The Nonprofit Hero Factory: Episode 21
The Promise and Problems of Philanthropy in the U.S. Today, with Doug White
In this Episode:
Charity and nonprofits have had a special role in the American system since its earliest days: to fulfill a need that the government is not designed to or capable of meeting. They are an important part of the individualist character of our nation and its development.
While donations to charity have risen in recent years, the average donation size has outpaced the number of donations. It seems that fewer people are giving, with the difference being made up by larger philanthropists. What does this trend portend for the charity world as a whole? Are billionaires the saviors or the villains of our nonprofit ecosystem?
Philanthropy advisor Doug White joins Boris to discuss the trends and pitfalls of organizations increasingly relying on larger philanthropic donors, their responsibility to large donors and the communities they serve, and how to navigate the two.
Listen to this Episode
Read the Transcript
[00:00:19.490] – Intro Video
Welcome to the Nonprofit Hero Factory, a weekly live video broadcast, and podcast. Where we’ll be helping nonprofit leaders and innovators create more heroes for their cause and a better word for all of us. Da-Ding!
[00:00:21.480] – Boris
Hi, everybody, welcome back to an episode of the Nonprofit Hero Factory, I’m excited about today’s guest. He is an advisor on all matters philanthropy on both sides to philanthropists and nonprofits. He’s going to give us some inside looks and some things to consider based on recent events and recent news and historic roles of nonprofits and philanthropists. His name is Doug White. Doug is a longtime leader and scholar in the nation’s philanthropic community. He’s an author and an adviser to nonprofit organizations and philanthropists.
[00:00:52.950] – Boris
As I said, he serves as the co-chair of the Walter Cronkite Committee at FoolProof. And as a board member, the vice president of the Secular Coalition of America. He is the former director of Columbia University’s Master of Science in Fundraising Management Program, where he also taught board governance, ethics and fundraising. Doug has published five books. His most recent “Wounded Charity” analyzes the allegations of mismanagement made in January 2016 against the Wounded Warrior Project. I know a lot of us heard about that and were affected by it in one way or another.
[00:01:24.990] – Boris
When I asked Doug what his superpower is, he says, “I try to help people better understand the role nonprofits play in our society and the impact they have on individual lives. I examined the personal stories of charities as well as the broader policy implications of philanthropy.” So with that, I would love to welcome Doug to the show. And hi, Doug, thank you so much for joining us today.
[00:01:48.480] – Doug White
It’s my pleasure, Boris.
[00:01:49.560] – Boris
If you don’t mind. Obviously, I just read your bio and it is impressive, but tell us your story.
[00:01:56.760] – Doug White
I began in the philanthropic world in the late 1970s when someone asked me to come to dinner. They asked me to then go out and talk to some people about raising some money. And I said, sure. It was for my high school. And I went out and talked to these people and they all said yes when I asked them for money. And I was so surprised because they weren’t getting anything back. And I thought this is easier than selling refrigerators or cars or anything like that, even though there’s nothing really tangible there to give to these people for what they’re what they’re paying.
[00:02:31.020] – Doug White
I thought what is going on there? And they said, well, I really had this great experience and I want to give back. All of these things that we now take for granted when we talk about fundraising. But for me, that was brand new. And it was it was so eye-opening. I knew that was my life’s mission at that point.
[00:02:48.470] – Boris
That’s pretty awesome, and I’d love to actually talk to you more about what it is that you think got them to quickly and easily—basically, it sounds like it wasn’t very difficult to convince them to—give. Clearly, that led you into this career of working with philanthropists as well as nonprofits. Why did you decide to go into philanthropy advising?
[00:03:12.570] – Doug White
Because over the years, it’s become clear that many donors want to make sure their money goes to the causes they want to see furthered. And a lot of times they don’t really know what those causes are. And so it takes a process that’s become rather institutionalized in the last couple of decades. But still at the beginning of all of this, it wasn’t. But it takes a process to actually talk to a would-be or a philanthropist about his or her values. What do you want to see changed in the world? How do you want to see your money used?
[00:03:48.570] – Doug White
We’ve gotten to the point on, let’s say, Maslow’s hierarchy to the point where they’re comfortable with their own world. They have what they need and their needs are taken care of. So now they’re saying, how can I look out to the rest of the world and do something about that? Well, a lot of people really don’t know what they want to do. They really don’t.
