Giving Done Right

1. Nonprofits are Unique, Not Just "Businesses Lite"

“We must reject the idea—well intentioned but dead wrong—that the primary path to greatness in the social sectors is to become ‘more like a business.’”

Distinct Missions. Nonprofits tackle problems that markets and governments often fail to solve, such as poverty, inequality, and environmental degradation. They operate with a mission-driven focus, prioritizing social impact over financial profit, unlike businesses that are driven by profit maximization. This fundamental difference necessitates different approaches to management, strategy, and evaluation.

Complex Challenges. Nonprofits often address complex, interconnected issues that require collaboration and long-term commitment. Unlike businesses that operate in a competitive environment, nonprofits often work in ecosystems, requiring them to partner with other organizations, government agencies, and community stakeholders. This collaborative approach requires a different set of skills and a different mindset than the competitive nature of business.

Diverse Landscape. The nonprofit sector is incredibly diverse, ranging from small, local charities to large, international organizations. This diversity means that there is no one-size-fits-all approach to management or funding. Givers must understand the unique characteristics of the nonprofits they support and tailor their approach accordingly.

2. Giving is a Skill, Not Just an Emotion

“Giving effectively is distinctly difficult—far more so than investing.”

Beyond Good Intentions. While good intentions are essential, effective giving requires a thoughtful and strategic approach. It's not enough to simply write a check or donate to a cause that tugs at your heartstrings. Givers must be intentional about their goals, strategies, and the organizations they support.

Learning and Humility. Effective givers recognize that they don't have all the answers and are willing to learn from others, including nonprofit leaders, community members, and those they seek to help. They approach giving with humility, acknowledging the complexity of social problems and the limitations of their own knowledge.

Avoiding the "Venture Capitalist" Trap. The analogy of philanthropy as "venture capital" is often misleading. Givers are not investors seeking a financial return; they are partners seeking to create social impact. This requires a different mindset, one that prioritizes collaboration, long-term commitment, and a deep understanding of the issues at hand.

3. Goals First, Then Strategy, Then Action

“To be an effective giver, you need to learn from what’s worked, or you’ll be doomed to make the same, predictable mistakes many new givers make.”

Clarity of Purpose. Effective giving begins with a clear understanding of what you want to achieve. This requires defining specific, measurable, achievable, relevant, and time-bound (SMART) goals. Vague goals like "helping the poor" are not enough; you need to identify specific outcomes you want to see.

Strategic Alignment. Once you have clear goals, you need to develop a strategy that outlines how you will achieve them. This involves identifying the most effective approaches, selecting the right organizations to support, and allocating resources wisely. Strategy is not about uniqueness; it's about aligning your efforts with others working toward similar goals.

Avoiding "Philanthropic Drift." It's easy to get pulled in different directions and lose focus. Effective givers resist the temptation to add new goals and initiatives without a clear understanding of how they contribute to their overall mission. They prioritize focus and avoid spreading their resources too thin.

4. Relationships are the Foundation of Effective Giving

“The most effective givers understand this difference, too. These philanthropists know that, while their business acumen (or that of their forebears) may have created their wealth, giving effectively requires a different set of skills.”

Partnership, Not Patronage. Effective giving is not about imposing your will on nonprofits; it's about building strong, trusting relationships based on mutual respect and shared goals. Givers should see themselves as partners with nonprofits, not as patrons or investors.

Listening and Learning. Givers should prioritize listening to and learning from the nonprofits they support, as well as the communities they serve. They should seek to understand the challenges and opportunities from the perspective of those closest to the ground. This requires humility and a willingness to challenge their own assumptions.

Transparency and Openness. Effective givers are transparent about their goals, strategies, and decision-making processes. They are open to feedback and willing to adapt their approach based on what they learn. They understand that strong relationships are built on trust and open communication.

5. Performance is About Impact, Not Just Overhead

“Focusing on overhead without considering other critical dimensions of a charity’s financial and organizational performance does more damage than good.”

Beyond Financial Ratios. Focusing solely on overhead ratios is a misguided approach to assessing nonprofit performance. What matters most is the impact an organization is having on the issues it seeks to address. Givers should prioritize results over simplistic financial metrics.

Defining Impact. Measuring impact is complex and requires a nuanced approach. There is no single, universal metric that can be applied across all nonprofits. Givers must work with nonprofits to identify the key indicators that are most relevant to their specific goals and strategies.

Supporting Capacity Building. Effective givers understand that nonprofits need more than just financial support; they also need resources to build their capacity, improve their programs, and strengthen their organizations. This includes providing unrestricted funding, multiyear grants, and support for evaluation and learning.

6. Policy Influence is a Powerful Tool, Use it Wisely

“Giving—your giving—can make a difference.”

Beyond Direct Service. While direct service is important, policy change is often necessary to address the root causes of social problems. Givers should consider how they can use their resources and influence to advocate for policies that promote positive change.

Collaboration and Alignment. Policy influence is most effective when it is done in collaboration with other organizations, community stakeholders, and those most affected by the issues. Givers should seek to amplify the voices of those who are often marginalized or excluded from policy debates.

Ethical Considerations. Givers must be mindful of the ethical implications of their policy influence. They should avoid using their resources to promote their own self-interests or to undermine democratic processes. They should prioritize transparency and accountability in their policy advocacy efforts.

7. Beyond Giving: Investing, Communicating, and Partnering

“We tend to focus on the challenges and problems we see. After all, there are many today, including disturbing threats to our democratic institutions, growing inequality, and a rising tide of racism. But it’s also important to remember the progress we’ve made.”

Impact Investing. Givers can use their investment portfolios to align their financial goals with their social goals. This involves investing in companies and projects that generate both financial returns and positive social impact. However, impact investing should be approached with caution and a clear understanding of the trade-offs involved.

Strategic Communications. Effective givers use communications to raise awareness, shape public opinion, and mobilize action. They understand that communications is not just about promoting their own brand; it's about advancing their goals and supporting the work of their grantees.

Cross-Sector Partnerships. Givers can leverage their influence to build partnerships across sectors, bringing together nonprofits, businesses, and government agencies to address complex social problems. These partnerships can create innovative solutions and amplify the impact of their giving.

8. The Virtuous Cycle: Giving Begets More Good

“That’s the nature of giving done right: It sparks a virtuous cycle.”

Ripple Effects. Effective giving has a ripple effect, creating positive change that extends far beyond the immediate recipients of funding. It inspires others to give, strengthens communities, and creates a more just and equitable society.

Personal Transformation. Giving is not just about helping others; it's also about transforming ourselves. It can provide a sense of purpose, meaning, and connection to something larger than ourselves. It can also lead to personal growth and a deeper understanding of the world.

Long-Term Vision. Effective givers understand that creating lasting change takes time, patience, and a long-term commitment. They are not looking for quick fixes or easy solutions; they are focused on building a better future for generations to come.

Last updated: February 1, 2025