My Line of Thought…From Philanthropic Investment to Leveraged Philanthropic Investment

Chequebook charity: this was a term used years ago in philanthropy to imply that a donor would make a gift without concern for the return on the gift. The charity made a request and a donor would simply get out his or her chequebook and write the cheque. Of course, there were exceptions, with some donors demanding more from the organisation. The exception has now become the norm, however, with the concept of chequebook charity disappearing much like the physical chequebook. More and more donors seek more from organisations and as a result the concept of philanthropic investment is now central to understanding donors. But is there more to know about philanthropic investment?

The notion of philanthropic investment is about making a wise investment in an organisation. It now underlies most requests for support from potential donors and philanthropists. It works like this: the organisation positions the proposal for a gift as a philanthropic investment and demonstrates the return (or outcomes) the organisation is seeking as a result from the generosity of the donor. Donors have no interest in bailing out an organisation because of mismanagement or because the organisation failed to plan for a changing landscape that is negatively impacting the organisation’s revenue stream. Instead, donors demand, and rightfully so, that their gifts be used to support meaningful outcomes that will allow the organisation to fulfil its purpose.

Positioning a potential gift as a philanthropic investment and expressing the ROI (Return on Investment) is rather mainstream now throughout the fundraising landscape. Organisations carefully articulate and aim to demonstrate, through proper stewardship, that the donor’s gift is making a positive impact on fulfilling the organisation’s purpose. Unfortunately, some stewardship programs are better than others and, further, some organisations get the proposal wrong with respect to the expected impact of the gift, leaving donors to wonder why their generosity didn’t accomplish the desired outcome(s).

Granting foundations have been known to push back on organisations before investing in a proposal because they have learned over the years what is possible and what isn’t. Their raison d’être is to support the non-profit sector by awarding grants judiciously and they make better choices during this process by engaging in a robust application processes, by having experts provide critical insight, by sharing lessons learned among the foundation granting community, and, frankly, through years of experience. Granting foundations have perspective that many individuals don’t have given the volume of philanthropic work that granting foundations carry out.

In the early 2000s, Bill and Melinda Gates were concerned about the state of American high schools and invested $2 billion to develop smaller schools. However, in 2008 the funding stopped because, as Mr Gates explained, “The overall impact of the intervention, particularly the measure we care most about—whether [pupils] go to college—it didn’t move the needle much…We didn’t see the path having a big impact, so we did a mea culpa on that.” A lesson learned was the lack of required financial commitment from governments and/or acceptance by the wider-teaching community and the funds were being treated as chequebook charity. These experiences have made the Bill & Melinda Gates Foundation better at what they do and have resulted in more and more foundations using leveraged philanthropy.

Leverage is using something to maximum advantage. Today’s donors are seeking ways to leverage their giving by working with the organisation to develop a new structure or blended gifts.

The matching gift program is the historical leveraged philanthropic investment, but it was traditionally limited to government or businesses that provided a matching gift program for their employees. Usually an employee would donate $100 to an organisation and the company would match 1:1, 2:1, or even 3:1. The other more common matching gift concept involved a donor pledging, say, $100,000 and the organisation would use it for a matching gift campaign to attract first time donors: the matching challenge would be used to promote to first ever donors if they make a gift their gift will be match by Mr and Mrs Good Donors until the $100,000 has been reached. Both matching concepts, however, didn’t require much on the part of the organisation and that is where leveraged philanthropic investment is changing this. Organisations are asked to demonstrate how much they value the opportunity to secure a major gift.

For example, a university needs a new parking garage, but lacks the required capital. In conversations of this need at a board meeting, a member of the board, who also happens to be a philanthropist, understands the logic behind the situation and is interested in helping. However, the philanthropist has no interest in having their $5,000,000 gift be known as the gift that built a new parking garage. The parking garage would be a revenue generator given the demand and the fees for daily or monthly parking rates. The philanthropist instead elects to leverage their $5,000,000 gift by placing a condition on the gift—the future revenue generated from the parking garage will be used to fund scholarships for students who demonstrate financial need. Future funds generated from the parking garage are no longer unrestricted. Instead, the philanthropist is associated with a generous scholarship program, the university saves on the associated borrowing costs to build the parking garage, and the parking garage will serve as a mutually vested interest in advancing the purpose of the university.