[00:04:09.000] – Doug White
But when they do know what they want to do, they still have another hurdle to find out what organization is going to best further that mission. So it’s a matter of going through a questionnaire in my case, and I think it’s probably the way most of philanthropy advisors do this, that really examines values. And it also has to do with family issues like what you want your children to be when they grow up in terms of what their value system is, what kind of world you want to leave behind, what kind of legacy do you want to leave?
[00:04:41.760] – Doug White
When I was on the board of what was then the National Committee on Planned Giving, I started this group called “Leave a Legacy”. And I think that’s still going. But it’s a local group. It’s a group that has local efforts around the country where people are encouraged to leave a legacy at a nonprofit through their bequests or some trust or something like that. And that has grown.
[00:05:12.570] – Doug White
That idea has grown and that vernacular has grown, to leave a legacy. But what does that mean? What do I want to do? How do I want to affect the world after I’m gone? People have a difficult enough time to think about dying to begin with, let alone how the world’s going to look like after they after they leave. But that’s the kind of conversation you have to have with people. And they are willing to have that because they’re asking you what can I do to make the world a better place?
[00:05:40.710] – Boris
So I want to touch on several of those things. And I think we’re going to come back to a few of them because they’re definitely on my list of things to chat with you about today. But one of the reasons why this is so important right now, and I feel like—predominantly my audience is nonprofit communications, marketing and fundraisers, and their goal is, of course, to help their organization grow to, as I like to say, activate more heroes for their cause.
[00:06:05.310] – Boris
It seems that over the last at least a few years, there has been a trend in giving where there’s been fewer and fewer smaller donors and more and more philanthropists on a larger scale that are actually more than making up for the losses in the smaller and smaller donations. So overall, giving is increasing while with possibly the exception of Covid last year, which I think did drive a lot more people to open up and and empathize and donate to local organizations or national ones. But aside from that, there’s been that decline and giving has grown regardless of that. So what do you think that trend is about? What’s what’s happening?
[00:06:53.270] – Doug White
I call that—I have a phrase for it—is the de-democratization of fundraising. When I began in the early 1980s with this fundraising gig, I was concentrating on the people who gave low amounts of money. You asked earlier about how I was able to get these people to give money to this school. And I can answer you by saying they basically ask themselves, I was just the conduit. I was just able to release some of their memories and some of their good feelings about the place and how that school helped them become who they were.
[00:07:36.210] – Doug White
I know that’s a bit of a cliché right now, and it’s not entirely true, but it’s true enough. And a school, college, whatever, oftentimes makes an impact on you. And so I was very involved with… those are thousand dollar gifts and that at the time was a big deal. But I was involved with those people who are giving low amounts of money. Today a thousand dollars is almost meaningless to some of these organizations. But over the decades we’ve become enamored with the large donors.
[00:08:10.010] – Doug White
And why not? If someone’s got a potential to give you a million dollars, you’re going to pay attention to that person. You’re going to you’re going to cultivate him over years, maybe, or over years. And why not? Because that’s going to result in more money than cultivating a person who’s got the capacity to give a thousand dollars or five hundred dollars or something even less, if it makes economic sense to take the time to do that. And it makes sense for the organization’s growth to do that.
[00:08:37.700] – Doug White
But, I have also noticed that we are doing that at the expense of paying attention to our smaller donors, and I fear that the pool that we create of smaller donors will not be enough to then turn into larger donors as time passes. And maybe the future of philanthropy is that your big donor will just come in and show up and say, I care about your cause. And so I’m going to I’m going to give you this money, but especially with organizations like, say, heritage organizations like schools…
[00:09:15.020] – Doug White
They grow into big donors. Seniors in college, or are asked to give to their class fund as seniors in college. That wasn’t true when I was in college. And so the idea there is to create a level of paying back, an understanding of how the school works and also to have a participation level. Right now, I’m in my fiftieth reunion for my high school, the school I went to, Exeter, just so you’ll know. And we’re very concerned about having a participation level at a very high level.
[00:09:49.910] – Doug White
And that’s crucial because it keeps people lubricated, if you will. Their philanthropic senses lubricated and keeps Exeter on the front page. And there are so many other competitors for that—the local food bank, their daughters’ schools, the local hospital where they had surgery. And they’re all legitimate competitors. And so what we say in our situation is don’t forget them. But do keep in mind the school that got this all started for you. And even if you can’t give a lot or don’t want to give a lot, then your participation is crucial.
[00:10:25.430] – Doug White
So that keeps that pyramid in the proper level. Still, though, what used to be an 80-20 rule is closer to 95-5 rule. And we are we are paying so much attention to that five percent.
