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Fundraising - not all philanthropy is altruistic

Introduction If philanthropy is about generosity, and post modern living is cannibalising generosity with;

• me • looking after me for a change, and • getting my needs met -

what impact if any is this having upon the traditional beneficiaries of other people’s generosity, charities? Define the problem Many of you will be familiar with the Grant Thornton Not-for-profit survey of last year. In that study in which they were looking to identify the most significant issues challenging their NPO. Guess what came first?

Difficulties relating to financing and fundraising emerged as the leading issues. Nearly two-thirds of respondents – 65% identified financing their activities as a key concern. 44% were also concerned about fundraising.¹

In my travels as a professional fundraiser that accords with my experience as most CEO’s ask me, Craige where can I get more income, how can I increase our fundraising revenue and who are the people we need to be cultivating to support our organisation? It seems to me there are several reasons why this is an issue:

1. the increased competition among NPO’s for the charitable dollar; 2. the burgeoning demand that is growing within our community for the NPO sector to pick and deliver more and more services that either did not exist a generation or two ago, or were delivered from other forums in society; 3. the growing government and community compliance and governance demands being placed on the NPO sector, have had a significant impact on NPO costs, in some cases more than doubling costs; and 4. the decreasing pool of funds being made available to the NPO sector by the HNWI and the big end of town – the corporate community.

It is true that overall the community is slightly increasing their giving to the NPO sector each year, that is the community overall. Today I want to address an issue on which we who chase the charitable dollar appear to have been quiet, in fact acquiesced and watched with little or no comment as a traditional income stream has been micro-reformed from a significant funding source to a micro funding source. Allude to the solution offered Corporate social responsibility, venture philanthropy, social philanthropy and even triple bottom line reporting to a lesser extent are all tools of the modern capitalist society that empowers the strong with even more, and marginalises the weak and vulnerable even more. How? And more importantly how does this help you in your job to raise funds for your cause? First, some definition some terms I draw the bulk of these definitions from a book last year, Giving it Away, In Praise of Philanthropy by Denis Tracey, an Australian academic with a deep and growing interest in matters philanthropic. I commend the book as the most valuable insight into Australian philanthropic landscape I have seen. Like some things Australia, you may find some similarities to the New Zealand situation. Philanthropy

You have all heard the Latin roots, love of mankind – and we understand the traditional sense of in response to that love of humankind, giving to help. Phillip Adams, I guess you would call him a leading part of Australia’s intelligentsia, which does not say much for me as I disagree with him on most things – says philanthropy is formalised generosity. I find that today to be a relevant contemporary definition that draws its motivation from the original philanthropos. So for today, keep in your mind that philanthropy is formalised generosity.

Altruism Not only does it mean unselfishness, and selflessness, it goes further and includes an element of self-sacrifice. The antonym of altruistic is selfish. In the context of altruism today I am talking of giving that is selfless indeed goes further to the point of sacrificing something. How common is that today? Actually it is very common, the disturbing part is that the lower down the socio-economic ladder you go, the more common it is. Conversely the more wealth people have, the less altruism, and the less self-sacrifice you see. It is sometimes said that philanthropy is developing into a more thoughtful or strategic approach.² I am fast coming to the belief after talking to hundreds of HNWI and corporate executives that a strategic approach to giving usually is code for I am trying to figure out how I can give less! Not always, and I do not put all in that boat. But it is an increasing trend with alarming consequences for those who rely on charitable giving. Strategic philanthropy Ellen Lagemann in her study of the Carnegie Corporation³

“finding maximally effective means to achieve agreed on ends and carefully thoughtthrough articulated, and criticised rationales for action”

Apparently that means fence at the top of the cliff type philanthropy, not ambulance at the bottom of the cliff. Venture philanthropy

“… takes still further the notion of an engaged donor … (the term) may be a marketing issue – a form of words designed to make today’s financially literate philanthropists feel more like active investors and less like passive donors.”⁴

Social investment

“… the idea that both the donor and the recipient will receive some benefit. The benefit to the donor will probably not be financial, but may be expressed in better family relationships (in the case of family philanthropy), in a happier and bettermotivated workforce (in the case of corporate giving), or simply in … personal satisfaction.⁵

Tracey marks two differences to personal philanthropy:

1. Social investment is an act of giving that aims to remove the necessity for further philanthropy. 2. The donor expects to receive some benefit from the transaction.

