From an economic perspective, I think of giving as one of the dynamics of wealth. If wealth is the accumulation of a pool of assets (my definition), the flows in and out of that pool matter. There are lots of choices, and tradeoffs are involved because, as a friend put it, “One dollar can’t serve two purposes.”

My wife, Fredi, and I have given to and served on the boards of many charities over the years.  We have similar beliefs about philanthropy, and respect our sometimes different views on which causes to support. Important point: It’s incredibly important to discuss such things with your spouse.

With all that as a backdrop, I’ll take a stab at briefly answering the 6 W’s of Smart Giving.

1. Why do I give?

Giving back is a value that was instilled in me at a young age by my parents and community. Also, I knew I couldn’t change the world but I wanted to serve the needs of society in areas that I found important, and where my contribution could have an impact.

That said, everything doesn’t have to fit neatly into a box. Sometimes I write a check simply because a friend asks me to, or join a board because I know and respect the other people involved. I was a grateful scholarship student at Stanford and HBS, and feel an obligation to pay it forward.

And, finally, there is the sheer joy of it; giving back is one of the most satisfying things I do.

2. What do I give?

Time, talent and treasure all have come into play, though in different measures at different times in my life. When I was starting out, for example, I didn’t have much money but I discovered that my real estate expertise was valued by land conservation groups.

During what I call the “go-go years” of peak family and career responsibilities, my wealth was increasing while my time was at a premium. These days, now that I am retired (or so they tell me), I find a significant portion of my time being spent on my philanthropy or helping others with theirs.

3. Where do I give?

Some people pick one cause and run with it. As with investing, I prefer a diversified portfolio. I write a lot of checks but my giving patterns are in line with the “importance categories” that we described in Getting to Giving. 

A quick analysis of the past several years showed that my top 5 gifts typically represent half of my charitable giving, the next 20 account for 40%, and the last 50 or so add up to only 10%. The causes represented in core and priority categories can change over time, however.

Some of the causes that I care about reflect my heritage, and are quite lasting. My grandfather passed on his passion for land conservation to me, and I am proud that my sons continue the tradition. Others reflect changing circumstances; I didn’t know I cared deeply about cancer until my wife was diagnosed with it.

4. Who do I give to?

The intended beneficiaries of my giving vary depending on the cause. Land conservation tends to involve regional issues and groups. I support organizations that enhance quality of life in my community, such as the Boston Ballet. Others have a broader scope; NPR contributes to a healthy and just nation.

Not surprisingly, I do my due diligence on any organization where I am considering making a significant gift. Yes, once again, the four questions: Is it doing work that is important to me? Is it well managed? Will my gift make a difference (but not make it dependent on me)? Will the experience be satisfying?

5. How do I give?

I have not chosen to set up a permanent family foundation or tried donor-advised funds. My contributions have been to organizations that I believe in. As I’ve said in previous blogs, I believe in providing multi-year support but favor spend-downs over endowments.

In 1993, I set up a charitable trust.  It allows me the luxury of disconnecting giving from tax considerations  It’s a smart move for estate planning, I believe, and has proven a useful vehicle for Fredi’s and my giving.

I hasten to add that, unlike some trusts, we actually give away significant portions of it. We are not intending to build a large corpus.  We hope that our example will encourage our children and grandchildren to be charitable for whatever causes they choose.

6. When do I give?

Some people prefer to wait until they are older (or dead) to make their gifts, figuring that their biggest contribution will be their ability to grow the pot. I was raised to believe that giving is a lifelong responsibility plus I prefer to give now and be personally involved, for impact and fun.

Pension assets are an exception to that philosophy, given our current tax laws. (They would be subject to ordinary income tax and the estate tax, if given to my heirs.)  Several big gifts in my estate plan involve pension assets; the charities will get the same amount, and the impact on my kids’ inheritance will be much less.