Often the needs of an organisation and the desired interests of a potential donor don’t align. For example, the organisation may make the case that a particular project is critical to the organisation and there is an urgent desire to get the project underway. Although the donor can logically relate to this project, emotionally it does not move them.

Another scenario might involve an organisation that is undertaking a multimillion dollar campaign and approaches a donor for leadership support to advance a plethora of areas in hopes that one of these areas will resonate with the donor. In this scenario, the donor may have an emotional connection to one of the projects, but the higher the requested gift, the more likely the decision making will involve some critical logic on the part of the donor. This logic may have the donor asking about the organisation’s skin in the game or how the donor can leverage their philanthropic investment to make an even bigger impact with their giving. For example, the donor may ask the organisation to match his/her gift to create a lasting endowment that results in doubling the impact.

In some instances, organisations need to pivot from just acting as a receiver of generosity and acknowledgment via the standard stewardship program because philanthropists are looking for more. Donors are demanding their leadership gift be viewed not just on the face value of the dollars, but also in the creativity in how the gift is structured so there can be a multiplier effect. Organisations may want to rethink proposals to donors and brainstorm the opportunities how those major and leadership gifts can be leveraged.

My Line of Thought…Lessons from the 2018 USA Giving Report

The highly anticipated 2018 Giving USA Report for the 2017 year has just been released. It reports a record $410.02 billion in contributions, representing a 5.2% increase from last year (3% increase, adjusted for inflation). Giving USA: The Annual Report on Philanthropy, is the longest running and most comprehensive report on philanthropy in the USA. The report is presented by two organisations: the fundraising professionals at Giving USA Foundation, a public service initiative of The Giving Institute (AskRIGHT is a member of The Giving Institute); and the research team at The Indiana University Lilly Family Foundation of Philanthropy.

Some of the key questions:

  • Where did the money come from?
  • Who received the money?
  • Why is giving to religion up and giving to international affairs down?
  • Are people giving more?
  • What is the impact of the stock market rally?
  • What are the lessons from the rise in online giving?



Overall, giving has risen: individual giving is up 5.2%, foundation giving by 6%, bequests giving by 2.3%, and corporation giving by 8%. The percentage breakdown from each source held steady from last year; however, a changing financial landscape may affect foundations and bequests as the transfer of wealth continues in the USA.

The increase in the number of foundations and donor advised funds is expected to continue (the Australian equivalent of the USA Donor Advised Funds are Private Ancillary Funds, which also continue to increase in quantity and assets). More donors, it seems, are committing to giving to those causes they are passionate about, but some do so by establishing criteria to be adhered to after their death.

The growth in foundation giving is attributed to the high performing USA stock market (S&P 500 experienced a 19.4% growth in 2017) and several mega-gifts ($300 million or more). A couple of outliers were Mark Zuckerberg and his partner, Priscilla Chan, who gave $1.9 billion to the Chan Zuckerberg Foundation, and Michael and Susan Dell, who put $1 billion in the Michael and Susan Dell Foundation.

Along with foundations, bequests are another area that will see an increase in the coming years. Currently, and at an increasingly rapid pace, more than $12 trillion in assets in the USA are being shifted from those born in the late 1920s, 1930s, and 1940s to their children and grandchildren (the latest USA census data reports 29 million people are over the age of 70). Over the next 30 to 40 years, an additional $30 trillion in assets will pass from the Boomers. It is projected that at the peak, between 2031 and 2045, 10% of the total wealth in the U.S. will be changing hands every five years.