Corporate social responsibility (CSR) This is not a term Tracey uses but is one that has gained currency in the past five to seven years, and is being touted increasingly by the corporate sector. Let me quote from Martin McKinnon, Qantas’ Marketing Chief, when launching recently Qantas’ big CSR program.⁶ "[CSR presents] a great opportunity ... to actually touch the parts other communications don't. It helps the brand because big is always bad in Australia, and it's not always a pleasant place to be all the time. If you declare an annual profit which is wonderful, then you're big and rich. If you declare a profit that's not, then you're big, inefficient and stupid. Small conversations really help, however. These conversations are made through corporate social responsibility." However, is it charitable giving? Listen to the limits that McKinnon admits to: "With CSR, people start to question your motives when you get to a certain profit and size. You become swinish and if you are not very careful about CSR, you become cunningly swinish. HNWI have also picked up on this tag, usually calling it social philanthropy or venture philanthropy. The trend, which I find disturbing is the move away from a focus on others, that you are hoping to assist – and focussing on self as the donor, focussing on the donor’s desire to control, to influence or to impose their own values onto a particular program or need. Of course the donor refers to it as the desire to make a difference rather than just putting money into questionable programs, sometimes with vague if not undesirable outcomes. And there is a point in this, there are NPO’s that are very sloppy in their accountability of making a difference to people’s lives or the society in general. CSR is about corporates being able to demonstrate a corporate return for their social investments. Very often the largest stakeholder in this group is their staff. Thus community involvement is a marketing tactic, a part of an overall branding strategy. Which again, I am not saying is a negative thing in terms of corporate accountability. BUT it is negative from a charity’s perspective and its influence is diminishing the amount of money made available to the NPO sector in NZ. Generosity Is a rare word today and I think no longer fits the post-modern world we inhabit. That paradigm is what had forced corporate leaders and HNWI to ask, well why are we giving away money, what’s in it for us? The post-modernist focus on meeting my needs first is the reason why baby boomers are pretty much the first generation to take charities to court to sue them when their parents bequest assets to a good worthy cause. It is the reason that a corporate must now meet CSR standards, not just give away some of its profit to those in the community who may be dependant. Historically Historically corporates gave big cheques to charities, usually at the whim of the Chairman of the Board, or in many case the wife of the Chairman. Corporate leaders for varying motivations gave large corporate gifts to charity each year. It was often unplanned, it was not strategic, it was merely often a personal response, or more likely a business colleague or friend who asked them to give. There are weaknesses with this model. But from an NPO’s perspective, it was money that came in generally untied and without strings. The issuing of a tax deductible receipt, a mention in the annual report and a plaque to hang on the wall were all that was required. Of course if you are NZ Symphony Orchestra then there would have also been some hospitality expectation. Current situation But today in the name of corporate social responsibility (CSR), the only charities who qualify for such corporate support are those can deliver benefits to the supposed benefactor. CSR has meant the rise and rise of third party corporate foundations, trusts and other variations of newly established benevolent bodies established to act as a middle man and disperse some of the monies received to NPO’s that can meet their needs. (It used to be that givers, donors or supporters use to meet a charity’s needs.) What do I mean by “some”, and how is this not seen as positive for the nor-for-profit sector? Let me give you an example, and it is one that is replicated hundreds of times over: On Wednesday I sat in the leather chairs of an Auckland boardroom of a multi-national company. They have been very proud of the approximately $100,000 per year their company foundation donates to good worthy causes in NZ. (A profit of $53m was produced by the NZ arm of the organisation in the last year). This organisation, a decade ago used to contribute between 7 – 10 times that amount in an albeit unstrategic manner, including sponsorship. Several years ago they established internationally their corporate foundation in order that the organisation could be more targeted in their community support. Monies that had previously been given to charity are now channelled into the company’s charitable foundation, where a corpus is building. From the return each year on this increasing capital fund (10% in a very good year), the costs are paid for the staff to administer the Foundation, and then there is a net figure that is dispersed each year to charity. Usually in the 3-5% range. And remember the charity sector used to get 100% every year – albeit it did not produce any benefits to the big donor. The NPO sector has been silent and unchallenging on this development, both here in NZ, across the ditch and to a lesser extent in UK and Europe. So through the corporatising of company’s charity giving, there is in many cases only 5% of the money coming to charities that they once got. I should also add that for some companies now giving this 5%, it is more than what they use to give, so swings and roundabouts. BUT THE ALARMING TREND NOW is when these company foundations (already a third party) are starting to prefer to give to other third party organisations (now fourth party) who will in turn invest the funds, build a corpus and distribute the funds to a number of selected beneficiaries. I do not want to name such organisations at this juncture, particularly as some of them are friends of FINZ, may be present today, and certainly are organisations that many of us make applications to for support. AND I am not saying that these organisations should not be there, hear me on this – most are very good ideas. What I am saying is that I question the value of cannibalisation of money that once went direct to charity, but now where:

1. the donor body is still giving the same, even increased amounts; while 2. the charity is now only receiving a minute percentage of the funds the donor is giving, and 3. the giver is now stockpiling capital, maintaining control of the capital, (even if not personal use) and watching it grow as a large corpus for subsequent disbursement of profits.

