Striking the Perfect Balance Between Donor-Centered and Institution-Centered Fundraising​

Donor-centered fundraising has been practiced and advocated for decades — well before “donor-centric” became a buzzword.

On one hand, donor-centered fundraising is an ethical consideration. Organizations must always interact with donors honestly and transparently, ensuring nothing goes against their best interests.

On the other hand, being institution-centered relates to the organization's goals and priorities, the targets set for fundraising professionals, and the real pressure to meet those targets while honoring and respecting donors.

Nonprofit professionals often navigate a delicate balance between these concepts, yet they can (and must) work together seamlessly.

This means fundraisers and other nonprofit staff must have a deep understanding of institutional priorities and donors’ interests, motivations and giving histories. With this knowledge, nonprofit professionals are equipped to find areas where those considerations intersect and acknowledge when they do not.

Heidi A. Droegemueller, vice president for seminary relations and executive director of the Luther Seminary Foundation at Luther Seminary in Minneapolis, challenges organizations to find the point where their mission, their area of greatest impact and what their donors want to invest in converge.

“It requires a lot of self-awareness,” she said. “Whatever you discover in that area of convergence needs to be the focus. If a donor recommends things outside of the [Luther Seminary Foundation’s] mission, we have permission to say no.”

Susan Hosbach, CFRE (ret.), FAFP, senior consultant at the Lighthouse Counsel, agrees.

“Always honor and respect the donor and do nothing that harms their best interest or intent,” she said. “However, when a donor wants to fund a project that does not align with the organization’s mission, values or priorities, it is in the best interest of the donor and the organization to politely decline and attempt to refocus in an area of common ground.”

Better Understanding Ethical Fundraising Practices

It’s all a delicate balance, but you don’t have to go it alone. CASE, the Association of Fundraising Professionals (AFP) and the Association of Healthcare Professionals (AHP) all have adopted a Donor Bill of Rights, as well as their own individual variations on a Code of Ethics they expect their members to follow. The tenets therein should be the guiding principles for our profession.

The Code of Ethics — whether it’s the Statement of Ethics for CASE, Code of Ethical Standards for AFP and Statement of Professional Standards and Conduct for AHP — clearly outlines the do’s and don’ts of ethical fundraising practices.

The Donor Bill of Rights ensures that donors are aware of an organization’s mission, programs, staff, board, plans and financial information.

But it goes even further in two areas.

One, it clearly states that donor relationships are built for an organization — not for the fundraising professionals who build them. Those relationships belong to the organization.

Therefore, organizations seeking fundraising professionals for their “connections” instead of their deep knowledge of a sector or community are treading dangerous waters. If the fundraising professional is the focus, the relationship then is transactional, like a sales relationship, rather than meaningful and mutually beneficial.

Included in AFP’s Code of Ethical Standards are requirements that donor information is proprietary to an organization (not to be transferred) and that contributions are to be used in accordance with donor intentions.

Never Compromise Donor Information

Even as a consultant, I can feel the tug when clients expect that I can influence a donor with whom I have a relationship. There are even consulting firms that make a promise of “friendly introductions.” At Lighthouse Counsel, we only share publicly available information and never confidential donor information we may have acquired in the past. After each client engagement, we remove all donor lists and other confidential information.

At the same time, fundraising needs to allow for honoring donors at all levels and the time it takes to deepen a relationship. On the institutional side, this also means the ability to say no to a donor when a gift is unethical or not in sync with the organization’s mission or priorities. I’ll never forget a major foundation head lamenting consultants who come in not to conduct research and get insight but to pitch multiple clients a year.

Recently, we saw a donor withdraw a seven-figure gift because the organization was not moving ahead with plans for the focused space for which the donor had designated those gifts.

In another example from years ago, a donor who asked for anonymity saw his name placed on a building without his permission — a move driven by the CEO’s ego despite warnings and protests by counsel and staff.

The donor called the CEO and threatened to pull the gift. The sign came down, but when the donor passed a decade later and after the CEO had been fired, the donor’s will had been updated and the organization did not receive what would have been a transformational gift — its largest ever by five-fold.

An institution’s priorities are reflected in how it pursues and accomplishes its goals. Much of that is reflected in how it assesses and compensates for the performance of fundraising professionals. It also is reflected in how those professionals are trained. I know of sales veterans (people with little to no real fundraising experience) who sell their services as coaches to fundraising professionals.

Guidelines for Balancing Donor-Centered and Institution-Centered Fundraising

In building the best possible donor relationships that honor both the donors’ and institution’s intent and goals, organizations are wise to:

• Be aware and follow the intent of the Donor Bill of Rights and the Code of Ethics.
• Be clear that donor relationships belong to the organization, not the staff member.
• Have a clearly defined gift acceptance policy that provides guidance for pursuing and accepting gifts and support when deciding against accepting a questionable or problematic gift.
• Be transparent about their institutional needs, goals and challenges.
• Fulfill commitments made to donors.
• Communicate clearly and consistently with donors.
• Be clear and always cognizant of their long-term goals and avoid anything that could possibly detract from them.
• Prioritize building meaningful, long-term relationships rather than focusing on quick-win transactions.

Balancing donor interest with organizational priorities is a complex but critical endeavor. While the promise of big, immediate gifts is tempting, the organization's long-term success relies on nurturing symbiotic relationships that meet both institutional goals and donor interests.

The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.