Donor Expectations: Ensuring Transparency and Trust in Not-For-Profits


Published by on June 17, 2024

Whether it is an individual, a sponsor, or a grantor, not-for-profit donors want two things.

First, they want confirmation that their donation has as large an impact on as many people as possible.

Second, they want confidence that most of the donation goes directly to the cause instead of the not-for-profit itself. 

While these two requests may have always existed, it is easier than ever for donors to scrutinize the not-for-profit sector. With highly paid executive directors, administration fees, and a plethora of charities to donate to, why not expect the best? 

I am a lifelong fundraising specialist who has been asked these questions on numerous occasions. Throughout my career, I have worked in a broad array of fundraising roles, from door-to-door fundraising to chairing the fundraising committee of an environmental charity. Time and again, the not-for-profit sector’s biggest criticisms come from donors themselves.

Donor Expectations in the Modern Not-for-Profit Landscape

Now, websites like Charity Navigator evaluate the effectiveness of not-for-profits and there are entire movements dedicated to effective charitable giving. A primary example is the Effective Altruism Movement, a worldwide group advocating for utilitarianism in charity donations by encouraging donors to use “evidence and reason” to determine which organization makes the largest impact on the most people. 

With the public demanding more from not-for-profits, managers have significant incentives to play into their donors’ fears. For instance, why risk hiring a younger and more creative employee if they have different qualifications on paper compared to an older individual? In fact, why properly compensate employees if each pay raise is met with fierce criticism? 

Not-for-profits that ensure every dollar spent is used specifically to maximize a donor’s perception of impact leave no room for chance, innovation, or humanity. Everyone involved in charitable work, from volunteers to executives, must acknowledge that there are multiple metrics to define a successful not-for-profit. 

I stress that measuring objective impact is important but that only some of a not-for-profit’s work is quantifiable. Ultimately, donors should trust that not-for-profit employees will spend money wisely and let go of the need to judge exclusively off objective impacts. Below, I would like to propose a list of four alternative metrics by which the not-for-profit sector should evaluate itself, all of which have nothing to do with funding, budgets, or impact. 

1. Does the not-for-profit take calculated and bold risks? 

I first watched Dan Pallotta’s now-renowned TED Talk on charities as a nineteen-year-old, and it permanently changed my perspective. A central argument is that if a not-for-profit takes donor money and tries something new, there is a chance that the project is not successful. Should a creative and bold initiative fail, a donor could rightfully accuse the organization of wasting funds.

Accordingly, not-for-profits do not take risks out of fear of failure. Imagine if this happened in the private sector. It is normal for corporate organizations to try and fail; often, they are rewarded for it. For instance, imagine if car companies never tried new things; forget about self-driving cars; the reality is that most people would still be riding horses. The same is true with the telecommunications sector, we’d never have had an iPod Touch, let alone a cellphone. Most of the time, it is only through innovation that progress is made, and failure is a part of the process. 

Ask yourself how different not-for-profits would be if they felt comfortable spending a relatively small amount of their total budgets on innovation. Let’s say not-for-profit organizations felt comfortable spending 10% of their budget on research and development with no requirement to recuperate the losses. The not-for-profit sector would not just be more innovative but, ironically, more impactful. 

2. Is there a cohesive vision for the future and guiding philosophy? 

Donors tend to focus on services delivered; a medical charity may gauge success by the number of vaccines administered or an animal rights organization by the number of animals saved. Metrics are generally the focus of a not-for-profit annual report, which often include numerical records of social media engagements, membership signups, and more. 

Impact is not only about service delivery but also about offering a compelling vision for the future. Do not merely ask what a donation will do when it is in the hands of a not-for-profit, but who the organization will inspire. 

The twenty-first century does not belong to those with power, but to those with influence. In one of my favourite papers, “Envisioning a Sustainable World,” Donella Meadows writes that making a change is not only done through incrementalism but also through painting a cohesive and radical vision for the future. 

So, when donating to a not-for-profit, ask if it has an excellent strategic plan, if its values align with yours, and most importantly, how it promotes these values. Does it have a substantial amount of influence or reach? 