1. It’s not about you. Fundraising shouldn’t be about you personally, or even about your institution. It should be about what your organization can do in the world, in partnership with a donor. Your role is catalyst and facilitator.  Because you are representing a mission, you are not begging. You can and should be proud of the work you are doing. You are making the world a better place, and giving other people the opportunity to join you in that effort.
2. Everyone’s a fundraiser. Your organization, top to bottom, is a sales team. Because critical donor interactions can begin with anyone, every staff member and volunteer must believe in your mission, and feel a part of fundraising efforts—even if that’s not in their formal job description. 
3. You’re the model. Look at your own attitudes and behaviors, because people are taking their cues from you. Remember: a leader is someone whom people want to follow. That’s especially important to remember when volunteers are involved.
4. To be a good leader, listen. That also holds for donor interactions. I like how my grandmother put it: “God gave you two ears and one mouth for a reason. And, if you try to talk out of both sides of your mouth to make up for it, that won’t work.”
5. It should be fun! If it isn’t, you’re playing the wrong role, or not doing it right. I have a horror of cold calls; I like lots of information. Well, the people around me understand this, and help me with it. An executive director I know is fabulous at generating excitement and winning supporters, but can’t make an ask to save his life. Again, he gets the help he needs: a development officer is always close at hand when it comes time to make that ask.

1. Wealth is an instrument of choice. People who are wealthy have lots of opportunities to give. Just because they’re rich doesn’t mean that they will give to you. How can you differentiate yourself from other causes, especially similar ones?

2. Good choices require good goals. You have to find people who care about the work you do. To do that, you have to understand their goals, generally and philanthropically, and determine whether there is a good match.

3. Wealth is a responsibility. Many rich people earned their money the hard way; they’ll want to be sure it’s not wasted. Can you demonstrate that you are well managed, and will be around for a while? Can you tell a donor how her gift is being used, and the impact it is having?

4. Enough is enough. Timing is everything. Here’s a way to think about what you can expect to get and when, based on my quantum view of wealth:

5. Things will change. People’s interests and circumstances change. Don’t assume that a devoted supporter will be around forever. The parents of a student may lose interest in your school once their child has moved on, for example.

6. Failing to plan is planning to fail. Where does philanthropy fit into your economic model and business plan? What prospects do you want to cultivate? How will you steward your donors?

And a final reminder: You don’t have to be wealthy to give. Time, talent and networks can be just as important as treasure.

To help you on your way, here’s a checklist summarizing the key steps involved: engage a prospect, make a proposal, formalize the gift, and nurture the relationship.

In reality, of course, things are more complicated. It can be a long and winding road, with ups and downs. Things can happen unexpectedly, either for better or worse.

Stay flexible, be positive, and keep your eye on the prize: an opportunity to have a positive impact on something you care about, and help like-minded individuals do the same.

Good luck, and have fun! 

In our experience, fundraising can be an extremely rewarding – yes, even fun! – experience. In fact, fundraising is one of the few activities in which you get to accomplish all four dimensions of enduring success[1] at once:

• Achievement: Getting results, while solving important societal problems
• Significance: Helping others achieve their goals and improve their lives
• Legacy: Laying a foundation for societal good that others will build on
• Happiness: Satisfaction in a job well done, working with people you respect

The next – and highly related question is: How can I do it better?

Fundraising is unfamiliar territory for many people, and fear of that dreaded “No!!!” is a major deterrent. New fundraisers often are told to  expect a turn-down at least two-thirds of the time. Not true!

So, how can you do it better?

We laid out several broad themes, in Getting to Giving. Making sure you can answer the “four big questions” is essential, but so are a donor-centered and entrepreneurial perspective, and attention to fundraising leadership. Here are some questions to ask, for success in each area.

The main task is translating the proposal into gift terms, which constitute the legal contract between the two parties. The goal is a mutually satisfying, sound gift agreement, with recognition that says “thank you” in a way that is meaningful to the donor and right for the institution. The proposal may go through some iterations.

