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Is it Transactional or Transformative?

philanthropy cartoon

Transactional fundraising is a hot topic in our industry lately, probably because cause-related marketing is being increasingly influenced by consumerism. The lines distinguishing sales from philanthropy are becoming blurred and a new lexicon has emerged around this, current buzz words being philanthrocapitalismand marketized philanthropy.

I was struck by a recent article in The Atlantic, titled: “Is For-Profit the Future of Non-Profit: The troubling allure of turning philanthropy into consumer activity.”

Writer Amy Schiller makes a strong case concerning the gradual erosion of traditional philanthropy amid our consumer-driven society. A slippery slope to be sure, and not unfamiliar to anyone reading this blog. In the article, she refers to (PRODUCT) RED as a highly visible example of this movement. I confess to owning one of Bono’s iconic T-shirts. And how many of us have been captivated by the “One For One” mission of TOM’s shoes? My kids buy them because they’re trendy and cool, seemingly less compelled by the fact that their purchase is providing footwear to less privileged children in far-flung countries. Rather than giving directly to these humanitarian causes, we are being conditioned to respond to the middleman who offers us something tangible that promotes our charitable nature. And advertises the product.

Ms. Schiller captures the dilemma acutely, “Consumptive outlets for our philanthropic impulses are more pervasive than ever. Yet, when charitable giving gets folded into market activity, the very space that philanthropy is supposed to provide as an alternative way of dealing with money shrinks. Traditional motivations for philanthropy, such as concern for mankind, creation of social capital, and responsibility to give back are subsumed into consumerism.”

“Philanthropy should imply a categorically different relationship with money than the one we have as consumers: something we embark on because we want to participate in a larger goal of improving the world and linking our values, histories, and resources with the needs of other people. Instead, this sector is increasingly vulnerable to what Harvard professor Michael Sandel calls “the corrosive tendency of markets” to crowd out non-market values.”

At Copley Raff we are increasingly encountering this transactional, market-driven philosophy as it creeps up the ladder in non-profit advancement programs. While Annual Funds have traditionally been benefits-driven, major gifts programs have not. The idea being that once we attract a donor to our cause with a membership, direct mail contribution or tote bag, we have an opportunity to expose them to the mission and vision of our organization and pursue a long-term relationship. Savvy advancement officers have always known that relational fundraising is where the action is and where true philanthropy lies.

But all of a sudden $50,000 and $100,000 gifts are being viewed as transactional by both organizations and donors. With increasing pressure on gift officers to produce results by adhering to management metrics and outcomes, it has become easier to “sell” a commodity rather than altruism. And for volunteers, it’s less scary to close a sale than to solicit a purely philanthropic commitment. By transactional, I’m not referring to naming buildings and programs, but rather receiving a disproportionate premium or service that places a burden on the non-profit and over time creates larger and larger cohorts of entitled donors…and overhead expense.

A case in point would be a hospital concierge society. A healthcare foundation client is in the midst of transitioning from transactional to philanthropy-driven fundraising. This shift in strategy is motivated by their pursuit of truly transformative seven and eight-figure gifts from current major donors.

Their concierge society has proven to be both a blessing and a curse. On the one hand, it has attracted nearly 800 donors who have each committed $50,000 for a lifetime (family) membership in this exclusive club. On the other hand, these donors have received such a plethora of benefits and services for a one-time gift that they may be disincentivized to give greater contributions over time. Many donors, in fact, have expressed this purchase and sale mentality.

Certainly if the foundation could go back in time and redesign the society, it is likely they would create a tiered program at much higher gift levels. And would assign terms – not lifetime membership. While advancement staff have done their best to cast the concierge service as a philanthropic benefit, language we typically hear used by volunteers and executives when describing this society is purely transactional in nature: “buy” “sell” “raise the price.”

The client agrees that there needs to be a reboot going forward. Their concierge society is here to stay, but the challenge will be integrating it into a robust major gifts program and impending multi-million dollar campaign. These donors should be some of the best prospects for further philanthropy, but the unknown question is how many members perceive their gifts as a transactional quid pro quo versus the doorway to a long-term relationship. Much will be determined by the behavior of foundation staff and volunteers as they begin these conversations.

In order to turn your transactional donors into transformational donors, it is essential to get to know them personally. Learn about their values, interests, priorities, and areas of alignment with your institution’s mission. Once a dialog is created, the relationship must be purposefully and meaningfully moved forward. By introducing interested individuals to various facets of the organization, observing them for emotion and resonance, and keeping them continually informed about how their support is being put to use, they will begin to view the organization – and their giving – differently. The goal is to spark curiosity and passion, engage them in the process, and demonstrate positive outcomes. When done right, your donors will begin to take the initiative as stakeholders in your future.

Both donor and organization are “transformed” by a gift when:

· A. The donor responds to the case for support and the organization’s ability to meet those needs.

· B. The donor is compelled by stories that illustrate societal or community need and the organization’s response.

· C. The donor makes a commitment to become part of that response, recognizing that their gift has the power to further the organization’s mission in a meaningful way.

· D. The donor develops multi-layered relationships within the organization and begins to feel like an “insider”.

· E. The donor’s philanthropy is translated into food for the hungry, clothes for the poor, live performances, medical treatment for the sick, college degrees or life-saving research.

· F. The donor is thanked and recognized for their giving and receives regular feedback and reports about how their generosity has transformed the community, the beneficiaries, and the organization.

· G. The gift is viewed by both donor and the organization as the beginning of the relationship, not the end.

As Amy Schiller sums it up, “Philanthropy means “love of humanity.” Yet as philanthropy merges and then is overridden by consumer activity, it is our own humanity that gets lost in the process.”

Your Takes:

1. Create benefits and recognition that further the relationship and connect the donor to the mission of the organization, and avoid those that place excessive human resource and financial burdens on administration.
2. If goods and services are exchanged in consideration for a “donation,” then define the interaction as transactional.
3. If a donor wants to support your mission and vision by providing resources for the journey in exchange for the impact you intend to make on society, then that interaction is philanthropic.

Guest contributor: Susan Kinney, Senior Consultant, Copley Raff Inc.

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