[00:10:39.800] – Doug White
And you are correct, Covid really brought out a lot of the smaller donors. It’s because that’s where the heart strings were. After 9/11, Red Cross brought a lot of smaller donors out. And so a tragedy or an intense situation will get our heartstrings going. And that’s good, but that’s temporary. And so charities have to figure out how to continue that.
[00:11:04.310] – Doug White
And I think there’s a lot of argument to be made to, even though it makes sense to go to the large donor and cultivate that person or the prospect. It also makes a lot of sense to cultivate the smaller donors as well, because otherwise we’re going to get into a situation where it’s seen that philanthropy is only for the rich. In fact, when I make my own phone calls for this reunion, people will say, you’ve got too much of an endowment, you don’t need my money. Besides, you’ve got X, Y or Z famous name giving you this money you don’t need me. What is my one hundred dollars going to do?
[00:11:40.070] – Doug White
And I have to go through the process and say, look, even though there’s a big budget, every dollar is accounted for and the school does do that and it does that very well. And that’s one recommendation for charitable organizations, is to make sure that they are there running their business properly. I say business not in air quotes, but I do say a little cautiously because I don’t want to get people confused between what a for-profit business is and a nonprofit business is. But the way I look at it is that both start with the same premise that you’ve got to stay alive, you have to pay people, you have to have an office, I think even today. You have to have computers. You have to have operational activity taking place.
[00:12:20.720] – Doug White
The difference is that the purpose of a for profit is to make a profit for shareholders. A nonprofit doesn’t have shareholders. It can often make a profit. That’s another issue. But it isn’t meant to go out of business or it’s not meant to go poor or be poor just because it doesn’t sell widgets. In fact, I think what it sells is much grander than widgets or any other widget that we can we can identify.
[00:12:47.990] – Boris
So absolutely, nonprofits do need to function as businesses, as any other business, and they do compete with businesses for the attention and money of people who might support it or might go and spend their money somewhere else in their time doing something else. So there’s a lot of that at play. It’s interesting what you call the de-democratization of philanthropy. I was very excited just seemingly a few years ago when the crowdfunding space first took off, because I saw that as the democratization of philanthropy, where anyone could become a donor to any organization, where any organization can also reach out and capture the interests and hopefully hearts of just about anybody that they could have some sort of affinity with.
[00:13:37.970] – Boris
It was an exciting time. Today, I’m not sure how prevalent that is in people’s mindsets in the organizations themselves. Is it worthwhile for them to run a campaign versus just make a few phone calls, wine and dine somebody if you will, bring them to the gala and get that big check? But it does say something for their future. It also, I think… and you and I agree on this. Possibly shifts their focus and attention away from a more groundswell public want for their services to what an individual or a few individuals might be looking for… the changes that they want to see in the world.
[00:14:23.980] – Boris
Can you talk a little bit about this outsized influence that some of the deeper-pocketed philanthropists might have on the charitable sector today?
[00:14:33.820] – Doug White
It seems to be more and more prevalent. Let me give you a little bit of history on that particular segment of philanthropy. I did a book on this. It was the lawsuit against Princeton University. In 1961, a woman, an heiress of the A&P fortune. And for most of your audience, that is going to be like coming out of Mars. They used to be the largest grocery chain in the United States for many, many decades. Well, the trust dissolved after the death of a grandchild.
[00:15:04.030] – Doug White
And so she inherited directly about a hundred million dollars and she gave about thirty five billion dollars of that to Princeton University, a huge gift, the largest gift to that university at that time. The second largest gift event of any university at that time. To establish the graduate program or to endow the graduate program at the Woodrow Wilson School the International Relations School. Time passes. We understand that the family is not happy with the way the money is spent.
[00:15:36.340] – Doug White
And so in 2002, this was 40 years after the gift was made. The son sues Princeton. Now, by this time that 35 dollars million has grown to about 900 million dollars. The family set up a separate foundation. Princeton was the only beneficiary of that foundation, which is fine. And as a result, Princeton included that endowment in its endowment totals, which is also fine. They were the only beneficiary. So it made sense.
[00:16:04.780] – Doug White
But the son said, you’re not using the money the way my father wanted to. And they said, yes, we are. And so he had sat on the board, there were there was a foundation, a separate organization. Four members were from Princeton, three were from the family. And he contended that a lot of the decisions were being made in their absence and money was being spent without their permission and knowledge, and that a lot of the money was going to the wrong place.