Details are important to show that you take the gift seriously, to achieve a true meeting of the minds, and to preclude future problems.  Parties on both the donor’s and the institution’s sides will be involved. The fundraiser’s role can be fairly minimal but a good lawyer is essential, and a tax expert may need to be consulted.

The contract will always include the gift purpose (e.g., endowment, current use), timing of payments, and any other financial terms. Potential tax issues must be addressed. IRS language is very specific about the exchange of gifts and services. As appropriate, recognition arrangements are addressed. Sometimes governance arrangements and reporting mechanisms are specified.

Permanent endowments can present a set of issues that stem from an assumption of perpetuity, about the institution and the relevance of the gift. Facts are: the world changes. Virtually all philanthropic areas will experience and must adapt to changes. Sometimes, they will be at the forefront of those very transformations.

How can you handle situations where the original intent of the gift no longer makes sense? That was the case at a university with an endowed chair for a railroad professor. What if a named building becomes outdated? Brandeis University was preparing to demolish an old science center for a new one, when it was hit by a lawsuit by the donor family.  Hospital facilities become obsolete, too.

“Out clauses” specifying what to do in those kinds of situations are one solution to the dilemma. They are important for both the donor and the institution. Think of them as a prenup to the marriage.

Gift processing can be simple or complicated.

It might just be a matter of handling a check that clears. But, if gifts are in the form of stocks or other assets, it can get complicated. How do you handle a stock whose value has plummeted over the period that the donor specified it must be held by the institution? An organization offering those gifting opportunities must have the capacity to properly manage them.

From the donor perspective, Rule #1 of gift processing is: Do it right and do it fast.

A donor will be justifiably annoyed if the receipt for a family foundation gift is incorrectly attributed to him personally; the error could cause tax issues. Getting a receipt out in a matter of days shouldn’t be hard. If a donor sees that his check hasn’t been cashed in months, he may wonder whether the organization really needs it. I recently received back a check that had been in a desk for four years.

At all costs, avoid the kind of fiasco that one donor encountered. She attended a wedding where the couple had requested donations to a summer camp, in lieu of gifts. She sent off a generous check in the couple’s name.  Some weeks later, she received a letter from the camp saying they didn’t know who those people were or how to contact them. Oops.

Personal letters of thanks from institutional leaders are a must, for significant donations. Public gift recognition is important to both the donor and the institution. It recognizes their partnership and shared vision, as well as the donor’s largesse. It must be carefully planned, especially for high profile gifts and individuals, and should be meaningful for the donor and right for the institution.

A press release is standard, but may require considerable effort to get the details right (e.g., spelling and accent marks for a complicated donor name). Opening events for named facilities or programs are common, as well. Some donors may insist on a more low key approach, or even anonymity. That is their right and privilege. Respect their wishes, and lay the foundation for a long-term relationship.

The basic data should be in hand from prospect research: education, career, estimated financial worth, and philanthropic activities, for example.  As you actively engage your prospect, there are some subtle and difficult things to determine. Here are the six questions you need to be able to answer:

