Five Tips for Effective Philanthropy

Sep 16, 2014

The lake cabin is closed up; the boat’s in dry dock; the kids are back at school – all signs that fall is here.  And so is the beginning of the fall fundraising season.  Our mailboxes – both electronic and old-fashioned – are filling up with charitable appeals. 

So, let’s talk about how to be an effective philanthropist, whether you’re giving away 50 bucks or 50 grand.

How does one decide which organizations to support?  For me, both as a donor and a funder, the challenge is always to keep the good nonprofits from obscuring the best ones – because neither United Way nor I have the money to fund everyone who asks.  I suspect the same is true for most of you.  We want to support the excellent, not the “good-enough.”

Here are five tips that help me, and United Way, decide where to give our precious dollars.  I hope they’ll work for you, too.

First, have a plan.  We’ve all seen that bumper sticker, advising us to “practice random acts of kindness,” and we should.  But when it comes to charitable giving, why would we act randomly?  Why wouldn’t we bring the same deliberate approach to this important task as we do to other important things in our lives?

I mean, if I took a random approach to my work, I’d be out of a job.  Wouldn’t you?  So, be thoughtful.  Decide how much money you want to give away and focus on supporting what’s important to you – whether it’s babies or butterflies – and concentrate your giving there. 

If your budget allows, set aside a little money for the inevitable other requests you’ll find hard to resist – like whatever your employee’s kids are selling so they can make that trip to Washington DC in the spring.

Second, do your homework.  You don’t need to scrutinize every charity’s financial statements down to the last nickel, but at least make sure they HAVE solid financial statements, plus an annual report outlining quantifiable accomplishments, and a board of directors that is representative of the community.  If they’re big, they ought to have an audit.  And it ought to be readily available.

Third, don’t be afraid of overhead.  I’ve beat this drum before.  It takes money to run an excellent nonprofit, just like it takes money to run an excellent business.  Nonprofits need to invest in themselves.  Don’t fall prey to the myth that charities with the lowest overhead are the best, or somehow the most noble – because often very low overhead is a sign of problems, not prosperity. 

Fourth, I like giving to organizations that focus more on change than charity.  21st Century philanthropy has got to be about changing lives and improving conditions; about finding effective strategies that lead to long-term solutions to problems.  We’ll always need a safety net but what we really need are more upstream solutions; more organizations focused on preventing problems than treating symptoms.  We need to be more results-oriented; to focus less on numbers served and more on lives changed.

And brings me to Tip #5.  Collaboration.  I want to support nonprofits – and I want YOU to support nonprofits – that collaborate with others to effect change; who work together – meaningfully, deeply, deliberately – to, together, develop and implement lasting solutions to problems. 

The term for this is “collective impact,” and it’s a bandwagon starting to sweep the nonprofit nation.   My organization and I have jumped on.  Because for too long, albeit for a number of understandable reasons, too many of us in the nonprofit world have worked in isolation, focusing more on the Band-Aid than the wound. 

But major social problems affecting the health of our communities are beyond the scope of any one organization.  Rather than achieving isolated impact, we need the kind of systemic change that results from a collective-impact approach.  We need to move from “doing good” to “getting good done.” 

And that takes all of us – nonprofits, businesses, foundations, schools, the faith community, government, individual donors – working together to set goals, measure progress, and reinforce each other’s work. 

The charitable world needs fewer lone fire-fighters and more coordinated SWAT teams to effect lasting change.  Nonprofits that embrace that philosophy – even when it means checking their own egos at the door, in order to advance the common good – those are the organizations I want to invest in.

Fortunately, there are good examples in Missoula and around Montana where collective impact is taking root.  Graduation Matters Montana, Let’s Move! Missoula, and Reaching Home:  Missoula’s 10-year plan to end homelessness, have been at this for awhile.  The new Western Montana Suicide Prevention Initiative is another deep and diverse collaboration that is shining a light on the dark issue of suicide in our community and how we can prevent it.

So, as you sift through the fall avalanche of requests for donations, I hope you’ll make a plan, do your homework, not confuse very low overhead with very high effectiveness, aim for change more than charity, and invest in coordinated efforts that are moving the needle in the right direction on the issues we all care about. 

And whatever you give, give SOMETHING.  Your community needs you.

I’m Susan Hay Patrick, CEO of United Way of Missoula County.  Thanks for listening.