[00:16:30.320] – Doug White
It was going within Princeton. Nobody was walking home with a Cadillac or anything of that nature. But it was just that the donor’s intentions weren’t being served. Princeton came back, said, look, we’re we’ve got a great school here and it’s good. It’s a lot to do with your dad. So let’s not get that wrong. Princeton’s graduate school here is among the best in the world, if not the best in the world. The donor kept saying that’s not the question. The question is, are you using my dad’s money the way you said you would use it?
[00:16:59.960] – Doug White
It was a terrible ordeal. And going back to your question, the donors, that was the first donor that I know of that I know of—and there were others, I’m sure—that ran into trouble with regard to how their money was going to be used. But did they have a right to say this is the way it should be used? Well, if Princeton agrees to it, my answer is yes, they do have that right. Now, fast forward to 2021. And you’ve got a very similar situation taking place right now at the University of Chicago.
[00:17:36.290] – Doug White
So what I’m getting at, Boris, is that there is an environment right now where large donors are expecting that their wishes are going to be granted. And the key thing for me is that the university or the charity agrees to this. And my thinking is not being an attorney and not looking at this through the legal lens, but from an ethical lens. If you’re saying you’re going to do it then by golly, you’ve got to do it.
[00:18:04.580] – Boris
So that’s a specific case with a very large donation. How do we extrapolate that on a national level, it seems like and people are often accusing or I don’t know if the accusing is the right word, but upset with an outsized influence that deeper pocketed individuals or large corporations have on our political system, it seems like there is something similar that might be going on in the philanthropic system. The other side of things, if you will, where the government isn’t directly involved.
[00:18:43.920] – Boris
Is that a cause for concern when a small percentage, as you said, fewer than 20 percent at this point, of the donors are maybe even if they’re not dictating, if they’re not saying here’s a 60-page contract, but they’re saying I’m going to support an organization that’s promising to do this. And then, sure, they might want metrics and performance indicators throughout. But is that, do you think, an issue for us and for most nonprofits out there?
[00:19:21.140] – Doug White
George Washington, in his farewell address, warned of organizations that today would call charities, warned against the influence of charities. And what he meant by that was individuals who may have different designs on the way American society should be from the designs that Congress, the people speaking through their representatives, would say our society should be. And since that day in the 1790s, when he sent that farewell address to Congress, it was actually published in a newspaper. But since that day, we’ve always had that tension.
[00:20:05.180] – Doug White
What role is… what role does charity play in our society? And when we ask that question, we then, in today’s vernacular, also have to ask, what role does the donor play in that whole process? Nobody elected Bill Gates to anything, and yet he’s had massive influence over much of our public life. Now, most people think that his influence has been very, very positive. And I’m going to grant those people that. But it still is not necessarily an expression of the people’s will in the United States.
[00:20:39.350] – Doug White
So I think we always have to take that into account. And any organization that, this is where the tension is, any organization that wants money has to balance getting that money with how strictly they want to adhere to that particular wish by the donor. But I think it’s fair to say at this point that donors do have much more influence over a charity’s mission than they used to and they’re expecting to.
[00:21:11.730] – Doug White
I’m not a psychologist, but I will say that my impression is that the richer you are, the more arrogant you get. In… oh, gosh, I forget the year. But some years ago, Mark Zuckerberg began an initiative in Newark for the Newark Public School Systems, in Newark, New Jersey. One hundred million dollars, and it was going to be matched by other philanthropists and one of the billionaires that I spoke with was part of that group, and he criticized himself as well as Mark Zuckerberg and the entire effort because they knew better. They they could take their private helicopter from a Manhattan heliport, go over and plop themselves down in Newark and say, “here, here’s the money and this is how it’s going to be spent and you’re all going to be the better for it.”
[00:21:58.280] – Doug White
No one talked to the people on the ground in Newark to say, how can this money be spent? No one among the advisors of this came from the Newark public school system or even the Newark schools or the community. So I think there’s a lot of lesson in that. You know, we don’t know better, but who does? The public charities are owned by the public, not any shareholders. So who does? Well, the board of directors is supposed to. There is no real I guess what I’m getting at, there’s no real ultimate arbiter that we can know is going to be right or know everything.
[00:22:41.500] – Doug White
It’s a messy system. Does the donor not know things? Probably not. He or she does know things and could help the organization well. But how much deference should we give to that one person? Is a question that’s probably going to plague us forever. What I think is the best answer and it’s not clean and it’s not perfect, but the best answer is to have a good board of directors who care about the mission, who are intensely engaged in the organization, and who have backgrounds that represent what the mission, the organization’s mission, is all about, deferring to those people as a group. They still might get it wrong, but it’s more than just one person.