3. What is the not-for-profit’s compensation of employees? 

The term “administration” is one of the dirtiest in the not-for-profit sector, and that is a tragedy. Generally, any work that does not immediately get reinvested into the cause of the organization is shunned, especially if it involves compensating staff. There is no shame in acknowledging that employees who work for not-for-profits should be well-paid. 

While I understand the intentions behind the criticism that not-for-profit organizations focus too much on their own employees, there is a double standard in society. If someone working in the private sector makes millions, they are viewed as successful, but a public servant who has dedicated their life to helping others is expected to live like a minimalist, taking as little money for themselves as possible. 

The higher the salary for a not-for-profit role, the more accessible the job will be to members of marginalized communities. High salaries also lead to less turnover, an incredibly prevalent issue within the not-for-profit sector. 

With more staff, the organization has more infrastructure to make a difference. Properly compensated employees should be considered a part of a not-for-profit’s impact, not a hindrance. Not-for-profit staff and managers need to be more outspoken on this topic, and donors should be more comfortable providing good wages. 

4. How does the not-for-profit help build a larger movement? 

I always consider how a not-for-profit works with others. It is easy to consider the not-for-profit sector a zero-sum game where supporting one organization subtracts from another. However, most not-for-profits fight similar fights and play different roles in a larger struggle. 

Donating to a large and reputable not-for-profit that serves thousands or even millions of people is a safe bet for ensuring a return on investment. Yet, smaller and more nimble organizations often punch above their weight and can fill niches that larger not-for-profits cannot. 

Not-for-profits are part of the framework for social justice. Funding a grassroots and “inefficient” organization that has an excellent reputation among the communities it serves is worth its weight in gold. Therefore, reviewing a not-for-profit’s relationship with its partners and sponsors is as essential as assessing its impact on clients. It is impossible to do everything alone, so do not place unrealistic expectations on any single not-for-profit. 

______________________________________________________________________________ 

I wrote this article to express the nuances of the not-for-profit sector from a fundraiser’s perspective. Right now, the modern world is obsessed with objective metrics, and with digital technology, humanity can track every detail of life. While objectivity is beneficial, it is only one part of a larger equation. 

People often ask me which charity is worthy of a donation, and I argue that all donors, be they individuals or collectives, should not just ask about the objective impacts of a not-for-profit but the subjective ones as well. 

Does the not-for-profit take risks and make mistakes in the service of learning and improving in the long run? Are the staff well-paid and equipped to serve in their positions for the long term? Can the not-for-profit help build a movement alongside other organizations while promoting an inspiring vision for social change? 

These points represent an underlying theme within the not-for-profit sector: the disconnect between donors and not-for-profit employees. Donors do not believe their money will be spent well, and not-for-profits fear their donors will leave if they are not adequately appeased. 

The disconnect between donors and not-for-profits must change, and if each stakeholder gradually shifts priorities away from objective impacts and places more trust in not-for-profits, the sector will, overall, be better off in the long run. 

With new criteria for evaluating not-for-profit organizations, the entire sector will be more vibrant and inclusive. Managers will invest in diverse hires, and not-for-profits will become part of a larger social justice movement that brings people from all walks of life together to make a difference. Competition over quantitative metrics of success will turn into a meaningful collaboration that will change the world for the better. 

Citation 

While this article is original content, the writing of this paper was informed by minor interactions with ChatGPT, an AI language model. AI is a useful tool to use in writing, with healthy limitations. Accordingly, I am including this citation to accredit, and thus de-stigmatize AI’s use as it becomes more commonplace in the not-for-profit sector, and indeed, in all sectors of the economy.

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Dakota McGovern (he/they) is a Canadian environmentalist and not-for-profit specialist with over eight years of experience in the sector. Dakota has served as a fundraiser in various professional and volunteer capacities, and is organizing an ongoing webinar series on not-for-profit strategy. His goal as a fundraiser is to bridge the gap between donors and not-for-profit staff by communicating the importance of fundraising as a tool for social change. For more information, visit his website at https://dakotamcgovern.wordpress.com, where Dakota writes about strategy, activism, and social justice. 

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