What Would Your Organization Do With a $50 Million Donation

What does the path to a $50 million donation look like? It begins with you believing it is possible. Then, you must be realistic about how it will come about, which is likely one of four ways:

1. From a devoted donor who has given to your organization for 20 years or more and has come to see it as a proxy for their purposes and values (and are most likely to give that amount late in life or through an estate commitment).
2. From a highly satisfied donor who has given two or more major gifts.
3. From an investment-minded philanthropist, most likely an entrepreneur, who is looking across institutions for programmatic initiatives that demonstrate bold innovation and strategic imagination.
4. Some combination of these.

For decades, I've asked organizational leaders what they would do with a windfall gift of $50 million. The most common response, by far and away is, "I'd put it in endowment." Yes, I realize a very rational case can be made for taking that action but in so many ways it's a philanthropic turnoff.

Is the Tide Turning on Endowment Giving?

Think of philanthropy as water.

Organizations want to gather it in buckets and save it in cisterns.

Donors want it to power mill wheels, to turn the grist of organizational potential into a flour that feeds human potential.

To ask what you would do with millions is an invitation to address what actions you could take, how you could fulfill an urgent need:

• Better serve humanity
• Close the gap between societal need and your ability to deliver
• Propel your organization from good to great or from great to superb
• Attack the root causes of a perplexing social ill

Responding to that invitation by saying, "I'd stow away the money to cocoon the organization from adversity" disappoints many because it doesn't address the mill wheel effect; it doesn't reveal what you would convert those resources to or how you would use them to improve lives.

Welcome to the Era of the Venture Philanthropist

As more money is made through entrepreneurialism and as more entrepreneurs look to philanthropy as a social and economic source of power, an emphasis on buckets and cisterns will only thin our funding streams. Entrepreneurs want to invest in organizations and initiatives that are responsive, adaptive, innovative, and relevant.

In the Entrepreneurs as Philanthropists report from Fidelity Charitable, 61% of entrepreneurs say they want to be personally involved in charities to drive change, and not simply by contributing financially. They are activists, donating professional services, fundraising, serving on boards, and organizing events. This is the era of the "venture philanthropist."

If you hope to secure a donation of $50 million or more from this kind of donor, it behooves you to give great thought as to what you would use it for. You can't wow a venture philanthropist into making an investment of that magnitude. You can't start the conversation with someone capable of making that kind of commitment with a brochure. As one multibillionaire said recently in a confidential interview, "If they want my support, they need to bring me problems, not proposals."

Philanthropists like MacKenzie Scott, who has donated billions in unrestricted funds to thousands of organizations since 2020, have spurred nonprofits and donors alike to take a hard look at the benefits and challenges of unrestricted funding. Even though an impressive 70% of the organizations Scott has supported with mega-gifts report that the money has strengthened their ability to achieve their mission, making mega-gifts with no designations is still the exception rather than the rule: Only 20% of funding for U.S. nonprofits has any degree of flexibility in how the money is spent.

Whether choosing to give restricted or no-strings-attached mega-donations, venture philanthropists demand that recipients are good stewards of their dollars, with progress measured in specific metrics and preference given to innovative organizations. Here's what works to germinate mega-gifts:

• Starting the conversation with brief but content-rich concept papers marked "DRAFT"
• Focusing more on "how" and less on "wow"
• Bringing venture philanthropists into a problem-solving dialogue or an opportunity at the conceptual stage

If you hope to secure a $50 million gift from such a donor, your organization must be prepared to stand up to rigorous scrutiny. Remember, the way people make their money has a profound influence on the way they give their money. Entrepreneurs achieve success by seeing gaps in the market, by picking up on what is leaving consumers unsatisfied, or by imagining a product or service that would advance the quality of life for many. Entrepreneurs secure funding for their ideas by developing thorough, well-documented business plans that are carefully scrubbed by potential investors. If they stand up to that due diligence, they secure support to launch their companies.

When entrepreneurs become philanthropic investors, they will expect the same rigor and innovation from organizations seeking their support. In fact, Fidelity Charitable reports that 59% of entrepreneurs say their business approach influences their giving.

Organizations, therefore, must be prepared to answer tough questions including how they propose to:

• Tighten their focus to ensure greater mission realization
• Convert private support into significant, sustainable societal outcomes
• Relate the dollar amounts requested to specific outcomes
• Evaluate and report on the progress being made on projects they have funded
• Adjust and adapt to current and emerging societal trends

After laying out these realities I have been asked by more than one CEO or president, "So if we go to all this trouble, can you guarantee we'll raise $50 million?"

My answer: "If you don't go through this level of preparation, I guarantee you won't get close to $50 million."

Landing a Whale Takes Time

Big gifts are like mammals. The bigger the animal, the longer the gestation period (blue whale=394 days; dormouse=14 days). No one is quick to let go of $50 million. From the time a credible concept is put in front of a credible contributor until the time a major investment is made almost always equals two years or more. You must commit to a three-stage process of major philanthropic decision making.

1. Probing: Transformational giving begins with a donor testing if an organization's ambition aligns with their philanthropic convictions or vice versa.
2. Negotiating: Once conceptual alignment is achieved, a period of negotiation unfolds in which the parties seek to define the exact investment and how it might be put to best strategic use in a way that is mutually satisfying.
3. Progressing: An iterative back-and-forth is most likely to advance when the prospective donor is afforded an inside view and given the opportunity to interact with those who will implement the initiative and those who stand to benefit from it.

A donor's desire for this kind of substantive interaction is what authors Jen Shang and Adrian Sergeant have characterized as a "tectonic shift" in philanthropic decision making, from the comparatively uncomplicated act of fundraising to a richer, more dynamic set of relationships centered on mutual values.

"More than just gathering donors, tomorrow's philanthropy will thrive on creating partners and empowering philanthropists who are vested in both the processes and outcomes of social change efforts," they write in Insights into the Future of Philanthropic Innovation. "It will nurture true, deeply held, and sustainable connections between donors and beneficiaries."

If organizations accept and learn how to manage this shift, they will be more adept at creating philanthropic partners. The more they bring potential partners inside, the more they increase their chances of having one or more of those investors give without restriction as an expression of confidence in the viability and ongoing relevance of the organization's mission.

However, it is a terrible mistake to begin the process by stating a desire for a $50 million unrestricted gift. Donors bring their own agenda, with a natural desire to apply their values and experiences to their giving. Yet when brought into open dialogue about what an organization is attempting to achieve in the face of gritty realities, donors will come to trust its leaders and subordinate their egos and agendas.

In other words, your best chances of securing a major unrestricted investment or endowment won't come from pleading for them but by showing and proving how philanthropic waters can more vigorously propel the mill wheel of your mission. Adapting to these new realities will make for more responsive and relevant organizations, not just improved fundraising results. Indeed, being more responsive and striving for greater relevance will be essential to sustaining and securing organizations' "market share" of private support in a changing philanthropic market.

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