[00:23:23.460] – Doug White
And of course, people will say, what if the billionaire’s on the board and just rides roughshod over everyone? Well, that’s a board governance problem. That person shouldn’t run roughshod over everyone. But that does happen. That’s real life. I mean, I do a lot of work in board governance and my goodness, that happens a lot.
[00:23:41.000] – Boris
So, it sounds like you’re saying there’s… That the reality is that they do have an outsized influence and there’s no easy solution to that, nor is it necessarily a problem or something that that needs to be solved. I think that, personally, the solution is to have a broader base of donors and a more, I guess stricter board and adherence to mission so that billionaires or whomever it is can’t ride roughshod, as you just called it, can’t override.
[00:24:26.750] – Boris
Of course, they could also just start their own foundations like Bill Gates did and like so many billionaires do in order to try to influence the change they want to see in the world. I’m a little conflicted on this personally, because on the one hand, I do believe that the greatest good needs to be responsive to the greatest number of people. But I’m also not a direction-by-committee kind of person. I think that often dilutes intentions and often gets nothing done.
[00:25:00.830] – Boris
And in the U.S. system specifically—and you and I talked about this a little earlier—we have this democratic system, this capitalist system where as much as it is complicated and far from perfect today, there is some of this idea of anyone can pull themselves up and rise up. Of course, that’s not true for everyone in this country, unfortunately, at this time. But there are nonprofits working on that, too.
[00:25:31.540] – Doug White
[00:25:33.620] – Boris
So there is definitely a need for private sector funding for charitable causes. And I don’t think that the government is the answer either. Like, we don’t want to I don’t think anybody in the US, except for perhaps actually some billionaires want their taxes raised. Most people do not. So the government doesn’t have the the resources or the bandwidth to tackle some of these larger problems and also isn’t as responsive to smaller things on the ground, certainly not on a federal level. So there’s this need for organizations, charitable organizations to step in and do some of the work.
[00:26:13.840] – Boris
And… without paying taxes, we can direct our own called a discretionary income—call it tithing, call it whatever you’d like—funds to the problems that we think are most important for government or for society to be able to tackle. I think back to the Soviet Union and, you know, in the Soviet Union, there were no charities. And in fact, a lot of immigrants from the Soviet Union to this day do not think that anybody needs to donate to charity because that’s the role of government.
[00:26:48.510] – Boris
At the same time, if you turn it and ask them, they’ll admit that the government in the Soviet Union, which claimed they would provide everything for everyone, really provided nothing for anyone except for the very wealthy elite that secretly stole a lot of funds from the people. So in the US, we need this kind of balance to our capitalist system in a private way. Can nonprofits fulfill that need and how do they approach this need for, at the moment anyway, these these white knights or these whales to come in and fund a lot of their major programing, knowing that it may not be responsive to their entire community?
[00:27:40.190] – Doug White
I’m seeing two questions in there, so let me break those out. Actually, several, actually, but I see two major things running there. What role in the capitalist system that we currently have nonprofits play? And also the role that the white knights play within that? So let me begin with the bigger the first part that you bring up. Congress, in its wisdom, understood exactly what you’re saying over a hundred years ago when they created the deduction for charitable gifts.
[00:28:10.400] – Doug White
So not only are our tax dollars not going to go to these things that we would otherwise want them to go to, we’re getting a tax benefit from this. So if we itemize, we will get a tax benefit.
[00:28:27.500] – Doug White
Now, just as a quick aside, you mentioned earlier we talked about the de-democratization of giving. And one of the factors, I think, in the last couple of years has been the increase in the standard deduction, which means that fewer people are itemizing, which means fewer people are able to take advantage of their charitable giving.
[00:28:46.130] – Doug White
That doubled, I think for married couples, it’s about twenty five thousand dollars now. So that’s huge. So that that that’s taken away a lot of the lower dollar donors from the charitable giving rolls. OK, if that’s an incentive. And there have been discussions as to how incentivizing charitable deduction is. I don’t believe that it’s as much of an incentive as some people do, but it’s there, especially for the larger donors.
[00:29:13.610] – Doug White
But the role of charities in society… It’s an interesting story we have here in the United States. You were talking about the Soviet Union, Europe also in the seventeen hundreds anyway, had a lot of money and they supported a lot of what we now think of as nonprofits, the churches, the art museums, the schools. And in the United States, we were very poor. We had no government money. Our government was bankrupt.
