 2006, 'The Moral Biography of Wealth; Schervish, PG 2008, 'Why the Wealthy Give').