1. What does he really care about? He may be quite clear about his personal vision and priorities. Or not. He may look to you for help thinking through ways to be strategic in his giving. Also, he may never have made a significant gift, and be unclear about the options. Listen, offer your experience and insights, and provide information. But, be transparent in your role as the bridge between your institution and the prospect, even as you work to help him meet his philanthropic aims. You are not his financial adviser.
2. What motivates him? Philanthropy is an opportunity to satisfy four basic human motivations: achievement, significance, legacy, and happiness. It’s helpful to understand what motivates your prospect. Someone who is achievement-oriented might join an arts organization to be invited to the “right” parties. Someone who wants to be of significance will be eager to help in a dire emergency. Someone who wants to leave a legacy may give before or after death, with or without acclaim. And, happiness? Gratitude and “payback” for personal success may be involved, but most donors just plain feel good when they give.
3. What “language” does he speak?  Language is about sense making, about how someone thinks about the world. With an MBA, you talk numbers. With a conservationist, you talk vernal pools.  Personal philosophies will vary. If someone’s politics tend to the right, you might talk about philanthropy and our duty to help the poor. If someone is in the liberal camp, you might phrase it as achieving the goals of equal opportunity. Language manifests itself in how people like to receive information, too.  A one page description? Volumes of data? Lots of pictures and graphics? Once a month, nicely bound? Real time, online?
4. How much personal involvement is he likely to want? This can vary dramatically. Some individuals may want extensive detail on the project, and expect considerable control over the use of their donated funds. Other donors, by preference, will be quite hands off. And some donors simply won’t have the time. You have likely heard of the Three T’s; donors can offer time, talent, and treasure. It’s much easier, for some, to write a check than to spend time engaged in the project at hand, or the organization in general.
5. What is the role of the spouse or family? It is increasingly rare, in a family situation, that just one person makes a decision when a significant amount of money is on the table. Other family members may be involved, or a family foundation. It may be less a matter of getting them excited, and more about making sure they won’t veto the endeavor. The role of the family may be nominal or significant in such areas as the size of the gift, the terms of agreement, or the actual oversight of its use. For endowed gifts, the role of future generations also must be considered.
6. Is he a person you can read easily, or will it be a poker game? Talking on the phone and writing – electronically or the old-fashioned way –  can take you only so far. A big part of the value of in-person meetings is the opportunity to “read” body language and facial expressions, and hear tone of voice. If a poker game it will be, better to be aware of it upfront. In those cases, it can be especially helpful to have someone with you at meetings, to watch for subtle signs of the prospect’s reactions or intentions.

At the risk of beating a dead horse, a reminder: it’s more about listening than talking. An attentive ear and some emotional intelligence can get you the information you need to educate the prospect about your organization, from his perspective, and probe for a possible match.

“Failing to plan is planning to fail.”

That adage, with some variations, is attributed to both Winston Churchill and Benjamin Franklin. General Eisenhower added: “Plans are nothing, planning is everything.” We agree that planning really is more about the process than the output.

Fundraising planning is not magic. Or rocket science. And, there is no such thing as a perfect plan, because things will change. “A good plan today is better than a perfect plan tomorrow” is another wise saying. 

Finally, a reminder: fundraising planning does not – or rather, should not – occur in a vacuum. It is part of a whole system approach to fundraising that we introduced several months ago in a blog titled “The Big Picture.“

In the sections below, we’ll briefly walk through the steps involved in developing a comprehensive fundraising strategy with a unifying marketing message, and being disciplined and flexible in its implementation.

Step 1. Define fundraising goals

It starts with entity planning: defining your mission, determining your resources requirements, developing your economic model, and identifying financial sources and gaps. The question then becomes: how can fundraising help?

That said, the reality is that there is a back-and-forth relationship between entity and fundraising planning.  Some entity financial needs may not be achievable through fundraising; operating expenses are notoriously tough to “sell” to donors.  On the brighter side, unanticipated gifts may arise; someone sells a business or decides to do an estate plan, and gives you a call.

Ideally, senior Development staff is engaged with other leadership in entity planning discussions. The goal is agreement on an overall fundraising target figure, and a list of major fundraising initiatives. You want to be ambitious but realistic, which requires a series of questions:

• What strategic initiatives or operational needs would be attractive to donors?
• How much do we reasonably expect to be able to raise, for each targeted initiative?
• What is the most likely source of funding – grants, individuals, corporations, government?

Next, how to make your “pitch”? Fundraising – never forget – is about selling, and everyone in the organization is a fundraiser.

Step 2. Develop marketing strategies

The goal is a powerful and cohesive marketing campaign that supports your fundraising efforts and resonates with target audiences.  Developing and delivering it is a team effort. The basic tasks are:

• Develop your key messages. A cascading approach can be powerful.  Start with an overall story and themes that are clearly linked to your organization’s mission. With that as the umbrella, develop a theme for each initiative and/or funding source.
• Build a high-level communications program. That will require assessing your target audiences (i.e., funding sources), identifying communication channels, and designing marketing materials. Equally important: training fundraisers on the use of marketing tools.

