Field of Donor Education Has Much To Learn

The prolonged economic downturn and decline in foundation assets have tempered talk of a new golden age of philanthropy. While such an age may not be upon us, a clear trend, heightened by the boom years of the 1990s, already has emerged: Donors want to be more informed and engaged in their giving than ever before.

In hopes of helping donors give wisely, a growth industry of education programs and services is mushrooming across the philanthropic landscape. This emerging field includes a wide range of learning opportunities, such as seminars, workshops, retreats, and giving circles, that are designed to cultivate, and educate potential or active donors.

However, donor education is in its infancy. It is a field flooded by more questions than answers about how best to engage and inform donors. It lacks uniform standards and a common language.

Nevertheless, if American philanthropy is to realize its vaunted potential this century, innovative strategies must be developed and tested to expand the number of high-net-worth philanthropists and everyday donors and get them engaged in charitable organizations.

Our research, conducted over the past year through focus groups with donors, plus interviews, surveys, and meetings with philanthropy leaders and organizations that provide donor-education programs, reveals six key questions about the current state of donor education:

Do donors want to learn? Well, no and yes. On the one hand, most donors are simply charitable check writers who have not thought about or had the opportunity to develop a giving plan or strategy. Some are highly successful businesspeople who assume they have the skills to give their money away.

Indeed, many donors come to philanthropy knowing exactly what cause or issue they want to support, and they are savvy enough to figure out on their own who they want to support, and how to do it. The donor-education world should be mindful of this. As one community-foundation leader suggested in our survey, it should start with the “assumption that donors are really smart, hip, and informed, rather than [being] the droolers some consultants think they are.”

Still, many donors initially go it alone, then get stuck or frustrated after recognizing that giving money effectively isn’t easy. They then may seek guidance or even formal learning opportunities.

“You think you know what to do as a donor,” one participant of the Rockefeller Foundation–sponsored Philanthropy Workshop, an intensive leadership-development program for wealthy donors, told us this summer. “But there are no checks and balances for giving money away. Where do you reach out for learning? Usually, if you start a career and don’t get trained, you get eaten up. But not in this field. You can get away with shoddy giving.”

How do donors want to learn? Donor-education programs have to accommodate a variety of learning styles and formats. They range from one-on-one consulting to hands-on work with charities to workshops and seminars. In adult education, people often learn best in realistic settings where they can apply their learning. For philanthropy education, this might involve donors taking part in visits to a nonprofit group’s headquarters or programs, volunteering with a nonprofit group, or participating in a grant-decision process.

In our research, we have found that donors tend to prefer educational settings that encourage interaction with other donors. That accounts for the rapid spread of giving circles, in which small groups pool their resources, learn together about philanthropy, and make small grants in the cities and towns where they live or nationally and abroad. Social Venture Partners, for example, which grew out of the technology industry in Seattle five years ago, now has affiliates of giving circles in more than 20 cities in the United States and Canada.

Who offers donor education? The growing group of providers of donor-education programs includes community foundations, national organizations such as the Association of Small Foundations, Changemakers, and the Philanthropic Initiative, some regional associations of grant makers, private foundations, a few universities, and a growing field of financial advisers and financial-services firms.

Community foundations are viewed by many in the field as an ideal vehicle to offer educational opportunities to donors at the local level over the long run. However, as Christine W. Letts, associate director of the Hauser Center for Nonprofit Organizations, at Harvard University, said in an interview, “Community foundations are just beginning to see donor education as their job. Instead of feeling good about their assets, they should use their discretionary money to bring donors together for learning.”

Others point out that as some community foundations offer low asset-management fees in an attempt to compete with financial-services companies such as Fidelity Investments, Charles Schwab, and the Vanguard Group, they are unable to cover the costs of in-depth, customized education programs.

In the rush to manage the philanthropic assets of wealthy people, many commercial and philanthropic purveyors of donor-education programs have bred a culture that does not widely share with donors the full array of learning opportunities, giving approaches, and resources available in the field. As Ted Lord, director of philanthropy promotion at Philanthropy Northwest, in Seattle, commented to us, “Is donor education about cloistering people’s assets or unfolding opportunities for them?”

What are the content and goals of education? The substance of donor education varies widely and is highly dependent upon what type of organization is offering the education. The content can be grouped into three main categories: the “why give,” including personal issues involving the motivations for giving and the issues related to the influence of wealth in one’s life; the “how to” questions of choosing appropriate giving approaches and strategies; and the larger “social impact” context for better understanding the needs of nonprofit organizations and society, and how to effect change in the world.

Unfortunately, many of the key organizations that provide financial or philanthropic services to donors lack the inclination or skills to help them assess their own values and goals. At its heart, philanthropy is about passion and values, both personal and social, and yet many providers of philanthropic advice — while skilled in the mechanics of giving — are too far removed from community life and the nonprofit world to effectively help donors improve and change society.

Who is being reached? Despite the steady growth of donor-education programs, the field is new and reaches only a sliver of the donors who may be interested in and benefit from deeper learning and engagement.

Most education programs invite known and engaged donors to their venues. Little is being done to promote such presentations in places where donors or potential donors reside, meet, and socialize, such as country clubs, retirement communities, school settings, libraries, professional associations, college-alumni gatherings, and churches, synagogues, and other religious centers.

The current philanthropic infrastructure has limited influence on the affluent, let alone the top 5 percent of wealthy Americans. The golden door for reaching donors is through those sitting at the gates of people with wealth — the lawyers, estate and financial planners, investment professionals, and others in the wealth-management field whom donors trust and first turn to for advice. Some promising programs have reached out to financial advisers, through such groups as regional associations of grant makers and grantees of New Ventures in Philanthropy, to help them engage their clients in options for charitable giving.

Who pays for donors to learn? Our national survey of donor-education providers found that more than 80 percent of them subsidize the cost of their programs. In fact, two-thirds cover 100 percent of such program expenses.

To what degree should donors pay the full costs of their learning, and to what extent do such programs need to be subsidized? We have repeatedly heard that donors do not place the same value on philanthropic advice that they do on accounting and other financial advice. However, some observers reject the notion of subsidizing tutorials for the wealthy. Provider groups counter that such costs are necessary because donors are unaccustomed to paying for philanthropic education and that such support promises to spur increased giving in the future.

Foundations do play a crucial role in nurturing the development of donor education and encouraging new giving. With the decline of foundation assets and the recent loss of support by Atlantic Philanthropies and the David and Lucile Packard Foundation for the philanthropy-promotion arena, it is especially important that new players step up to support and build a culture of caring and donor engagement in our society.

The field of donor education will certainly look far different in 10 or 20 years with the arrival of new resources, leadership, and technology. This means that those involved in supporting donors in their learning journey have an opportunity to think big, test new ideas, and help shape what will be a vital component of the philanthropy world in the coming decades.

Dan Siegel and Jenny Yancey direct the Donor Education Initiative of New Visions, a nonprofit group in Mill Valley, Calif. Results of the survey of donor-education programs are available at http://www.newvisionsprd.org.