My Line of Thought…A Culture of Philanthropy

A quick search using the key words “organization” and “culture” together on Amazon.com books returns over 8,000 results.  That is a significant amount of opinions, studies, and explanations on the subject. Some of these books are seeking the holy grail of the best organizational culture and advocating that all organizations should strive to achieve a particular culture.  Is there a “best” organizational culture?  No. The desired culture of an organization can very dependent on the mission of the organization and not all missions are the same. The culture of a creative ad agency, for example, may not work so well for a military squad steeped in battle.

Nonprofits relying on fundraising to help advance an overarching mission benefit from the instillation of a culture of philanthropy. Fundraising is a team sport. The culture of philanthropy within a nonprofit demonstrates a universal understanding, at all levels of the organization, of the connection between donors and their philanthropic investment. Further, there is staff willingness, regardless of title or job description, to participate in the process to secure and steward this investment though a shared understanding and respect for the donor giving cycle. To often the fundraising department is viewed by others that asking for money, stewarding a gift, or promoting gifting opportunities lies only with the advancement team and it’s their job alone to bring in gifts from individuals, companies, trusts or foundations.

It is the job of a fundraiser to secure gifts, but the attitude that it should only be left to the fundraiser is short-changing the organization. Should the players on a premiere sports team (select your preferred sport) work in isolation of the trainers, conditioning coaches, facilities personnel, the head coach? It is hard to fathom how athletes who take to the field without general support, without a game plan advocated and instructed by a coach, or without interaction with other members of the organization could  become a premiere sports team.

Within a non-profit organization’s overarching culture, the desired culture of philanthropy needs to be developed. Schein defines culture as “a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as they correct way to perceive, think, and feel in relation to those problems.”[1]

Culture is deeper than the climate of an organization. Denison articulates the difference: “Climate refers to a situation and its link to thoughts, feelings, and behaviors of organizational members. Thus, it is temporal, subjective, and often subject to direct manipulation by people with power and influence.  Culture, in contrast, refers to an evolved contest (within which a situation may be embedded).” [2]  To be recognized as having a culture of philanthropy it must be embedded throughout the organization.

Sustaining this culture requires the embracement, and enhancement, by each new leader of the organization. Successful fundraising builds on itself as demonstrated by a plethora of organizations upon celebrating a successful campaign begin working on the next one. Although campaigns may have set shorter time frames, fundraising is ongoing and requires a vision looking beyond the horizon.

Having leadership connect the philanthropic dots for members of the organization is a critical component, along with leadership practicing what he/she preaches. Unfortunately, for some in an organization fundraising is a “dirty” word. Further, an individual not involved daily in fundraising may view a potential donor as a multi-millionaire so they should have no problem giving the organization (or a special project within the organization) $500K or $1M—after all they are multi-millionaires. This is not a culture of philanthropy as it lacks an understanding and respect for the donor giving cycle. The donor giving cycle works towards proposal alignment followed by an appropriate solicitation and sustainable stewardship. It is the right project, the right timing, the right amount with the right person asking.

The fundraiser must be able to articulate the mission along with the successes and remaining challenges to a potential donor.  Typically, the fundraiser is not in the trenches delivery the services of the nonprofit to the end user. This is an important factor and why creating a culture of philanthropy is critical to creating a high performing and sustainable fundraising program. The success of a particular fundraiser, or fundraising campaign, requires collaboration among fundraisers, along with the entire team in the fundraising portfolio, and the organization’s entire team.

Depending on the “maturity” of the fundraising and engagement program within an organization,  the time to achieve a culture of philanthropy can vary. What does the organizational structure look like?  Where does the office(s) of relations and fundraising sit on the organizational chart? Does the director (or organizational title used) report directly to the CEO/President of the organization? Is the position limited to the areas of relations and fundraising or is the position combined with communications, marketing, or another area that indirectly may help the fundraising unit, but takes time away from the core business of the relations and fundraising unit?

Budgeting.  When it comes to developing the organization’s budget is the fundraising KPI equal to the projected shortfall in the budget, i.e. fundraising needs to fill the gap. Or are the KPIs for fundraising more measured? Is there a director of fundraising in the room when the overall organization’s budget is developed?

Strategic plan. When the organization’s strategic plan is developed how is fundraising and external engagement included? It is part of the discussion at the highest level of the organization? Does the strategic plan incorporate the fundraising and engagement component?

