Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Friday, November 14, 2014

The Business of Philanthropy - A Rant

I apologize in advance that today's posting here is going to be more of a rant than a helpful article, but I hope you will sympathize with my frustration. This comes from two articles I read yesterday that left me shaking my head, wondering if the world's gone crazy.

First, yesterday morning, I read Poor customer service at charities 'a key reason for high attrition rates', about a report released by Donor Voice called Donor Churn - How to stop it before it starts and why current approaches prevent this from happening.

Actually, I very much agreed with the thrust of the article and report, that you need to pay attention to your donors, and be responsive to their questions, before they drop you from their giving, not trying to make up after. The line that got me frustrated was this:
"Service in the non-profit sector is too often relegated to some distant corner of the organization and/or treated as a cost center."
Well, yes. It is a cost center! Donor relations is not free. The folks at Donor Voice know that - they make their living selling donor retention services to nonprofits. Not only is this not free, it is not program related either. It is overhead, and that's where my frustration lies.

With all the attention given lately to the overhead myth - the idea that looking at a nonprofit's ratio of overhead to program expenses is the best way to judge "effectiveness" - I found it baffling that this report could say their research finds donors want organizations to be more responsive to their inquiries, without mentioning that donors apparently don't want to cover the cost of that response.

If you've removed your phone number from your website to reduce inquiry calls (a finding of the report), explain why. If it was to save on overhead, say so! Or, just answer the phone, and educate your donors about the true costs of running your organization, and why your overhead is what it is.

But that article was just a minor irritation. What got me angry enough to write this rant was this:

Yesterday evening, I read the news about Lincoln Center getting set to rebuild - and rename - Avery Fisher Hall, the home of the NY Philharmonic. Fine. The hall was built in 1962 and renovated (and named) in 1973. I was built in 1961 and I could use a little renovation as well.

It turns out, however that the Fisher family isn't giving up their naming rights quietly or cheaply. While their original gift in 1973 was for $10 million, the ransom they will receive to release the Philharmonic from the deal will be $15 million (plus other perks).

Patricia Illingworth has summed up the situation perfectly:
"... Philanthropy is understood as the giving (and sometimes volunteering) for the love of humanity... The fact that the family required $15 million (plus other things) in order to relinquish their rights underscores that this is business and not philanthropy..."
The Fisher family received four decades of worldwide recognition, publicity, thanks, and kudos for their investment. Now they're also getting a 50% return on their money.

Not a bad deal for them. But what about the donors to the new hall? Who will be making the $15 million donation that won't produce a single note of music, and won't lay a single coat of paint on the rehabbed building, but will go entirely to the Fishers? Would you like to be the one making that pitch to one of your donors?

And what does that say to all of our potential donors about how our arts organizations (and other nonprofits) are being run? What does it say about how we manage our money or negotiate deals? No wonder donors are curious about our overhead rates and want to keep them low!

It's almost enough to make you want to remove your phone number from your website and stop responding to donors altogether.

Or, maybe, we could stop fearing our donors, stop babying them and trying to protect them from the realities of our world, and stand up to them when they have ridiculous demands that make a joke of philanthropy.