Advice From Veteran Grant Makers on the Charity-Donor Relationship: Book Excerpt

Following are excerpts from The Art of Giving, a new book by Charles Bronfman, founder of the Andrea and Charles Bronfman Philanthropies and Jeffrey R. Solomon, the organization’s president.

No man is a hero to his valet, as the saying goes. And no donor is a pure unadulterated blessing to his grantee either. Pure as their motives might be and enlightened as they may consider themselves donors have been known to toss an occasional spanner into the gears of a good, solid working relationship with the nonprofit they so generously support.

There are any number of explanations for a failure to communicate, but one is the power of money to bend even the most sensible people out of shape. Transfixed by the prospect of receiving a significant sum, the potential recipient may lose perspective in her eagerness for the money, and the donor may have his own anxieties about giving away a large portion of his holdings. After the deal has been struck, people tend to recall what they wish they’d agreed to, not what they actually did. In this collision of hope and ego, small issues can be magnified. Does the donor expect name recognition, and if so in what size letters, and where? Was this gift intended as one time only or an annual one?

Furthermore, when disputes arise and payment is halted, there is no built-in mechanism to resolve them. In business, if your biggest customer fails to pay on time, you can shoot off some increasingly sharp demand letters and then take him to court. Of course, you could do something similar to a nonpaying donor, and that would definitely get the message across and may win some money back. But it would also send chills down the spines of every other donor and potential donor that you’ve got, all of whom are thinking that if they pledge you money, they might be slapped with a lawsuit too.

The first rule for donors has to be no surprises. No surprises. None. As a donor, you have to be clear about your intentions and your obligations and stick to them. No less than on the for-profit side, your word is your bond. And to make sure that it is, grantees should record every pledge they receive. If you are putting on a cocktail party fundraiser, bring along a tape recorder to establish a record of exactly what the donor agreed to. If there is a substantial pledge, document it with a gift agreement, in as simple a format as possible. It dampens some of the party atmosphere but reduces more hurtful misunderstandings later on.

Donors, however well meaning, can also be guilty of meddling.

They imagine that because they are helping to fund an organization, they are entitled to offer endless advice on how to run it too. They may want to be involved in personnel decisions, in matters of programming, in questions about where to expand. As we like to say: NIFO — noses in, fingers out. Donors can have all the information they want, absolutely, but no control. That sits with the board, as well it should.

That’s especially important in hiring. The first rule of human resources is that the person who did the hiring should also be able to do the firing, if firing ends up being called for. So it is all the more important to keep any donor away from hiring decisions, lest he then be empowered to fire as well. Then you’d have a really intrusive donor on your hands.

The reason that nonprofits have to be so vigilant about outside influence, especially in personnel matters, is that people are pretty much all they have. There are no huge manufacturing plants, no extensive inventory. Each organization rises or falls depending on the people in it. Without the money to motivate their employees, nonprofits depend on a sense of purpose, a feeling of security, and a pleasant atmosphere to inspire them. Nothing could wreck all that more quickly than the discovery that a fellow staff member had been axed on the whim of a donor.

For their part, donors need to recognize that without a contented and productive staff, they are never going to achieve the objectives they sought to accomplish with their gifts. Indeed, if they can motivate the staff with their gift, they increase its value.

Money for everyone is protean, holding many meanings and many forms. But for the wealthy, it can be mistaken for power — power to be taken seriously and used to get their way. And some of that does occur. Like the proverbial man who’s won the lottery, the rich might also think their jokes are funnier than most other people’s and their observations more sage. People do flatter the wealthy, inflating their egos, and distorting their sense of their place in the world, in hopes of obtaining some of that wealth for themselves. While it’s obviously counterproductive for donors to deploy some of the power of money by abusing the staff, there can be some perverse satisfaction in knowing they can.

It’s too bad that many nonprofits, perpetually hungry for funds, are obliged to operate in the realm of the wealthy. It means that the nonprofit operates in two worlds simultaneously: the regular world they know and the world of wealth they can only guess at.

The combination can be corrupting as nonprofit executives ride along on the ego trip of the wealthy, expecting box seats at the opera and first-class air travel. If those executives aren’t careful, this can only widen the divide between the haves and the have-lesses, as they can lose track of the audience they serve in their desire to join

the ranks of the donors they cater to. And that leaves nonprofits in a place they’d just as soon not be: one of the more class-conscious entities in America. The ranks of too many nonprofits have a tragic upstairs/downstairs quality, by which the staffers downstairs dream of life above and the donors above neither know nor care to know about life below.

Excerpted with permission of the publisher Jossey-Bass, a Wiley imprint, from The Art of Giving: Where the Soul Meets the Business Plan. Copyright © 2010 by The Andrea and Charles Bronfman Philanthropies.