The culture of philanthropy within an organization may develop organically over time, however, the opportunity cost while this is happening could be significant. Rather, it is worth exploring implementing an education and involvement program to speed up the process to help members of the team connect the important work they do to fundraising success. Everyone at the organization should be included—after all, it is a team sport.

[1] Schein, E. 1985. Organizational culture and leadership. San Francisco: Jossey-Bass. Schein, E. 1992. Organizational culture and leadership (2nd ed.). 

[2] Denison, D. 1996. What is the difference between organizational culture and organizational climate? A native’s point of view on decade of paradigm wars. Academy of Management.

 

My Line of Thought…Fundraising Will Get Done Last

Is fundraising at your organisation taken seriously? According to Philanthropy Australia 1 in 4 charities depend on philanthropy and giving for 50% or more of their total income. Therefore, one could surmise that at least a quarter of Australian non-profits are taking it very seriously. The latest statistics from Philanthropy Australia state individuals gave $12.5 billion, foundations and trusts (private and public ancillary funds) gave a combined total of $660 million, and businesses gave $6.2 billion. In the United States, Giving USA reports individuals gave $281 billion, foundations gave $59 billion, and corporations gave $18.5 billion. If your nonprofit is not taking fundraising seriously the numbers indicate perhaps it should, but a word a caution when doing so.

If you give someone more than one thing to do and one of those things involves fundraising, fundraising will get done last, if at all. I am baffled by an organization’s cry for more gifts, but see wisdom in assigning non-fundraising responsibilities to their fundraisers. For some smaller organizations, for example, the shear lack of resources requires a person to be a fundraiser and a non-donor related event planner. However, this practice is not limited to under-resourced organizations. Some chief fundraisers are also responsible for organizational marketing, public relations, communications, and/or government relations, etc. Is this doing the organisation a disservice?

It can be a blessing for the chief fundraiser to have access to marketing and public relations resources, but at what cost? Granted, fundraising requires excellent marketing and communication messages from the organization that are fundraising “friendly.” However, managing areas like marketing or communications responsible for messages not directly related to fundraising, e.g. future student recruitment or handling a ‘hot’ issue, takes focus and time away from fundraising. These areas contribute to the case for support for fundraising efforts, but managing them can spread the chief fundraiser too thin.

Fundraising is like a sales position, it is necessary to be out of the office to build relationships in order to close a sale. Granted there are those occasional bluebirds—when you happen to answer the phone and the prospect informs you they want to make a major gift—but these are few and far between.

What benefit is an organisation giving up by giving their fundraiser(s) more than direct fundraising duties? Ultimately, more financial resources. Fundraising is about the numbers: the number of contactable prospects to solicit, the number of mass appeals and response rates, the number of attempts to secure personally scheduled visits, the number of personal scheduled visits, the number of solicitations, the number of attendees at a fundraising event, dollars raised, dollars paid, etc.

I appreciate the chief fundraiser has necessary duties beyond chasing major gift prospects all day. However, these responsibilities are typically related to the fundraising operation: strategy development, budget, personnel matters, fundraising marketing and messaging, volunteer coordination, establishing KPIs, etc. Any additional responsibilities have a direct impact on the chief fundraiser’s personal prospect portfolio. More responsibilities equate to a smaller portfolio and less prospect visits as there is only so much time in the day.

Many academics, and university leadership who came up through the academic ranks, are not typically accustomed to chasing philanthropic prospects for appointments or making the fundraising ask. Students typically seek appointments with professors or conference organizers extend the invitation to speak. Academics who consult can appreciate the art of chasing prospects. Chasing prospects takes time, energy and an optimistic attitude. Additional clutter and noise gets in the way of effective prospecting.

The financial health of an organization can influence the allocation of duties. For many universities philanthropy is viewed as a means of maintaining or enhancing excellence. Securing a gift to endow a chair allows the university to attract top talent or endowed merit-based scholarship will increase the number of high performing students. However, philanthropy, for a university, doesn’t keep the doors open—that is tuition income. With multimillion dollar plus annual operating budgets philanthropy income is viewed as a drop in the bucket. Further, in some cases the donor’s restriction on the gift is not seen as helpful or making an impact.

A long-term view of philanthropy is required as it can become an incredible force in making a difference for a university. A combination of philanthropic gifts and investment returns over the years have allowed Harvard University to amass a US$37 billion endowment, Yale University a  US$27 billion endowment, Stanford University a US$24 billion endowment, The Ohio State University a US$4 billion endowment, Oxford University with a nearly £3 billion endowment and, in a much shorter time frame, The University of Melbourne with a AUS$745 million trust. And these universities are not letting up with ongoing massive (1 billion dollar plus) fundraising campaigns executed by professional fundraisers.

