In South Africa, philanthropy underpins much of our civil society and many of our most treasured institutions. Individual donors are a vital part of what these organisations contribute to the country.
Philanthropy is not the same as charitable giving, which tends to deal only with symptoms such as poverty or homelessness. In addition, charitable donations are often comparatively random, with the donor having little or no connection with the beneficiary.
In contrast, philanthropy usually explores and addresses the core problems that give rise to these symptoms, and does so through shared involvement in a cause that evokes passion and pride in achievement in both the donor and his or her partner organisation.
How does an individual select a partner organisation?
As with business investments, a philanthropic investment in a non-profit organisation usually involves considerable research – especially as South Africa has around 100 000 non-profit organisations (NPOs) to choose from.
Common ground with the donor usually forms the first selection criterion, after which geographical area, target beneficiaries and even specific projects can be used to narrow the field further.
Once a group of organisations which match the philanthropist’s values and interests has been identified, a ‘due diligence’ examination, to ensure that a donation will be used properly, is vital. Key questions will include:
- Is the organisation legally constituted and tax exempt?
- Can it supply audited financial statements and an annual report?
- Is the organisation’s leader well respected?
- Does the organisation have a properly functioning governing board, and who serves on that board?
- What is the organisation’s history and have there been any reported questions around its integrity?
- Who are the organisation’s other donors and are they suitable investment partners?
Building relationships
For successful philanthropy, a robust, enduring relationship between the donor and the partner organisation is essential. Trusting and respectful relations increase transparency and ensure that issues can be dealt with in a constructive manner. Both partners need to be accessible to each other: organisations should be responsive to queries from donors, while it is important for donors to acknowledge and reward achievements.
Long-term or short-term support?
In an effort to avoid a culture of dependency, philanthropists are sometimes inclined to make only once-off donations. This strategy provides little satisfaction to the donor, however, as the chance of seeing real change or benefit from one donation is small, and the partner organisation, restricted to dispensing only short-term benefit, is also disappointed.
Longer-term financial support arrangements are more creative, allowing for investment in systemic change that impacts on the real problem and providing a more satisfying experience for both the philanthropist and the organisation. Better strategies exist for dealing with dependency issues, which are best treated separately, in conjunction with the organisation.
Identifying what funds can be used for
Philanthropists are sometimes unwilling to donate funds without knowing which specific project they will be spent on. How funds should be spent can and should be negotiated with the organisation, but it needs to be kept in mind that core costs such as salaries and rental are often more critical to organisations’ survival than project-focused money.
While specific projects are easier to conceptualise and their outcomes provide a more ready source of satisfaction, projects cannot run without the core of the organisation being intact, and un-earmarked funds allow the organisation to allocate money where it is most needed.
Exit and succession strategies
Withdrawal of support by a long-term donor presents huge challenges to a recipient organisation, and it is good ethical practice to have an exit strategy in place to mitigate the effects.
Beyond providing a respectful period of notice (usually one year or two), these strategies can include:
- Sponsorship of fundraising costs;
- Creating opportunities to introduce the organisation to other philanthropists or funders;
- Building the organisation’s capacity to raise funds through training or the employment of a fundraiser; and
- Investing in an endowment to underwrite the organisation’s future running costs.
- A combination of some or all of these strategies can help ensure that the organisation remains viable after the donor’s departure.
Conclusion
Good donor practice means building a rewarding and fulfilling relationship for both the philanthropist and his or her partner organisation. This partnership should be based on mutual accountability, respect and professional relations. While the philanthropist is often assumed to hold the more powerful position, it is important to remember that without the organisation, the philanthropist’s objectives cannot be met. In effect, the organisation offers the philanthropist an opportunity to change the world!
Shelagh Gastrow is the Executive Director of Inyathelo: The South African Institute for Advancement. Inyathelo is a key organisation promoting the growth of a philanthropic movement in South Africa. Prior to founding Inyathelo in 2002, Shelagh was Director of Fundraising at the University of Cape Town. During the early 1990s she worked for the Institute for a Democratic Alternative for South Africa as the co-ordinator of its Africa programme. Shelagh has authored five editions of Who’s Who in South African Politics: (1985 – 1995).
Source details: Nedbank Private Wealth Giving Report (2010)