We are continuing our three-part blog on the philanthropy trends we’re seeing, and how nonprofits can best position themselves to take advantage of them.
- Nonprofit Mergers. There is a tremendous interest from the foundation community in seeing mergers and acquisitions. The Weingart Foundation has led this with the Nonprofit Sustainability Initiative and recently we saw the mergers of Lamp and OPCC. The merger most commonly described as a success was PS Arts and Inside Out Community Arts, but in reality this was primarily a program acquisition than a true merger. Nonprofits may want to explore which programs may be better executed at their organization and then begin discussions with colleagues in their field. Many funders may actually fund this exploratory process, even if it doesn’t result in an acquisition or merger, and it’s a wonderful way to build a relationship with a funder and show that you’re thinking beyond your organization to the larger issue.
- Investor Philanthropists. The Zuckerberg announcement is one of the most recent examples of how many philanthropists are beginning to explore the best vehicles to address the issues they are passionate about solving, and many times this isn’t going to be through a traditional nonprofit direct service program. Mark Zuckerberg and his wife, Priscilla Chan, didn’t actually donate their money to a foundation, but instead created an LLC. These investor philanthropists want to do what ever is going to bring the most impact – and aren’t as focused on a tax break or traditional ways of addressing things. They want to see scale and leverage. So you should use these words when you talk to them – not how far their dollar will go, but how you’ll be able to leverage their dollars because of the efficiencies and uniqueness of your programming. Moreover, while many funders don’t want to be accountable to the public for how they are dispersing their funds, which the Zuckerberg/Chan’s won’t have to do because their money is in a LLC, they do expect that their donations are treated like investments, and want to receive similar reporting that they do as with their investment portfolio. Nonprofits should be using data strategically and efficiently – not for the sake of data, but to be able to provide hard facts to their investor philanthropists to help them understand the picture.
- SRI’s, Impact Investing, Divestments. The public is beginning to really challenge the funder norm that individuals are capitalistic for the majority of their life and then become philanthropic once they’ve made a certain amount of money. Individuals, particularly millennials, want to have opportunities to give throughout their lifespan, but in ways and vehicles that make sense for them. This is the long view – building a donor base who in 20 years will be able to make major and planned gifts. In the meantime, think of ways you can engage individuals with your mission and make smaller contributions in the meantime. Monthly giving programs are on the rise, surprisingly, and individuals want to find easy, digestible ways to give. According to The Network for Good, a monthly donor’s annual contribution amounts to 42 percent more than that of a one-time benefactor. Monthly donors also tend to be the most loyal, with retention rates averaging 80 percent. Another way to take advantage of this trend is through cause marketing. Generally, it’s not our favorite way to give to the issues, but it can actually resonate with individual funders who are looking at ways to incorporate giving into their day to day lives, as long as it’s meaningfully tied to your mission. Lastly, individuals and nonprofits are also questioning the traditional model that 95% of a foundation’s assets sit in a portfolio, and only 5% is being used to affect change. SRI, PRI, and impact investments, are all on the rise. Can we make the 95% work for us?
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