The chief fundraiser for the aforementioned universities are part of the president’s cabinet, but not to undertake non-related fundraising activities. Rather, their place on the cabinet is to stay informed about university plans and activities, weigh in our strategic plans, communicate the pulse of the alumni community and donors, demonstrate to the university community that fundraising is important, lead and communicate on a university-wide campaign, and maintain an unfiltered communication relationship with the president.

Universities are layered with bureaucracy and getting entangled in fundraising related bureaucracy absorbs enough time as it is. The added burden of time spent on those items that will not advance fundraising initiatives is the opportunity cost of building relationships. Not all fundraising is the same, e.g. the annual fund solicitation compared to the major gift solicitation. The latter requires more personal attention and involvement because a donor’s philanthropic investment is greater.

Securing major gifts requires a steady pipeline of quality prospects. Research can provide invaluable information to help narrow the major gift prospect pool (capacity), but in many cases the personal visit is needed to help qualify a prospect (e.g. determine the level of connectivity). There are many necessary elements for a university to be successful in major gift fundraising, but relationship building is paramount. 

Additional non-fundraising responsibilities for the chief fundraising professional, especially when there isn’t a team of major gift officers on the road to assist, means less relationships are getting built. Although there is no universal correct way to organize the duties of the chief fundraiser there are better practices demonstrated daily by those fundraising operations leading the pack in raising monies. Your organisation could be leaving thousands, or millions, of philanthropic dollars on the table and restricting the chief fundraiser’s duties to capture this potential revenue is a demonstration that the organisation does take fundraising seriously.

My Line of Thought…Paying Board Members

Some universities in Australia are compensating members of their university councils/boards, per an article in The Australian[1]. Councils are charged to exercise all powers, authorities, duties, and functions other than powers specifically excluded under legislation in governance and oversight of the university. The Chancellor and the council are the boss of the University’s Vice Chancellor. These councils are like an ASX’s listed company board albeit there are differences, for example, in compensation rates and in how a member secures a place on the board and/or removed. For Australian universities there are no annual shareholder meetings and voting by shareholders.

Paying a “volunteer” to serve on a university board is different by country. In the United State members are typically not paid. In fact, it is the opposite, especially at private universities, where to be considered for a position on the board an individual, in addition to having influence and the appropriate level of expertise/experience, is likely to have significant philanthropic capacity. In the United Kingdom there is the Higher Education Code of Governance that addresses the issue in Element 7.7:

“Current normal practice is not to remunerate external members and to pay only travelling and other incidental expenses. However, if the governing board decides it is appropriate to remunerate, it will need to consider the:

·      provisions of charity and employment law;

·      implications for the division of the responsibilities between the governing board and the executive;

·      public service ethos which applies generally among HE governors;

·      need to be explicit about the time commitments;

·      need to apply a formal process of appraisal to the remunerated governor.

Where it is decided to remunerate, payments would need to be both commensurate with the duties carried out and reported in the audited financial statements.” [2]

A review of Oxford University’s Financial Statements 2015/2016:

“No trustee has received any remuneration…The total expenses paid to or on behalf of a trustee were £1,140 (2015: £1,700). This represents travel and other expenses incurred in attending Council and related meetings.”[3]

McGill University, located in Canada, makes no reference to a member of the board receiving compensation in the Board of Governors Handbook 2017 – 2018 or in the university’s financial statements[4] [5]

All the boards and their members have very important responsibilities regarding governance, legal, senior management oversight (the hiring and firing of the vice chancellor/president), etc. and are protected from personal liability through a comprehensive directors’ and officers’ liability university paid insurance policy. There is, however, a difference in the culture of philanthropy among boards.

There is a saying, “give, get or get off.” Universities ask alumni to contribute to make a difference in the lives of today’s students by supporting scholarships, therefore, it behooves the university to be able to communicate that at the highest level of the university individuals too are making a philanthropic difference. It can be rather disingenuous to be stating the case for gifts, but leadership (board/council) themselves do not philanthropically support the university and, in some cases, are getting paid by the university.

