Donors choosier about where their money goes

Expectations of charities are high, writes

Individuals and companies are increasingly examining philanthropic funding initiatives very carefully. They have strong expectations for high accountability and management by the organizations they invest in.

More and more, their focus is shifting toward supporting projects that have clear deliverables with high impact. In other words, the rigour that corporate investors seek is now entering the not-for-profit world.

You may think it is only major funders who use this degree of sophistication. But casual donors’ expectations are changing for what they expect from charities they support.

These individuals give to honour a person and/or service, have an affiliation with the cause, support an event, buy a ticket for a lottery or attend a fundraiser. They expect the organizations they support to be honest, transparent and respected. They may not invest large dollar amounts but collectively they are great in numbers and are a crucial part of the fundraising puzzle.

Donors increasingly see themselves as change-makers. They hold an altruistic concern for people and their well-being. In response, many philanthropic and non-profit organizations are applying business-focused language to attract donors (“investment,” “return on investment,” and “outcomes”) but words are not sufficient to gain donor interest. Successful organizations will be accountable, transparent and seen as effectively achieving social goals and demonstrating outcomes.

Donors are increasingly less loyal to specific non-profits or charities. They are committed to problem solving or making impact investments. Even in the area of medical investments, where there is often a strong emotional connection between the donor and the organization, donors are demanding proof of progress.

For example, the Alberta Cancer Foundation is intimately aware our donors have close ties to the facilities in which they or someone close to them had or will receive care. While they view research as vitally important, they expect that there will be no duplication of effort and resources and that the line of sight from “bench to patient” will be absolutely clear and timely. Merely supporting the research enterprise is not enough; the ideal result would be a cure.

This dynamic challenges how we select projects for funding. A review of evolving trends shows that donors don’t just want to select from a menu of investment options; they want their investment to make a difference.

This is evidenced by the increasing involvement of patients and families in setting, managing and evaluating research priorities. To this end, we have chosen to drive a process that will involve and more closely align with donors’ priorities, preferences and expectations. We do so being mindful of our investees’ (the health system, universities and community organizations) priorities, capacity and ability to deliver.

Investment options must be carefully assembled to reflect investor expectations and community needs. We have assembled a wide range of researchers, medical professionals, patients, administrators and donors to assess what investments should be supported and to provide guidance for measurable outcomes.

This process identified that patients, families and donors want results faster. Medical research has a long horizon from basic research to clinical application. And, the probability of success increases the farther along the timeline the research is. Many donors are most interested in those things that are closest in development to, and have the best opportunity for, patient impact.

This has become the toughest part of changing investment decisions. Many good projects may no longer qualify because donor interest lies elsewhere. It doesn’t mean that these projects are not important or valuable; it simply means that philanthropic investment may not be the appropriate source of funding.

This is a very hard message to deliver and one that philanthropic organizations must carefully navigate. By no means have we been perfect — but we have found ways to slowly wean financial support for projects not of interest to donors and to help these groups look for other options.

Social investment, venture philanthropy, crowd sourcing, forging non-traditional relationships (based on transparency and partnership) and the sophisticated use of technology are other factors driving the need for change. Those groups that can embrace that change, and adapt to it quickly, will succeed. The challenge is huge — and we will all be better for it.