In my experience as a nonprofit leader and fundraiser over the last decade, I have often been asked, “What makes a good donor?” To start, it’s important to understand that philanthropy can help society as a whole when government aid falls short. The responsibility of a community to uplift their neighbors should be done by those who have the means and privilege to give back.
You need to be a solutions-oriented architect. Think about what you are planning to solve with your donations. When you put thought into action, your gift, regardless of the amount, is more impactful, and carries more meaning. Through philanthropy, you can find your happiness and self-actualization. So, how do we get there?
Giving time, talent, treasure, testimony, and our truth are the five building blocks to effective giving. It may sound familiar: These actions have parallels to the Parable of the Good Samaritan who gives his time to help a man in need, talents to tend the man’s wounds, and his treasure by paying for the man’s lodging.
As you think about which causes and organizations to support, it’s important to do research beyond financials. Who is the organization’s founder? Who is on the board? Who are the staff members? What is their strategic plan, vision, and mission? How do they measure outcomes and manage beneficiary feedback? After you ask these important questions and feel confident that the organization serves a critical function and purpose, you’re ready for the Five Building Blocks of Giving.
Five Building Blocks of Giving
Establish a practice of volunteering your time. It will soften your heart and help you get to know a charity or organization better. It builds an affinity in a way that simply donating money cannot. When combined with other building blocks, you can achieve a sense of enlightenment and a deeper understanding of an issue or organization, ideally leading to long-term value and impact. This first building block will influence the rest of your giving and allow you to tell your story more sincerely.
If you have a specific expertise or skill set that would be valuable to a community organization or nonprofit, lend your service. For example, an investment banker may be most useful serving on a board’s finance or investment committee, while a tech entrepreneur may provide their knowledge to build a nonprofit’s website. This is an invaluable asset where the return on investment appreciates and compounds in goodwill.
In Five Pillars of Prosperity, M. Yaqub Mirza discusses the “secret sauce” to avoiding debt and living a life of faith-based prosperity. Once you’re ready to contribute to a social cause financially, there are many ways to do so, such as using appreciated holdings (stocks, mutual funds, or real estate). If you haven’t begun investing, but have more than a rainy day fund, it may be a good practice to use your excess cash (or appreciated assets) to setup a Donor-Advised Fund (DAF). If your assets are more than $1M, a family foundation could make sense or even a trust, listing a DAF as beneficiary.
There are multiple benefits:
- Receive the deduction the moment your giving vehicle is created
- Invest your balance for future charitable growth
- Name the fund after a loved one, in memory or in honor of your family. Decision-making can become a shared practice and actively involve family.
A giving circle can also be formed with friends or family to contribute to common causes together. It’s important to have a consensus so all parties involved can share in the impact created. You don’t need a DAF, giving circle, foundation, or trust to make an impact, you simply need a heart and a dollar, however these tools can help you build a strategy and drive impact.
You’ve seen an organization in action. You’ve donated. You know a board member, a beneficiary, or a staff member. Your accumulated experience can be curated into a soundbite for the nonprofit to use. Share your journey with others and describe your learning experience, the impetus for your first donation, and why you still donate to the issue or an organization. Advocating for the cause is a powerful way to use your voice.
It’s important to be mindful of power dynamics, so donors should consider useful ways to share feedback with nonprofits they support. As more nonprofits spend time building relationships with donors, you can use this opportunity to speak your truth and reflect on your lived experiences. Come from a place of authenticity and think about how your perspective can support the nonprofit and, ultimately, its beneficiaries.
As you consider how to incorporate these five building blocks into your giving, it may feel overwhelming at times, but remember there are many tools and resources to guide your giving journey and drive collective impact.
Muhi Khwaja is Co-founder and Director of Development & Philanthropy of the American Muslim Fund. American Muslim Fund is the 2019 recipient of Outstanding Foundation by the Association of Fundraising Professionals Golden Gate Chapter for National Philanthropy Day.
Learning and benchmarking are key steps towards becoming an impact giver. If you are interested in giving with impact on Philanthropy take a look at these selections from Giving Compass.
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