Universities can attract the right talent to serve on a board even if they are not compensated. In reviewing the Board of Overseers or President and Fellows (the Corporation) of Harvard University (Harvard has two governing boards) or Oxford University’s Council an impressive talent pool has been amassed. [6] [7] [8]

Why do these highly influential, wealthy, and experienced leaders volunteer to serve on university boards? They believe in advancing the mission of the university because it is a good thing to do and universities are a cornerstone of a civilized society. There are other reasons:

Connections. The opportunity to serve on a powerhouse board provides an opportunity to build a network otherwise not available to the individual. If Harvard asked if you would serve on their board would your reply be yes only if you were paid? (Yale alumni, no need to comment.)

Information. Boards have access to information that can prove useful. For example, board members receive endowment financial investment reports and updates from money managers.

Repay. For some board members it is a way of giving back to their alma mater. They are grateful for the education and experience they received that framed their successful career.

It’s good business. Universities are economic drivers and for many communities are an employer anchor—“A University Town.” Serving on the board is a way to connect the university to the community and stay abreast, and influence, the developments of the university. Further, industry leaders are keen to understand curriculums as their success is dependent on the university graduating students with the correct skill set.

Tradition. Some members have a long tradition of the family involvement with the university and there are legacies that go back generations. The desire to serve on the board stems from deep seated long-standing family commitments.

Academics. Although a member has amassed his/her fortune in business, he/she serve as protector of the classics and liberal arts education. They want to ensure universities don’t lose sight of their history in the wake of new trends.

Faith. Accept the invitation to serve on a board, for example at a faith-based university, because it is God’s will and a way for them to serve their faith.

Philanthropic oversight. As aforementioned in the U.S. many board members are significant donors to the university and, for some, such an investment comes after being involved at the highest level. There is comfort sitting at the table of the organisation where one has philanthropically invested millions.

Social. Giving time as a board member offers up a plethora of special invitations to functions. Serving on a board affords the opportunity for social interaction.

Ego. I would be remiss if I left out ego. Individuals volunteer to serve his/her ego. The ability to share they are on the board/council of XYZ University plays well at social functions and lends creditability to the individual’s professional endeavors.

Locally, opinions have been expressed that Australian university alumni are just not philanthropic and there just isn’t a culture of philanthropy. I disagree with the former and agree with the latter. Alumni are generous and do give when properly engaged, a gift proposal aligns with their passion and interest, and the university is making a difference/has a good reputation. Although there is a culture of philanthropy in Australia, it is not universally entrenched across the higher education sector.

To secure philanthropic investment and create a cultural of philanthropy requires investment in advancement professionals, programming, and instilling philanthropic teamwork across the university—at all levels. Just because someone is rich and you have a need for money doesn’t mean they will gift it to you. Further, the thinking if 10,000 alumni of XYZ University were asked once to give $500 each to secure $5,000,000 is not reality. If it were that easy it would be happening and the higher education professional advancement landscape would look different.

Further, Australian universities are playing catch up in creating a culture of philanthropy among their alumni. Creating this culture starts when alumni are students, instead of 20 years after they have graduated. See Penn State University’s student philanthropy.[9] More investment is needed today in Australian higher education advancement operations to raise more monies, even when it means a future professional or leader will reap the benefit and the praise for a realized gift of the future for the work that was done today.

There are the pros and cons to compensating board members, but attention should be given to how donors or potential donors will receive the news. It is important alumni feel they are valued and are treated accordingly with value add programming and benefits. With today’s rising tuition and government funding cuts increased philanthropic dollars can make a difference. University boards can take an active leadership role by engaging in advancement work of their respective universities and contribute to enhancing that much needed culture of philanthropy.

[1] https://www.theaustralian.com.au/higher-education/queensland-university-to-pay-senate-members/news-story/10cefa9e9890aff05ef281dfe179ba4b

[2] http://www.universitychairs.ac.uk/wp-content/uploads/2015/02/Code-Final.pdf

[3]https://www.ox.ac.uk/sites/files/oxford/field/field_document/Financial_statements2015_16_0.pdf

[4]https://www.mcgill.ca/boardofgovernors/files/boardofgovernors/00._board_of_governors_handbook_2017-2018.pdf

[5]https://www.mcgill.ca/vpadmin/files/vpadmin/auditedfinancialstatementsyearendedapril_2017_2018-01-10_0.pdf

[6] https://www.harvard.edu/about-harvard/harvards-leadership/board-overseers

[7] https://www.harvard.edu/about-harvard/harvards-leadership/president-and-fellows-harvard-corporation

[8] http://www.council.ox.ac.uk/people

[9] www.thon.org