In “The Art of Simple Nonprofit Communications”, we stressed the importance of addressing the needs of both internal and external audiences, with integrated but focused plans. 

The internal communications plan is for “everyone” involved in your institution. This includes all staff and board members who have been or will be involved in fundraising as well as ambassadors, planning team members, volunteers, and other engaged stakeholders.  General staff awareness also is important because, as we’ve said more than once, everyone is a fundraiser!

An internal communications strategy for institutional advancement is a core effort that should be led by a senior manager.  He or she will advance the planning efforts, working with staff groups as needed to leverage the organization’s communications vehicles (e.g., email, in-house newsletters) and keep all stakeholders apprised of the fundraising effort’s goals and overall progress.

The external communication plan is for individuals, foundations, business leaders, educators, community leaders, policymakers, media and others who might be interested in learning more about your work and/or will be invited to join the journey with you. Public relations and press-oriented activities can complement targeted marketing activities.

Step 3. Develop strategies for raising money

Institutions’ targeted funding sources (e.g., foundation grants, corporations, individuals) will vary, depending on the outcome of Step 1. Strategies for each source must be developed and coordinated. We will limit ourselves, here, to some suggestions for individual giving strategy development.

The best starting point, in our experience, is the “magic” formula for achieving your fundraising goal:

You can use the formula to test actionable options, each of which will have implications for both fundraising effectiveness and efficiency. For example, if you can increase the average gift size and/or your closing rate, you will need fewer donors to hit your dollar goal, which will reduce the workload for fundraising staff and volunteers.

Next, you can use the gift pyramid… but not in the traditional way, as an iron law of market segmentation that essentially reflects wealth distribution, with 80% of dollars coming from the top, 10% from the next 10%, and 10% from the remaining 80%.  There are few problems with that.

For one, you can get so focused on averages that you fail to see the outliers. Have you heard the one about the statistician who drowned in a lake with an average depth of six inches?  Averages conceal a lot. The average wealth of you, me and Bill Gates is not very useful.

For another, the shape of your “pyramid” should look different depending on your fundraising strategy. A traditional triangle may make sense for an academic institution with a broad alumni base. But some institutions don’t have that luxury; their cause may be a priority for very few, if any, donors. 

There are many fundraising strategies beyond the traditional pyramid, including the three shown below: participative (where you want everyone to give at least something), elephant hunt (where you’re after one or a few passionate supporters, as with many health-care initiatives), and dual strategies (which are common in membership organizations raising money for large projects).

Step 4: Implement!

There’s a lot of basic project management work involved in implementing any strategy. Strategy needs to be translated into action plans with tasks, deliverables and due dates, and then make sure it happens. Progress against goals and targets needs to be monitored, and reported.

When it comes to significant giving, one of the most important questions is: who to include in your “getting to giving” efforts?

Even with development staff and a corps of volunteers, there are limits to your fundraising capacity. How much time do your “askers” have available?  What roles can or should they play? For a major fundraising thrust – such as a capital campaign – you may need to add capacity.

Targeting prospects is the other side of the coin. That will be more or less difficult, depending on your organization and strategy. Identifying and qualifying people who can make bigger gifts, however, is a challenge and opportunity across the board. Here are a few tips.

Start with “believers” who have given before, and use them to recruit other like-minded individuals. Leverage relationships; you know the person, or you know someone who knows him, or people in your organization know him. A warning here, though: don’t just sit around the table picking the brains of your board members, or you’ll just get a list of the usual suspects.

Another warning: making a list of rich people isn’t the answer. It’s not hard to find rich people; the trick is finding the right people. Who are natural allies? What are their board involvements, their giving histories, their financial circumstances, even their personal interests? That information is available, with some work.

