The Fatigue of the Intelligent Donor
By: By Lorenzo Davids
The deep question that confronts us in 2014 is whether the noble acts of Philanthropy can further evolve into a far more directed force and more meaningful practice to impact the socio-economic challenges confronting the South African landscape? There is no doubt that the world in which we live in can do with a very significant dose of more philanthropically minded citizens everywhere. The generosity of both the wealthy and the poor philanthropist is to be lauded. Billions of rands of aid money are donated to worthy causes each year. And many of those causes, despite severe challenges and constraints, are holding the very thin fabric of civil society together – often on shoe string budgets and the lowest paid staff. One of the key questions for those of us who monitor these environments, is how does one shift this giving relationship from often transactional giving – a donor giving money and a beneficiary spending that money on an agreed cause, to a more engaged, transformative and meaningful relationship . This transactional relationship has dulled the real intent of philanthropy – the infusion of a responsibility to beneficiaries to transform context and currency by means of this exchange.
On the one side of this transactional relationship is the donor. Let me clear about this: South African donors are an extremely generous community and have sustained, often amidst some of the most challenging times, causes and campaigns they have believed in. In many ways, donors have put their money where their hearts and minds are. From political to social to humanitarian causes, South African donors have kept pace with many of their international counterparts in making sure that a vibrant and well-funded NGO sector remains a key part of the pre- and post-apartheid South African society. This commitment by donors to civil society organisations is the reason why we have such a vibrant civil society sector in South Africa.
However, on the other side of this relationship, are hundreds (thousands, hundreds of thousands?) of beneficiaries. And this is what should worry us the most: For decades many sincere acts of Philanthropy has not moved from this transactional relationship between donor and recipient. The consequence is that a horde of transactional relationships now exists as opposed to a higher set of transformational relationships – where both parties hold each to account for the outcomes and impacts agreed to. The danger of these types of transactional relationships is that they often migrate from good intention to a money conveyer belt. The outcomes requested by these truckloads of donor funds are often poorly defined, have very little long term impact and serves more to placate need and comply with demand and request than to work at creating visible and measurable changes in the poverty or related social, health or educational challenges we face as a society.
And thus when I listen to non-profit organisations and its leadership bemoan the lack of funding and talking of the now well-worn “donor fatigue” topic I see the very real consequences of transactional giving manifesting itself. In these discussions they talk about how hard it has become for non-profit agencies, most that do vital, necessary and excellent work, to survive. I however, question the entire notion of donor fatigue. The figures show that donor funding has remained largely consistent: some R8 billion from corporate giving, some R8 billion for HNWIs as well as a further R5.1 billion in goods and services from the same group, some R6 billion from Government and a further R4 billion from individual tax payers (excl the mentioned HWIs). This is also excluding international funding and funding from special grants and projects from government and parastatals. This equates to many billions of rands. My question is: Can we see real transformative differences in the health, poverty, educational and income generation sectors across South Africa that matches the scale of the investment?
In our analysis at Community Chest we believe that three things have however happened which impacts the flow of donor funds: 1. The mushrooming of NGOs (From 50 000 in 1994 to 115 000 in 2014) over the last 20 years which all take a slice of the donor income, reducing the size of the slice others are used to getting. 2. The growth of an intelligent the donor community, who are no longer only moved by compassionate appeals to donate, but now more are inclined to give when moved by intelligent solutions. 3. The lack of accountability to donors by some NGOs have really muddy the waters for many others in the same sector and have caused donors to allocate the funds on their balance sheets without necessarily distributing it within the allocated year until such time that they consider it safe to make the distribution.
This is why a deep discussion is required in philanthropic circles about how donor funds are applied. And thus my contention of the dire need to now reform philanthropy and social investment. We need more accountable relationships – not for the survival of the sector primarily – but that the end beneficiary, the student, the pregnant mom, the sick child, the school, the social enterprise, can immediately benefit from the impact every donated rand should create.
Donors are not tired of giving—they are tired of the real needs of real people being wrapped up as requests to ask for more funding without it being accompanied by proper research, intelligent solutions, and monitoring and evaluation systems which tract and report on outcomes and impact.
I think it’s an insult to call donors fatigued. I think donors have just become more informed, more intelligent and demand more accountability.
If we are going to begin this dialogue within the Philanthropic space then donors must insist on working with proper research and the best intelligence available. What do I mean? What is crucial right now is that we don’t sell donors “better interventions”. What we need is an intelligence that can sit down with the donor community and begin to talk about long term permanent solutions and not just short term interventions. Donors must be extremely sceptical of anyone who offers them an intervention to fund and there are no long term solutions embedded in that intervention or any measurements attached to both the intervention and the solution.
It is a hard lesson, but unless we change our approach, we shall continually have the excuse that the reason such-and-such an NGO had to close its doors was because of donor fatigue, when the real truth is that donors simply no longer believed the offered intervention would make the difference they were funding and hoping to see.
