The Donor's Dilemma: Do Donors Know Better?

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I’ve blogged more about technology in the nonprofit space than about the philanthropy space, but I’ve been avidly reading philanthropy bloggers such as Tactical Philanthropy, Philanthropy 2173, and the White Courtesy Telephone.

Sean Stannard-Stockton of Tactical Philanthropy just made a post entitled Do Donors Know Better Than Nonprofits?. The heart of the issue is about how much freedom (or restriction) should donors place on donations.

He writes:

Why don’t donors trust nonprofits to know the best way to allocate their capital? If they don’t trust them to make capital allocation decisions, why are they giving to these nonprofits at all?

The first point that I would like to make is that framing it in terms of “trust” is an ad hominem. Who would argue against the idea that trust is an essential element to any relationship?

Here’s my argument about program versus general operating support.

Foundations don’t necessarily make grants to support a nonprofit’s mission.

Foundations make grants to support their own missions.

The ideal, of course, is when both the mission of the funder and the nonprofit are in perfect alignment and synchronicity. That doesn’t always happen, though, or it is not always explicit. I applaud the universe of donors and funders that have the wherewithal to make general operating investments.

So if the mission of the funders is tightly focused—oh like say on investing in technology or telecommunications to throw out a hypothetical—then that focus has to cascade down to the grantees. And unless a funder wants to only fund nonprofits that have “name your issue area” explicitly in the grantees missions—then you must resort to having clear agreements which are then codified into program restricted grantmaking.

And, yes, I absolutely have trust and faith in our grantees. I believe that they are doing amazing things. At the end of the day, as a funder, I want to be clear about what we are doing together, rather than what the nonprofit is doing for me or what I’m not letting them do.

Also on this topic: Grantmakers for Effective Organizations has a new report on General Operating support. Well worth the read.