You need to build a database of qualified prospects, including their potential for giving. You also have to consider their readiness for making a large gift. What stage of life are they in? (Many big gifts are still bequests or near bequests.) Have they experienced a major transition? (That entrepreneur who just sold his business may be ripe.)

None of this is a cookie cutter solution, of course. You will be learning as you go. Maybe that great idea for an event just didn’t work. Maybe you discover that you are more interesting to venture philanthropists than you expected. The one thing you can count on is that there will be surprises – some good, some bad. Be disciplined but flexible.

Oh, and have fun!

He is quick to point out, however, that he had lots of help, from a talented and tireless Development team as well as alumni, faculty, and HBS leadership.

Philanthropy is the lifeblood of many nonprofits, and fundraisers need support as they work to address the four big donor questions, and get people to give … and give again to your organization and cause. Here are some of the challenges, and how to address them.

“Are you doing important work?” challenges you to articulate what you do in a clear and compelling way; that requires effective communications and public relations. You also have to figure out who cares about your cause (“Are you doing work that is important to me?” is the real question); that requires good prospect research and analysis.

“Are you well managed?” challenges you to present a sustainable economic model; that requires industry knowledge and business expertise. Assuring donors of your organization’s integrity and fiscal responsibility also is critical; control systems and transparency in all financial matters are necessary to accomplish that.

“Will my gift make a difference?” challenges you to show your organization’s impact; getting beneficiaries in front of donors at meetings and events can help (e.g., SummerSearch students, NPR radio talent). Reassuring donors that their gifts will be and are being used as they intended requires good contract development, processing, and oversight.

“Will the experience be satisfying to me?” challenges you to pay attention to every step of the getting-to-giving journey; that requires hiring staff, recruiting volunteers and building a culture that values donors, and paying attention to details that may seem trivial to you but matter to the donor (e.g., dietary requirements at a dinner event).

The tables below summarize what we see as key fundraising support activities. Some are fundraising-specific, and some are foundational. Each of them has a role to play in individual fundraising success.

Depending on your organization’s size and structure, and your fundraising strategy, these activities may be performed by small or large development groups, people in other parts of the organization, or external partners, or volunteers. 

We clearly view fundraising support as a critical enabler rather than wasteful overhead. You obviously want to minimize costs, but the real key is to give your fundraisers what they need to be successful at raising money for your cause, now and into the future.

First, the partnership. 

Fundraising starts and ends with people, within and across organizational boundaries. At its simplest, it involves donors, volunteers and staff, bound together by their shared commitment to the organization’s mission.                   

The distinction among partners’ roles often gets blurred, which is a blessing and a curse. On the plus side, it can offer flexibility and synergies. However, overlapping roles also can cause confusion and other problems.  For example:

• Should making a large donation be a board member requirement?
• What to do when a big donor feels entitled to decision making power?
• Your endowment manager (if he does well) may actually be your largest donor!

The trick is to make sure that people are clear about their roles in any given situation, because the “hat” you’re wearing will make a difference in how you’re heard.

As a board member, Howard once gave someone within the company a customized pentagonal dodecahedron (which looks like a squared-off soccer ball) with one of his many roles on each face: shareholder, CEO, son of the founder, and so on. Every time he came by to talk, Howard made him point to which hat he was wearing. Clarity is important, whether it’s in the for-profit or nonprofit sector.

Next, the myth.

Volunteers often are painted as selfless individuals. Well, yes, but…  Volunteers, donors, and staff all have their own “gives” and “gets.”  At the highest level, the “give” is attending to an unmet social need, and the “get” is a feeling of commitment and satisfaction.

It’s your job to figure what motivates your volunteers, and to find roles that are mutually satisfying. That will take some effort – “free” help isn’t really free – to recruit, assign, and support your volunteers. And don’t wait for National Volunteer Month (that would be April, by the way) to express your appreciation for their service to your cause.