With Millennials expected to be the recipients of this wealth transfer, it is worth noting the difference in giving behaviours of Millennials (born 1981-2000) and Baby Boomers (born 1946-1964). Millennials are either in the early stages of their career or still in school, while the Baby Boomers are retired or fast approaching retirement. In the most recent Fidelity Charitable report, The Future of Philanthropy, a survey of 3,200 donors revealed that 56% of Millennials report spontaneous giving (see section below on trends in online giving) and 72% of Baby Boomers say their giving is more planned. Further, Millennials’ worldview is distinct from Baby Boomers: the approach of Millennials to philanthropy is more global and social, and they express more optimism about philanthropy’s ability to impact the issues most important to them. The transfer of wealth that is projected in the Giving USA report will keep the bequest pipeline healthy.

It is worth noting the breakdown of the $35.7 billion in bequests in 2017:

  • $18.58 billion came from estates with assets $5 million or more
  • $6.92 billion came from estates with assets between $1 and $5 million
  • $10.19 billion came from estates with assets below $1 million.

Organisations should not underestimate the impact that non-mega bequests could have. Consider receiving just 1% to 3% of the total value of an estate from each of your many loyal constituents.


Contributions to recipient organisations saw religion, receiving 31%, again outpacing all others. Education was second at 14% and human services third at 12%:


Most sectors experienced an increase in gifts:








The increase in giving to foundations — now 15.5%, up from 3.3% in 2015-2016 — should have a flow-on effect in future years for the other categories when these foundations make grants to support their respective causes. In the USA, most foundations are required by law to give a set percentage (5% is the general rule but the calculation can be complex).


Some religions preach tithes — literally a tenth of earnings to be given to support their religion and the worthy causes: for example, feeding the poor may account for why religious organisations benefit more from other sources as well as the fact they ask more often, such as weekly. Many religious organisations have also adapted effectively to regular bank transfers of donations.


The United States and its neighbours has recently experienced several major natural disasters — including Hurricane Harvey (inflicting $125 billion in damage), Hurricane Imma, and Hurricane Maria — which is attributed to the decline in giving for International Affairs. This follows historical trends in which international affairs experiences a decline in giving following an increased in natural disasters at home. However, the decrease in internal affairs might also be a reflection of the political climate in the US, with the sentiment of “American First” and “Make American Great Again.” This is something to watch.


This area is known to vary. The vast majority of giving to individuals comprises medicines for patients in need, made possible by patient assistance programs of pharmaceutical companies’ operating foundations. These programs continually change under the various schemes run by the companies.


Giving as a percentage of disposable income remains steady at 2%. To put this into perspective, according to the US Bureau of Labour Statistics Americans spend 5% of their disposable personal income on entertainment. The graph below illustrates the trend over the last forty years.


2017 giving in the USA is charted against the stock market’s Standard and Poors 500 Index (S&P 500 is the market capitalisation weight index of the 500 largest publicly traded USA companies by market value). The performance of the stock market might affect giving — certainly there is a significant correlation, although there is a lag between the two. 2017 was a banner year for the stock market, indicating 2018 could be a good year for philanthropic giving.


Finally, the total giving as a percentage of the Gross Domestic Product has been hovering around 2% for the last few years.


The report included statistics from the Blackbaud’s Index (Blackbaud has a fundraising software platform servicing the non-profit industry). The online giving data reported from 5,764 non-profits that charitable support secured online amounted to $3.2 billion in 2017:

  • Online giving to religious organisations grew in 2017 and outpaced growth in giving through traditional methods.
  • Online giving for higher education institutions, compared with charitable organisations of all types, saw a greater increase.
  • Human services, healthcare, public-society benefit, and arts all experienced growth in online giving.

Shopping habits of the consumer continue to evolve with the rise of internet shopping, as smartphones become easier to use, enabling consumers to quickly make bookings, purchases and appointments.

There are some lessons for non-profits. As the online experience for these commercial sectors continues to improve, charities must also move to create similar online experiences. Unfortunately, online giving is marked by impatience, especially for the first gift to an organisation, so an antiquated online experience may lead a potential donor to give up the attempt. Organisations would benefit from an evaluation of their online experience for current and future supporters.