We are encouraging donors to see their grants and donations as a business investment, with appropriate returns, accountability and results. When we review our internal funding processes at Community Chest, I often ask the question: “What is the solution we are asked to fund?” Responsible citizenship must compel donors to look beyond the offered intervention for funding and look to what solution this intervention is a part of. After all, no one should be funding the same intervention over and over without looking at the end beneficiary and being able to say: “I am funding this intervention, because I have seen the solution it is a part of. It will add value to your life and enable you to become a responsible active citizen”. We owe that much to the millions of people who use these interventions. As an accountably agency to both donors and our thousands of community beneficiaries – we must begin this necessary shift from funding interventions to funding solutions, from transactional funding agreements to transformative funding outcomes.
And this is the most difficult part of the Philanthropy dialogue: There are so many donors who have this need to do good and feel that if they can just donate some money to a cause or organisation they will have done something of cosmic significance. The reality is often a rather different one. Doing good without a solid and clearly articulated set of outcomes as well as knowing which impacts are able to create the leverage needed to transform a society, most donor money never achieve the good it intended to do. How is it possible that at massive infrastructure cost for a facility like a shelter or food kitchen we can often at most show 2 people per year who have changed their lives around and have become active and successful citizens? The cost ratio to success is simply not feasible. And so what we need are not necessarily more and more people who wish to do good. And that is really hard to say. But the truth is that this type of good has for centuries been the enemy of the best. What we need are people – and it must include donors specifically – who will look at the issues they have been funding for years and ask the tough question: “So how do we solve this problem so that it will no longer consume more and more money each year? How do we add more value than what we are currently adding in order to move this from the realm of intervention to the realm of solution?” And that’s the really difficult discussion. Let’s admit that some types of services will require on-going funding – a facility for children with forms of mental or physical disability. But even here we must not shirk back from thinking solutions and not just interventions. For example, could centres be combined and could they be asked to collaborate on services they offer so that certain duplications are minimised and thus more funds become available for other deeper interventions within those solutions?
Donors everywhere are experiencing the effects of the law of diminishing returns. After many years of funding the many non-profits they have been funding they feel less satisfied than what they did when they first started out. They are tired of traffic light begging. They are tired of door knocks. They are tired of mall entrance confrontations. The satisfaction of giving has diminished as people see less of what they thought they would see – real change for people who really need it. It’s time for the billions of Rands donated annually to effect real change. Change we can all see. But more especially, change the end beneficiary can see and use to build a better life for themselves.
Lorenzo Davids is CEO of Community Chest South Africa and the Community Chest of the Western Cape. He currently leads the national Community Chest and its five regional offices around the country in designing impact strategies to fund Education, Health and Income Generation. Community Chest invests over R50-million annually to over 600 local non-profit organisations countrywide.
The deep question that confronts us in 2014 is whether the noble acts of Philanthropy can further evolve into a far more directed force and more meaningful practice to impact the socio-economic challenges confronting the South African landscape? There is no doubt that the world in which we live in can do with a very significant dose of more philanthropically minded citizens everywhere. The generosity of both the wealthy and the poor philanthropist is to be lauded. Billions of rands of aid money are donated to worthy causes each year. And many of those causes, despite severe challenges and constraints, are holding the very thin fabric of civil society together – often on shoe string budgets and the lowest paid staff. One of the key questions for those of us who monitor these environments, is how does one shift this giving relationship from often transactional giving – a donor giving money and a beneficiary spending that money on an agreed cause, to a more engaged, transformative and meaningful relationship . This transactional relationship has dulled the real intent of philanthropy – the infusion of a responsibility to beneficiaries to transform context and currency by means of this exchange.
On the one side of this transactional relationship is the donor. Let me clear about this: South African donors are an extremely generous community and have sustained, often amidst some of the most challenging times, causes and campaigns they have believed in. In many ways, donors have put their money where their hearts and minds are. From political to social to humanitarian causes, South African donors have kept pace with many of their international counterparts in making sure that a vibrant and well-funded NGO sector remains a key part of the pre- and post-apartheid South African society. This commitment by donors to civil society organisations is the reason why we have such a vibrant civil society sector in South Africa.
However, on the other side of this relationship, are hundreds (thousands, hundreds of thousands?) of beneficiaries. And this is what should worry us the most: For decades many sincere acts of Philanthropy has not moved from this transactional relationship between donor and recipient. The consequence is that a horde of transactional relationships now exists as opposed to a higher set of transformational relationships – where both parties hold each to account for the outcomes and impacts agreed to. The danger of these types of transactional relationships is that they often migrate from good intention to a money conveyer belt. The outcomes requested by these truckloads of donor funds are often poorly defined, have very little long term impact and serves more to placate need and comply with demand and request than to work at creating visible and measurable changes in the poverty or related social, health or educational challenges we face as a society.
And thus when I listen to non-profit organisations and its leadership bemoan the lack of funding and talking of the now well-worn “donor fatigue” topic I see the very real consequences of transactional giving manifesting itself. In these discussions they talk about how hard it has become for non-profit agencies, most that do vital, necessary and excellent work, to survive. I however, question the entire notion of donor fatigue. The figures show that donor funding has remained largely consistent: some R8 billion from corporate giving, some R8 billion for HNWIs as well as a further R5.1 billion in goods and services from the same group, some R6 billion from Government and a further R4 billion from individual tax payers (excl the mentioned HWIs). This is also excluding international funding and funding from special grants and projects from government and parastatals. This equates to many billions of rands. My question is: Can we see real transformative differences in the health, poverty, educational and income generation sectors across South Africa that matches the scale of the investment?
