From Donors to Investors - More Than Semantics

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Words are important. They convey meaning and aid in the communication process. Sometimes, however, words are laden with baggage and stereotypes that complicate or distort the communication process. I want to suggest that the word “donor” is one such word as nonprofit executive leaders engage supporters of their organization. Merriam Webster defines donor as “a person or group that gives something (such as money, food, or clothes) in order to help a person or organization.” What if instead of viewing these people or groups as donors we viewed them as investors? How might that change the nature of the relationship and the attitudes between the organization and the individual/group?


Donor carries with it the notion that there are no strings attached. If you donate something to me, it’s a gift for me to receive and do with as I please. Unfortunately many nonprofits treat donors as if they have no responsibility to report back to them, to account for the use of the gift that’s been given,or nurture the relationship. Most often that gift is in the form of money or time volunteered to the organization. It’s not uncommon for nonprofits to have a sense of entitlement - their donors are obligated to continue supporting the cause and the organization irrespective of sound business practices, measurable impact and outcomes, strong leadership, and timely and open reporting. In order to be a donor, most often there is a minimal level of trust required.



What if nonprofits viewed people and groups who support the organization as investors instead of donors? How might that change the relationship?

Think about this from a business perspective. Like many of you, I have a number of investments in a variety of companies. Those companies regularly send me detailed and comprehensive reports (most quarterly) of the activities of the company. There isn’t a sense that I am obligated to maintain my current investment or even increase that investment. The company, if it’s worth investing in, takes the relationship seriously and is keen to communicate to me in such a way as to enhance the level of trust and at the very least maintain my investment if not increase it.

I am suggesting that it might be more helpful and beneficial to see the people and groups who give of their time, money and talent to nonprofit organizations as investors - people who are investing in a cause to make a difference. The benefit that accrues to them as investors is not financial but philanthropic and humanitarian. From the standpoint of the nonprofit, this constitutes is a subtle but profound paradigm shift. It shifts the responsibility to the nonprofit to work hard at building, maintaining, and growing trust! It places the responsibility on the nonprofit to report frequently, transparently and clearly to its investors.

Why This Matters

In my work with nonprofits what I discover is that few have a clearly developed strategy to secure new sources of ongoing funding. Many nonprofits are faced with an aging support base. My contention is that if nonprofits viewed their supporters as investors rather than donors, they’d be much more focused on generating new bases of support, tapping into the existing support base in an effort to generate positive recommendations and recruitment of new supporters. But that requires a paradigm shift from donor to investor.

This was brought home to me with crystal clarity recently as I sat with a wealthy philanthropist. I asked him to outline the criteria he uses to decide which organizations and agencies he supports financially given the multitude of requests the receives. His response was most interesting. He indicated that he looks first and foremost at the quality of the leadership team, the vision and mission of the organization, the detailed financial statements, and the scope of the organization’s impact in bringing about substantive and meaningful change. What became very clear to me was that his decision making process related to his financial support of a nonprofit is the same as his decision making process when he considers a real estate purchase. For him it’s an investment! His return on investment in the nonprofit is not financial - it’s philanthropic and humanitarian.

Here’s what I know - If nonprofits treated those who support their organizations more like investors than donors, there’d be a lot more investment dollars and volunteer engagement coming their way to make an even more profound impact on their communities! If that’s true, what’s stopping you and your organization from making the paradigm shift?