Rage philanthropy —  the recent trend of activism-motivated giving inspired by the election of President Donald Trump — is waning, but it was made conveniently possible through online giving (directly to an organisation or to crowdfunding sites) and lessons are to be learned. Such activism brought a number of first-time donors to organisations, which created the need to rethink stewardship and donor relations to retain these particular donors. Today’s active donors want more than a thank you letter. They need the opportunity to be involved with the organisation.


We can learn from the trends taking place in the USA to help our philanthropic efforts here in Australia. Of course, non-profits are at the mercy of the economy, like everyone else, but organisations can be proactive in developing online platforms that are modelled after successful private sector businesses and that target potential donors based on demographic trends—the treatment of the Millennials compared to the Baby Boomers, incorporating online giving in your major gift program, and understanding and executing a comprehensive bequest program to raise the awareness among donors on how they can make a difference in the future.

* All charts from 2018 USA Giving Report

My Line of Thought…A Growing Culture of Youth Philanthropy

At the  Alliance of Girls’ Schools Australasia Conference in Adelaide — Fearless Girls. Strong Women. — I was struck by the growing culture of Youth Philanthropy that is developing in many girls’ schools. These girls are learning valuable philanthropic lessons through these programs: social awareness, leadership skills, civic engagement, team working skills, service learning, empathy, assessment tools, and the spirit and meaning of philanthropy. Many of these philanthropists, either today or in the future, won’t be in the headlines for making large multi-million gifts; however, by actively working to make their communities better and helping those who need help, they will become the next generation of strong, compassionate women.

Each school is unique, abiding by its own independent philosophy and mission. As a result, each social justice program (SJP) is varied, supported as they are by students, volunteers, teachers, and administrators. There is nevertheless a common theme: a growing number of schools are making a huge sacrifice by using the energy and limited resources to benefit others, not themselves.

This sacrifice is selfless and generous, but in some cases it isn’t necessarily the best way forward. Philanthropists are keen to support organisations making a difference in the lives of those they serve as well as the lives that these individuals touch in such a positive and helpful way. A good warm-hearted story goes a long way in motivating a philanthropist to make a gift. What better story than one of Youth Philanthropy and the impact these fearless girls are having on the lives of others?

If you aim to make a commitment to care for someone, then it is critically important that you first take care of yourself. The Alliance members are doing wonderful work in educating girls, but there is a need to look to the future and the role philanthropy can play. In many cases, a potential donor does not contribute to a worthy cause because they weren’t asked. Unfortunately, some of the schools are not asking for themselves and they need to start. A more overt focus by school leadership on philanthropy is a significant opportunity for any school to do more for others and do more for itself, because both pursuits ultimately benefit girls.

How does a school allocate the finances to invest in the personnel and tools needed to commence a sustainable, and beneficial, fundraising program given the pressures on the budget?

The answer is that the school leadership (board and executive) must find the will to act. Fundraising is a team sport. It can’t just be left to the fundraiser as the fundraiser needs the involvement of the board volunteers, the principals and deputy principals, the teachers, and other staff to promote and share the case for support. Further, fundraising is a profession and takes a dedicated budget that supports the professional(s) who are implementing a fundraising plan, putting a great deal of time into running fundraising activities and cultivating (along with others) high quality relationships.

A necessary fundamental tool to raise funds is a dedicated constituent relationship management (CRM) software system for fundraising. Fundraising is about relationships and without a fit-for-purpose CRM designed to support building lasting relationships, i.e. institutional relationships that continue from one principal to the next, the aspirational goals of raising significant dollars will be very difficult to realise. Over 60% of the schools reported not having a CRM to support their fundraising activities, i.e. activities raising monies for the benefit of their school, and yet the 2018 Fundraising and Alumnae Relations Alliance Survey clearly showed that schools that had invested in a CRM were achieving better results.

Schools must allocate staff time to work with the girls and volunteers to ensure that such activities are well-organised, are following the law (e.g. raffles), and are promoting the school appropriately along with the other good causes they have chosen to support. In addition to time, schools must find the will to set out the fundraising work as a strategic and operational priority and allocate sufficient human, marketing, and operational resources in the annual budget. Asking for a gift to benefit the school directly doesn’t have to been done at the expense the SJP. Quite the opposite.