Foundations Should Use ‘Giving Tuesday’ to Show How to Choose Charities

Giving Tuesday, a new effort to promote end-of-year giving by Americans, offers an opportunity for foundations to make a statement about how to support effective nonprofits and help the public learn more about what foundations do. It’s an opportunity I hope they seize.

This year’s Giving Tuesday falls on December 3. Nonprofit organizers who started marking the special day last year hope to make it a new tradition that the Tuesday following Thanksgiving, Black Friday, and Cyber Monday will be about helping others.

Although it may seem as though Giving Tuesday is really just about getting individuals to give, it also represents an opportunity for foundations to make a mark—and in so doing, to build a bridge between individual and institutional philanthropy.

Giving Tuesday’s larger goal is important for all of us in philanthropy; it seeks to counter the consumerism of the shopping days following Thanksgiving, and perhaps alter the conversations as families get together for the holidays.

I hope it will contribute to an increase in overall giving, greater participation in giving, and at least some small change for the better in our collective spirit.

I’ve been impressed by the way communities and groups have made Giving Tuesday their own. That’s a credit to the 92nd Street Y, which has been the incubator for this idea, and to its dynamic interim executive director, Henry Timms.

But Mr. Timms told me that one group he and his colleagues have struggled to engage in Giving Tuesday is foundations.

On the one hand, that makes sense, since Giving Tuesday has really been focused on generating giving among individuals. Foundations, of course, make grants all the time—that’s a big part of what they do.

But what if foundations used Giving Tuesday to make one or perhaps several of their grantees recipients of special Giving Tuesday impact grants?

The criteria would be simple: Foundations would choose the organization or organizations they support that have demonstrated the greatest effectiveness in pursuing their goals. Then foundations would give the winning groups the type of grants that we at the Center for Effective Philanthropy have found are most helpful in terms of impact on organizations: large, multiyear, and unrestricted.

Perhaps foundations could offer at least $200,000 (ideally more) over two years, accompanying the grant with significant public announcements.

Importantly, these grants would come on top of whatever the organizations were already getting.

What would this accomplish? It would:

• Reward high-performing organizations with the kind of flexible funds that can be hard to obtain, allowing them to strengthen their infrastructure. Too often, effective organizations struggle to get the resources they need to invest in their growth and development, as we documented in a recent research report from the Center for Effective Philanthropy, “Nonprofit Challenges: What Foundations Can Do.”
• Send a powerful signal to individual donors—and other grant makers—about organizations that are making a difference, encouraging more support. It would also reinforce the importance of choosing organizations based on their effectiveness in pursuing their goals. Foundations, after all, have staff members whose job is to do just that. But typically, only foundations benefit from this work. Why not allow other donors to reap the benefits of the expertise of foundation staff?
• Help educate the public about the role foundations play. In addition to individual announcements tailored to the causes or communities in which foundations are working, organizations like the Council on Foundations, Foundation Center, Grantmakers for Effective Organizations, and my organization (or perhaps all of us together) could track the Giving Tuesday impact grants and seek to draw attention to all the grant makers that gave and the groups they rewarded. Perhaps GuideStar, Charity Navigator, and BBB Wise Giving Alliance could find a way to note on their sites which nonprofits had received one of these special awards and from which foundation.

Wouldn’t it be interesting to see which organizations foundations chose and why? And whether some received multiple grants from multiple grant makers?

It might be ideal for the organizations to come together with their supporters in some forum to discuss their work—and inspire other nonprofits to meet high-performance standards.

I have had some foundation leaders tell me in recent weeks that they like this idea but that it’s short notice for 2014, given that they’d need board approval. They have told me it’s something they’ll have to consider for 2015. But I hope that a few can move quickly enough to test the idea this year.

With donations that now represent 16 percent of total giving, foundations are too important not to play a role in Giving Tuesday.