[00:29:43.880] – Doug White
In the 1820s, Alexis de Tocqueville came here from France to look at American society, and he was struck by the number of what he called Associations. And how people in communities would help do these things that in France was done by the government. So we started out very poor. And I think that’s what gave us birth, gave birth to our philanthropic system, which is very, very strong. By the way, this last year, we gave about 470 billion dollars to charitable organizations, a five percent increase over the prior year.
[00:30:12.650] – Doug White
So the role of of nonprofits… excuse me, yes… the role of nonprofits has always been somewhat defined by the fact that we didn’t have any money to put toward these purposes. And as the country has grown, it’s grown richer. There’s still a mindset that the government can’t do everything. I think even if we had all the money to do it the way we wanted to do it or that we could do it, we still wouldn’t take on the old European system where we were just pay for all of these things. Because there’s a sense here that and I believe it’s a very strong one and a very positive one, that as Americans, we’re more individual.
[00:30:48.050] – Doug White
Now that’s had its problems. Nothing’s perfect all the way through. But that individualism has created this nonprofit sector that’s very, very strong. Now, some of the larger problems that the government has to fix or that needs fixing in society, only the government can fix. Nonprofits aren’t going to build roads, they’re not going to create a military. For the most part, they’re not going to take us to the moon. Not going to do a lot of the large, big things that the government does.
[00:31:15.020] – Doug White
But there are a lot of organizations that are doing other things that are big. Cancer research, for example, that’s a nonprofit-government collaboration. The government’s got an interest in this and the nonprofit world has an interest in doing this. And I hope together there can be enough work and research done for that to someday be past tense disease. So I think that going forward, we’re never going to get out of having nonprofit play an extremely important role, nor will we get out of the situation where the government doesn’t want to spend some of these dollars for these purposes.
[00:31:56.260] – Doug White
And I think that’s healthy. I think that’s healthy. And and the government encourages that through the deduction. That’s the only way it can say, yes, we want to encourage you to make these gifts. And I think private philanthropy is a strong, strong, good moral force in society. And I think I know because I’ve been to Saudi Arabia to talk about this, I’ve been to China to talk about this, been to India to talk about this… The idea of how we have grown to be such a philanthropically oriented society is pretty special here in the United States.
[00:32:28.480] – Doug White
And I want to be very clear that that’s different from saying that we are more philanthropic than other people. I believe that’s a human tendency, not one defined by national borders. It’s just that we have a system where that can be better expressed or more efficiently expressed. Now to your second part there, where the large, I think you’re calling them “whales”, these large donors, what role are they going to continue to play in this society as we go forward?
[00:32:57.370] – Doug White
Because if we continue the way we are. We might see a very, very elite nonprofit sector and like we are seeing in the United States right now at large, we’re seeing these higher endowed charities become even better and better off and these lower and doubt charities, if they’re endowed at all, struggling more and more. And that takes away from, I think, the essence of what a charitable organization should do.
[00:33:28.700] – Doug White
And that’s the other thing about this. Charities are public commodities. We’re using public dollars to fund these organizations. So I think there’s an argument on both sides there. But if we allow this mega-donation mania that we have right now going into these larger and larger organizations, I’m afraid the system just may fall apart with such a division between the rich organizations and the small ones. This is where if I may, this is where Mackenzie Scott comes in. Mackenzie Scott, the former wife of Jeff Bezos, is known this past year for having given hundreds of—billions of dollars to underfunded, mostly black, historically black colleges around the United States.
[00:34:19.550] – Doug White
And recently she gave another several hundred million dollars. And what she has done, she’s hired these people to go out and talk to these organizations to find out where the need is. And they’re not overfunded, they’re not over endowed. They need this money. And the money she can give them is a real help to them. I would like to see more of that kind of philanthropy. Rather than saying, OK, I’m going to get more money to Harvard. And I’m not picking on Harvard. They’re a great organization. They really, really are. But it’s just that they have the largest endowment in the United States. But Harvard doesn’t need another building with someone’s name on it right now.
[00:35:01.430] – Doug White
So and as you’ll notice, McKenzie Scott isn’t putting her name on any of these buildings. In fact, she’s keeping that list of those organizations secret. She’s not keeping the organizations from talking about it. And some of them are. That’s how we’re getting the news about who’s getting what.