In our analysis at Community Chest we believe that three things have however happened which impacts the flow of donor funds: 1. The mushrooming of NGOs (From 50 000 in 1994 to 115 000 in 2014) over the last 20 years which all take a slice of the donor income, reducing the size of the slice others are used to getting. 2. The growth of an intelligent the donor community, who are no longer only moved by compassionate appeals to donate, but now more are inclined to give when moved by intelligent solutions. 3. The lack of accountability to donors by some NGOs have really muddy the waters for many others in the same sector and have caused donors to allocate the funds on their balance sheets without necessarily distributing it within the allocated year until such time that they consider it safe to make the distribution.
This is why a deep discussion is required in philanthropic circles about how donor funds are applied. And thus my contention of the dire need to now reform philanthropy and social investment. We need more accountable relationships – not for the survival of the sector primarily – but that the end beneficiary, the student, the pregnant mom, the sick child, the school, the social enterprise, can immediately benefit from the impact every donated rand should create.
Donors are not tired of giving—they are tired of the real needs of real people being wrapped up as requests to ask for more funding without it being accompanied by proper research, intelligent solutions, and monitoring and evaluation systems which tract and report on outcomes and impact.
I think it’s an insult to call donors fatigued. I think donors have just become more informed, more intelligent and demand more accountability.
If we are going to begin this dialogue within the Philanthropic space then donors must insist on working with proper research and the best intelligence available. What do I mean? What is crucial right now is that we don’t sell donors “better interventions”. What we need is an intelligence that can sit down with the donor community and begin to talk about long term permanent solutions and not just short term interventions. Donors must be extremely sceptical of anyone who offers them an intervention to fund and there are no long term solutions embedded in that intervention or any measurements attached to both the intervention and the solution.
It is a hard lesson, but unless we change our approach, we shall continually have the excuse that the reason such-and-such an NGO had to close its doors was because of donor fatigue, when the real truth is that donors simply no longer believed the offered intervention would make the difference they were funding and hoping to see.
We are encouraging donors to see their grants and donations as a business investment, with appropriate returns, accountability and results. When we review our internal funding processes at Community Chest, I often ask the question: “What is the solution we are asked to fund?” Responsible citizenship must compel donors to look beyond the offered intervention for funding and look to what solution this intervention is a part of. After all, no one should be funding the same intervention over and over without looking at the end beneficiary and being able to say: “I am funding this intervention, because I have seen the solution it is a part of. It will add value to your life and enable you to become a responsible active citizen”. We owe that much to the millions of people who use these interventions. As an accountably agency to both donors and our thousands of community beneficiaries – we must begin this necessary shift from funding interventions to funding solutions, from transactional funding agreements to transformative funding outcomes.
And this is the most difficult part of the Philanthropy dialogue: There are so many donors who have this need to do good and feel that if they can just donate some money to a cause or organisation they will have done something of cosmic significance. The reality is often a rather different one. Doing good without a solid and clearly articulated set of outcomes as well as knowing which impacts are able to create the leverage needed to transform a society, most donor money never achieve the good it intended to do. How is it possible that at massive infrastructure cost for a facility like a shelter or food kitchen we can often at most show 2 people per year who have changed their lives around and have become active and successful citizens? The cost ratio to success is simply not feasible. And so what we need are not necessarily more and more people who wish to do good. And that is really hard to say. But the truth is that this type of good has for centuries been the enemy of the best. What we need are people – and it must include donors specifically – who will look at the issues they have been funding for years and ask the tough question: “So how do we solve this problem so that it will no longer consume more and more money each year? How do we add more value than what we are currently adding in order to move this from the realm of intervention to the realm of solution?” And that’s the really difficult discussion. Let’s admit that some types of services will require on-going funding – a facility for children with forms of mental or physical disability. But even here we must not shirk back from thinking solutions and not just interventions. For example, could centres be combined and could they be asked to collaborate on services they offer so that certain duplications are minimised and thus more funds become available for other deeper interventions within those solutions?
Donors everywhere are experiencing the effects of the law of diminishing returns. After many years of funding the many non-profits they have been funding they feel less satisfied than what they did when they first started out. They are tired of traffic light begging. They are tired of door knocks. They are tired of mall entrance confrontations. The satisfaction of giving has diminished as people see less of what they thought they would see – real change for people who really need it. It’s time for the billions of Rands donated annually to effect real change. Change we can all see. But more especially, change the end beneficiary can see and use to build a better life for themselves.
Lorenzo Davids is CEO of Community Chest South Africa and the Community Chest of the Western Cape. He currently leads the national Community Chest and its five regional offices around the country in designing impact strategies to fund Education, Health and Income Generation. Community Chest invests over R50-million annually to over 600 local non-profit organisations countrywide.
