Charting Our Course: First-Year Reflections from Giving Compass

3 Tips for Effective Donors

In figuring out the best way to approach your giving, there’s no shortage of competing voices offering advice about where you should direct your charitable dollars. However, it’s important to also pay attention to how you give. No matter the issue area you care most about — whether it’s climate change, education, or the arts — the way in which you interact with the social change leaders you’re supporting on the front lines has a meaningful influence on their ability to carry out their work most effectively. At the Center for Effective Philanthropy (CEP), we work with funders to help them better understand what practices make for more effective giving. In our work, we hear from many perspectives, including that of funders and nonprofits. Recently, three perspectives we’ve heard from on our blog stand out as salient pieces of advice for donors on how they can be effective in their giving — so that the nonprofits they support can best work toward achieving the goals that matter most to all involved. Donors, here are three tips to bear in mind as you consider how to make the most out of your charitable giving: 1.       Provide Flexible Funding “A leadership team that is focused on efficiency and effectiveness is what everyone should want, but many grantmaking processes unintentionally result in a focus on compliance instead.  And once the entrepreneurial spirit is squeezed out of a culture in favor of compliance, it’s hard to get it back in, so this can have long-term consequences.” “I’ve found as a nonprofit leader that the flexibility of funding has been more important than any other grant characteristic over the long term. In a professionalized industry of strategic planning and outcome tracking, it’s time to go beyond not only the overhead myth, but also beyond the distorting type of managerial training wheels that line-item grant budgets represent.” -          Alex Forrester, Co-founder and Chief Strategy and Innovation Officer, Rising Tide Capital (“The Curse of Line-Item Budgets: Tracking Pennies Instead of Outcomes”) 2.       Avoid Creating Unnecessary Harms for Nonprofit Leaders “Many of the unavoidable challenges for nonprofit staff flow from the reasons they do the work — serving clients and addressing challenges that are really hard to witness and even harder to change. But there are also avoidable challenges for nonprofit staff — and some of those are created or exacerbated by donors in how they make their donations.” “As a nonprofit ED, I worked with many individual donors, and the ones that made the biggest positive difference to me and to the organization were those with whom I could be open and candid. Feeling like I could only share positive news and paint a rosy picture for a donor actually added stress to my already-overflowing plate — an avoidable harm. The most valuable donors were those who not only celebrated successes with me and the organization, but who were also available when I faced challenging situations and hard days, and who made it clear that challenges weren’t going to deter future funding.” “Donors who make an exponential difference with their giving, in my opinion, are those who not only give but are contagiously enthusiastic about the organization they support — meaning they introduce the organization to friends and colleagues who might themselves become donors or have time and expertise to offer.” -          Lindsay Louie, Program Officer for Philanthropy Grantmaking, the William and Flora Hewlett Foundation (“Donors: How You Give Matters More than You Might Realize”) 3.       Ask the Right Questions “It takes commitment and openness to understand constituents’ needs. Unfortunately, many donors lack this requisite openness and instead ask questions with a particular solution in mind.” “The donor who inquires, ‘How can we help?’ positions themselves to listen to the needs of constituents and respond in ways that can most make a difference. In order to solve social problems, we need to understand our constituents at a deeper level. We need to ask questions without presupposing the solutions, because the answers you’re told depend on the questions you ask. This is the only way toward effective philanthropy.” -          Adrian Tirtanadi, Executive Director, Open Door Legal (“Donors, are you asking the right questions?”) Ethan McCoy is senior writer, development and communications, at the Center for Effective Philanthropy (CEP).