[00:35:19.690] – Boris
So there’s clearly so much more that we could discuss about this and endless things to learn on both sides of the conversation around this. What are some resources that organizations that nonprofits that might be listening to this should maybe go and check out? Obviously, I think your books are going to be a great resource for both history and some practical knowledge and advice. Are there any other that you would recommend?
[00:35:47.680] – Doug White
I would. And thank you for asking. A lot of the literature and nonprofit and fundraising activity has to do with how great it is or how to do fundraising and how great it is that donors can help charities. And I think we need that and we need more of it. But two books that have caught my eye in the last year, one is called “The Givers” by David Callahan, and he examines who these people are, these givers, these donors and what motivates them. It’s a great book. It’s not at all negative, but it’s not. It’s not it’s not all positive either.
[00:36:25.180] – Doug White
And the other book is “Winners Take All”, by—and I’ve got to look at the name here… he’s very famous, but I still have trouble with— “you’re the hottest who’s very well-spoken, very knowledgeable person.” And his is a critique. It’s an outright critique of how philanthropy and philanthropists really perpetuate the inequalities in American life. And I recommend those books not because of the way they are negative, but because they’re really positive, both of them, because I feel the same way.
[00:37:01.360] – Doug White
I feel like I so cherish the nonprofit world and the role nonprofits play in the United States and the role philanthropists play. I so cherish it. I want to see them all do well. I don’t want to see bad actors come in. I don’t want to see the bad charities take over. Some years ago there was an article in the Tampa Bay Times entitled The 50 Worst Charities in the United States. And there was a scathing review of how some charities really do misbehave.
[00:37:32.290] – Doug White
I want those people gone. I want them out of our sector. It’s too pure and we need good people. And I know we’re not angels. We will never have only angels in the nonprofit sector, even though sometimes we like to think of ourselves that way. But we are and we are human. But we really have to be more and I wrote a whole book about this on the ethical decision making at nonprofits. We have to be better than the rest.
[00:37:57.580] – Doug White
I just I feel our aspirations have to be higher. We don’t have a political environment in which to succeed. We don’t have a for-profit environment in which to succeed. The way we succeed is by really, truly making the world a better place, which I feel is a lot stronger a pull than either of the other two motivators.
[00:38:19.130] – Boris
Awesome. We’re going to link to both of those books and to your works in our show notes, if nonprofits are looking to delve further into this or to start their path down this road, where should they begin? Do you have any calls to action for them to get going?
[00:38:37.430] – Doug White
Well, as a nonprofit, I think I’ve seen the areas of… there are three areas basically that I think need a particular attention: Board governance. And there’s a whole bunch of work within that whole process here. But as I mentioned before, you don’t want one person steamrolling the others. Board governance is a process. It’s a skill. It’s a discipline. And people need to learn how to be board members because they are the ultimate people at an organization. We don’t hear as much about them as we do the CEOs, but they are extremely important. And so the process of board governance is critical.
[00:39:14.540] – Doug White
Ethical decision making at charities. I think we have a unique space to make these decisions. As I said before, we don’t have for-profit concerns that we don’t have political concerns. We’re kind of in a pure space to make ethical decision making as high level as possible. So I think we need to pay more attention to that so we keep our bad actors away.
[00:39:35.510] – Doug White
And finally, I think the question of impact, if I’m a nonprofit, I want to make sure that I can show why I exist. One of the things that I ask a nonprofit when we do our retreats, the first thing I asked them, in fact, is how would society be different if you didn’t exist, if you closed your doors tonight, what would happen? Who would care? And board members have to actually think about that because it’s not intuitive. What would happen if we didn’t exist.
[00:40:06.680] – Doug White
And the answer is, well, we’re trying to cure this disease. That’s what they want to do. What would happen if they did not exist? When you… when I think of it that way and I put this in another book, about 30 percent of our organizations could go away and nobody would notice. So we tout the fact that there are a million. And when I say a million, the 501C3 sector of section of the C3 sector, for profit and public charity, excuse me, nonprofit public charities and foundations, probably a third of those three hundred thousand. And I know that’s maybe controversial, but I would say that that could happen and society wouldn’t be any worse off.
[00:40:53.180] – Doug White
So, if we’re going to get money and if, excuse me, if we’re going to ask for money, I think we have the obligation to tell people how we’re going to use it and the kind of impact the organization is going to have. So those three areas, let me just repeat governance, ethical decision making and impact. If I’m a nonprofit, those are the three things I need to really pay attention to.
[00:41:12.050] – Boris
Awesome. And if people want to follow up with you, what’s the best way to get in touch?