What is the result of CSR

• Less dollars to charity sector • More dollars retained by corporates through placing funds into their own foundations, and thus maintaining control of those assets

CSR is a very good corporate decision in terms of minimising expenses and retaining asset value. But it is a bad decision for charities –for now and the next generation. Maybe in a few generations you will have the philanthrocrats that we envy the US for, though you only did to witness uproar there as the federal government seeks to lift their guaranteed disbursements to 4% a year. Example A major newspaper in NZ, high profile – now has a new manager, developed a new policy. All giving now in form of advertising rather than any cash – no cash. Has allocated several $20k allocations per month, which people apply for. Will give space, exposure, ads, - useful for some, but not all. Why not give cash? They make cash. Because it costs far less to give space than cash – again an attitude where community support is now an expense line, not a altruistic gesture. Sure they allocate you $20k of space, where they have a hole to fill, and never on the front 5 pages. And if you ask for page 3 or whatever you are deemed ungrateful. Corporates want to ensure that their CSR package is excellent value for money. But is giving about value for money? Sure we al make value judgements about supporting this or that charity because we think they can get more out of a dollar than another. But is giving about driving for value for money? Is giving alms, giving gifts, helping another out about telling the charity how to deliver a service, what their service priorities should be or how you expect the charity to spend its meagre resources on meeting your corporate needs? Example do I support the Wellington College’s appeal for the music students to tour Europe playing concerts in various famous venues. Or would we prefer to support the Sallies in some of their work with youth on the street. The words may be unpopular, but when we think of donor motivations, we consider words like:

• Grateful for what I have • Hopeful of a cure for Alzheimer’s, and preferably before I get there. • Ashamed that in our community here there are children who are homeless and living on the streets • Pity for a person who has had an accident or …

Some of these are deemed to be politically incorrect, or deemed to be paternalistic, or deemed to be making inappropriate value judgements such as we should pity the person who is dying of leukaemia. And there is a place for some of that – but some in our community have thrown the baby out with the bathwater. Back to the corporate giving – which was a fair part of charitable income - In the charity sector, if this trend continues there are those who will lose out in the big gift market. Consider again from man at Qantas⁷ - But industry also knows the public is wary about whether this stuff is increasingly sophisticated spin. The counter-voice at the Ogilvy PR socialfest was Dr Stephen Jurd, who helps run The Morris Trust, a project dealing with drug and alcohol addiction. "Marketing gurus tell you that CSR needs to be a something that fits with your brand, that carries a message to your target consumers and key stakeholders that eventually helps to boost your bottom line," he said. "But who wants to be seen helping drunks and junkies? For many Australian companies, our charity stands for Can't See Returns. It's probably what most people feel is a pretty ugly topic. It doesn't help politicians win elections, and corporate support has been difficult to come by." And for the final word on corporate giving - From Stuart Wilson, Executive Officer of the Australian Shareholders Association Ltd – Fin Review 240204

CSR involves a company building meaningful relationships with society …. And when it comes to corporate philanthropy, are directors entitled to give away money that does not belong to them? Any decision to make a charitable donation must have a resultant economic benefit to shareholders – even if it s somewhat intangible or longterm in nature.

Conclusion Many of you will have heard Alexis de Tocqueville’s observation from a speech he made in 1831. In effect what he said 170 years ago was that America is great because she is good. If ever she ceases to be good, she will cease to be great. I think that applies to use here in NZ in 2004, as much as did to the USA in the 19th century. New Zealand is a good country, a great place to live, to work and to raise a family. But is it changing? Is that change for the better? Is it as good as it once was? Certainly giving among HNWI and corporates has been changing over the past 20 years. They are giving more, but not to front line charity use. As fellow fundraisers I believe that we have the mantle here in NZ to inform, educate and motivate our community toward altruistic giving, and supporting humankind simply because it is the right thing to do. Let me draw from an article, “Philanthropy is more than a tax deduction – teaching people about philanthropy” by Robert DeMartinis @ nonprofit.com

Many people don’t know what philanthropy can do for them. Giving feels good and can be addictive. Philanthropy can be one of the most self-satisfying acts a person can perform and the more addictive it becomes to a person, the more they will give. While the end result of philanthropy can cure many of the world’s ills, the act of philanthropy first must be taught.

There is no one else giving that message. We as professional fundraisers work with the issue everyday. It is our job to stand up and show a better way. I hope that this can be accommodated in your career, in your workplace and in your own personal practice. _{References:
1 The Grant Thornton 2003 Not for profit Survey, NZ, 2003, p3 2
2 Tracey, D: Giving it Away, p3
3 Per Tracey, p4
4 Tracey, p5
5 Tracey, p5
6 The "On Marketing" column is written by Paul McIntyre, Media, The Australian, March 20-26, 2003.
7 The "On Marketing" column is written by Paul McIntyre, Media, The Australian, March 20-26, 2003}

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