Reading tea leaves #24: Buffett advises 'Go for Gold'
An intervention by the top investor and philanthropist Warren Buffett sets the tone for the theme of this latest round-up of philanthropy in difficult economic times. Buffett told an audience of charity leaders gathered in New Orleans that they should resist the urge to find new recruits to their cause and focus instead on those people who have already shown an interest in their work. Or, in the inimitable plain-speaking voice of a billionaire with a fondness for cherry coke: “go where the gold already is”. The suggestion that it is more efficient to invest in retaining rather than recruiting donors has been well-rehearsed in the sphere of mass fundraising, but donor loyalty is increasingly being touted as the answer to the problems posed by the recently-ended-but-still-smarting recession.
For example, Giving in 2010, a report by Dini Partners finds the single most important factor influencing major gifts in the current climate is an existing relationship with the asking organisation. The received wisdom that “if you don’t ask, you don’t get” appears to be being supplanted with “if we don’t know you, you don’t get”, which raises questions as to how new initiatives without existing supporters can get off the ground in this post-recession era.
The answer may lie in the shifting philanthropic practices of subsequent generations. According to wsj.com, a roundtable discussion of donors in their 20s and 30s, convened in New York by philanthropist Charles Bronfman, finds that the next generation prefers to support smaller start-up organisations because they are felt to be more receptive and appreciative of their donations than the large established non-profits supported by their parents and grandparents. Whilst younger charities lack a track-record of building relationships with existing donors, it appears they may be able to compensate by offering potential supporters a clearer sense of how their money is spent and what results their donations achieved.
A feature in the Wealth Bulletin reiterates the suggestion that recession-hit philanthropists are less likely to be interested in supporting new causes, claiming that the wealthy are maintaining ties to causes with which they have already built a relationship. But echoing the findings of the Bronfman focus group, the Wealth Bulletin argues that this relationship is a two-way street, with donors demanding greater information about how their gifts are being used effectively.
Corporate donors are also to be found reciting the ‘no new causes’ mantra. According to Reuters the economic downturn has led to a paring back of corporate philanthropy, a shift in chosen causes towards those meeting basic needs and a reluctance to countenance new approaches for support. However, the impact on the dollar value of corporate giving was mixed. Reuters spoke to 10 companies with well-regarded corporate foundations, of which four had increased their giving, four had decreased their giving and two said it remained steady. Reuter’s findings are more positive than the sentiment contained in the Wealth Bulletin’s pronouncement that, as a result of the recession, “the man in the street is still giving and the man in the penthouse is giving more carefully [but] the man in the boardroom has turned off the taps”. An explanation for this descending order of sustained philanthropy in the teeth of the recession is offered by John Low, chief executive of the Charities Aid Foundation, who is quoted as saying: “By far the most sticky of all givers are the general public… this notion has held good during the crisis.”
‘Sticky givers’, ‘men in the street, penthouse and boardroom’, charities being urged to ‘go for gold’; the credit crunch may have had an as-yet unquantifiable impact on giving but it has given us a wealth of well-turned phrases and bon mots.