[00:41:16.730] – Doug White
I think LinkedIn I’ve got a public page there. And when it says contacts at LinkedIn, you can click that, and I actually have my own addresses in there, my phone number and my email address. It’s not just the LinkedIn address. So I think LinkedIn would be the best place to go. And I also do pay attention to that and tweak it every once in a while to make sure it’s up to speed up to date, up to speed with what I want.
[00:41:41.780] – Doug White
And so you’ll see what my own value system is in there. And I put that in the introduction of it. And so if anybody wants to further a conversation or have a conversation, feel free to touch base.
[00:41:53.960] – Boris
Awesome. Thank you so much, Doug. Thank you for all your time today, your insights. Thank you, everybody, for joining us for this episode of the Nonprofit Hero Factory. If you like what you see or what you hear, please do subscribe, rate and share our show with anyone that you know that might also benefit from the wisdom that people like Doug are imparting. Thank you again. And we’ll see you soon for another episode of the Nonprofit Hero Factory. Bye bye.
[00:42:40.850] – Outro Video
Thank you all for watching and listening to the Nonprofit Hero Factory, we hope this episode has given you some ideas and strategies for creating more heroes for your cause and a better world for all of us. Please be sure to subscribe to this show on YouTube, Facebook, iTunes, Spotify, or your favorite podcast platform and let us know what you think, by leaving a review.
Concepts and Takeaways:
- Philanthropists have reached a point in their lives (3:48) where they are looking for:
- Legacy. I.e., ways to improve the world around them based on what they care about.
- The nonprofit organizations that they believe can get them there.
- The de-democratization of fundraising: Fewer people are giving larger amounts and having an outsized influence. Yet, small donors are critical to success. (6:05)
- Tragedies or intense situations like 9/11 and COVID get our heartstrings going and increase donations from donors of all sizes. (10:39)
- That’s good, but temporary. So charities have to figure out how to keep those new donors engaged.
- If nonprofits don’t cultivate smaller donors, philanthropy and giving might start to seem like activities just for rich people.
- Large gifts often come with large strings attached, and failing to fulfill promises to donors can result in disastrous consequences and legal challenges. (14:23)
- A notable early example is the A&P heirs’ endowment of Princeton’s Woodrow Wilson school, but it continues today.
- “There is an environment right now where large donors are expecting that their wishes are going to be granted. And the key thing for me is that the university or the charity agrees to this. And my thinking is, not being an attorney and not looking at this through the legal lens but from an ethical lens… if you’re saying you’re going to do it then by golly, you’ve got to do it.” (17:40)
- What role do charity and nonprofits play in American society? And what role do billionaire philanthropists play? (20:05)
- Nobody elected Bill Gates to anything, and yet he has had massive influence over public life. Is his an expression of “the people’s will” in the U.S.?
- The dangers of billionaires hubris donating funds and dictating how they should be spent, as illustrated by a failed reform of Newark, NJ, public schools.
- Nonprofits need a strong board of directors who care about the mission and are intensely engaged in the organizations, to keep them on mission and not kowtowing to deep-pocket donors… including the board members themselves. (22:41)
- The role of charity in the U.S. capitalist system vs. communist countries like the former Soviet Union and socialist countries today (25:00)
- Our system relies on nonprofits to do the work that, in other parts of the world, is being done by governments. And that system relies on individuals to essentially vote for public good projects with their donations.
- The government recognizes the importance of charitable giving and incentivizes it through tax deductions. With the recent increase in the “standard deduction” allowances, smaller donors are not seeing the tax rewards of charitable giving, and therefore dropping off. (28:33)
- There is a danger that mega-donation mania can destroy the nonprofit ecosystem, with big organizations like Harvard only getting bigger. How does Mackenzie Scott’s approach change things? (33:28)
- Three areas that nonprofits need to pay particular attention to (38:37)
- Board governance
- Ethical decision making
- The question of impact
Action Steps: What Now?
About this week’s guest
Doug WhitePhilanthropy Advisor
Doug White, a long-time leader and scholar in the nation’s philanthropic community, is an author and an advisor to nonprofit organizations and philanthropists. He serves as the Co-Chair of the Walter Cronkite Committee at FoolProof, and as a board member (vice president) of the Secular Coalition of America. He is the former Director of Columbia University’s Master of Science in Fundraising Management program, where he also taught board governance, ethics and fundraising. Doug has published five books. His most recent, “Wounded Charity” (Paragon House, 2019), analyzes the allegations of mismanagement made in January 2016 against Wounded Warrior Project.