I was in conversation with the CEO of a charity organisation, who confessed that they always saw a dip in philanthropic giving whenever they appeared to be doing well. The latest, for them, was the launch of a new facility, which meant a significant investment to service a new region. Really good for them — they were expanding! — but also a major commitment that needed even more financial support to ensure its longevity.
In a commercial business, that same activity would be seen as just a capital expenditure which would need to be recouped over years before the investment returned value. And that is exactly what this is: a capex exercise. The funny bit is that, because this is a charity organisation, it doesn’t always translate that way existing supporters and donors.
For a lovable grassroots non-profit, growth in activities sometimes tugs on a common paradox of visible success: that the more you look like you’re thriving, the harder it becomes to communicate why you still need philanthropic support. This was certainly what this CEO felt.
Here is the assumption: that a donor will think progressively through these statements:
1. “They seem to be doing very well. Perhaps someone else is funding them.”
2. “They have just upgraded their facilities. They must have enough money.”
3. “My contribution probably isn’t as necessary as it used to be.”
4. “Perhaps I should direct my donation somewhere that looks more in need.”
How does this relate to intangible, unseen value creation? Fascinatingly, here in the not-for-profit space we see this as an example of how value-creating activities (a new facility, servicing new regions) actually might erode value in the short term, requiring intentional effort to reposition messaging and recapture that value.
(While I’ve seen a lot of this — where philanthropic support drops because of perceived successes, and the Identity Tax that comes with it — I’m curious whether this goes through your mind when you donate to a cause. Reply to this newsletter or let me know in the comments what your view is.)
Regardless of how real this perception actually is for an organisation, I think there are two very real factors here:
That this is an indication of transformation: from a grassroots player to a more sophisticated entity.
That there is a very real communications piece that needs to be managed during in this transition, so that genuine business advancement does not threaten the perceived necessity of giving.
The reason I say that this is symptomatic of a point of business mid-transformation is that we tend to expect different things from the places we donate to. If you donate to a major institution, say, St Paul’s Cathedral in London or The British Museum, you would expect a certain level of polish and professionalism across all points. Compare that to a local club with its beaten-up website and slightly off branding. You forgive it because of its scale. But, ironically, as that little club starts to develop its capability, some supporters will naturally drop off out of fear that their support is no longer required. Ironic, because that’s perhaps when support is most required.
So, noting that, and considering that stakeholder perception still needs to be managed, there are two signals that need to be expressed at once, without contradiction, in a not-for-profit’s brand communications and marketing:
1. This organisation needs my financial contribution. That its mission remains unfinished, unmet, and needs persistent additional resources to create value that would not otherwise exist.
2. This organisation is capable and successful. That its facilities are better, its operations are sophisticated, its reach is growing, and its work appears well supported.
As an aside, in my mind, why would you not want to only donate to causes which fulfill both of these? Wouldn’t you want to donate or sponsor something only if you knew that it was being governed and led well? Not out of toxic guilt, pity, or helplessness, but because the organisation is well-equipped to sustainably address a social, cultural, or environmental gap in society.
Here is my sharp truth on what this CEO felt: it is actually a good thing to see some drop-off in philanthropic support after your organisation starts looking like it’s thriving.
To lead through that, you’d just need the stomach to bear the transition and the drop-off in support. The donors who were looking to donate only to causes that they viewed as ‘less fortunate’ fall away. The donors who are looking to contribute to organisations who demonstrate strong, sustainable capabilities to address a social issue emerge in their place.
I know, for myself personally, the only organisations I wish to donate to are those which demonstrate a certain level of polish and professionalism because, as it pertains to my current personal preferences in philanthropy, those are signifiers of impact to me. I suspect there is a whole demographic of people who donate who think along those lines.
By expanding value, any value, you must also let go of some things which got you where you now. Sometimes that means real supporters too.
Put it this way:
Do you want to attract donors who will only contribute to you if you appear needy?
If you donate to a cause, would you only want to support them if they remain needy?
If your organisation is needy, it’s operating from a deficit model. The notion is we are struggling; we need donations to survive. The implicit proposition is that the organisation’s need justifies the gift. In this case, if you have inadvertently been expressing that to your philanthropic audiences, then absolutely any visible improvements will weaken your funding position.
Compare that with a value-creation model. This proposes that we create value, and donations enable that value to expand and multiply. The implicit proposition is that the gift contributes to outcomes, capabilities, and future possibilities that would not otherwise exist. Under this model and strategic approach, visible improvements will only expand your capabilities, perception, and attract stronger financial stakeholders to support your mission.
Which camp would you rather be in?
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