Personalized Philanthropy – Purpose and Process
Maximize the lifetime value of your donors,
Amplify the impact of your current gifts, and
Build a model of sustainable fundraising
Whether you are a gift officer, advisor, a fundraising executive – or even a donor – to make transformational gifts part of your own practice, you may want to add some personalized gift designs to your tool box. Making the shift in culture and practice to real donor-focused giving can have a deep and lasting impact on an organization seeking a path to sustainable fundraising success. This turn from back-of-the-bus, “hit-and-run fundraising is very well documented in the Chronicle of Philanthropy (April 2016), which compares the development of personalized philanthropy with the evolution of personalized medicine. Each in its own way stress a valuable concept of “rightness” for engagement, whether with a donor or a patient.
There are many challenges and opportunities for fundraisers and donors who are commuting dialing between the sometimes mind-numbing institution-focused culture of conventional fundraising and the more holistic-minded donor-focused culture. You can find a glimpse of what a donor-focused approach would look like in my book, Personalized Philanthropy: Crash the Fundraising Matrix. I’ve tried to carry and to share the lessons learned there into my own practice.
What is Personalized Philanthropy?
Personalized Philanthropy is an innovative fundraising concept that combines the immediate impact of lifetime gifts that are expendable today with the long-term impact of planned and estate gifts that are sustainable for tomorrow. This comprehensive approach to fundraising enables donors to target their gifts and connect them to the purposes they care most passionately about, knowing that their support makes a difference during their lifetime and will grow in the years to come.
Personalized Philanthropy is a donor-focused approach that uses the full spectrum of charitable giving vehicles as building blocks in a larger philanthropic plan. Rather than viewing each gift as a single transaction at a moment in time to meet the goals of a “campaign,” gifts used in combination can be staged over time and focused on a purpose. Each gift can be chosen to serve its purpose and advance the overall goal, given its unique properties. This kind of planning requires a generalized knowledge of how the gift vehicles work and a specific knowledge of what the institution needs. The results can be transformational beyond both the donor’s and the institution’s expectation.
Personalized Philanthropy aims to connect the donor’s passion and compelling interest
to an evergreen core purpose and compelling need of the institution.
The strategies of Personalized Philanthropy are bold. They leverage current and future gifts; cause a rethinking of the relationship between current giving and endowment; and boost donor engagement and commitment. With Personalized Philanthropy, the impact of a long-term planned gift begins now, rather than being deferred or denied to donors in their lifetime. And donors are recognized during their lifetime for deferred gifts.
Personalized Philanthropy is inventive. It provides new tools and gift designs that are easy to understand, without the typical jargon of planned giving. Yet, it is also evolving and building a new vocabulary – a language that can be shared by gift officers, professional advisors and donors alike.
The strategy of a donor-focused gift design is simple:
Every committed donor should be able to access their full financial capacity
when they want to – not just upon their demise.
Personalized Philanthropy enables professional advisors to expand the charitable capacity of their clients. While continuing to grow assets under their management, advisors can encourage clients – to their mutual benefit – to treat a portion of their increased wealth as “social capital” and use it to advance the societal good and scientific progress that can only come from effective philanthropy.
Gifts that use the Personalized Philanthropy approach not only create more positive experience for the donors and advisors, but they are more rewarding and joyful for the gift officers who use them. This approach to fundraising leads to increased lifetime value of donors’ philanthropy, and also lowers the turnover of development officers.
Tools of Personalized Philanthropy
As described in my book, there are three primary tools of Personalized Philanthropy. Each of these donor-focused gift application builds a bridge to connect current and future gifts in its own way. by focusing more broadly on achieving “the right gift, for the right purpose.” The definition of fundraising that guides us is the aim to mesh a donor’s passionate interest with a compelling need of the institution they care about.
Umbrella Gifts: The Personalized Philanthropy Breakthrough
The Personalized Philanthropy breakthrough is also powered by Umbrella-like gift agreements. Each gift agreement unites and integrate different gift vehicles – chosen because they can help advance the goal over the lifetime of a donor. Agreements are a way to stage a gift over time – with gifts that can activate today and those that can activate later in life and even at death. In an umbrella gift there can be many gift vehicles. Each element has a different function. Yet they all share a common purpose.
The vastly under-estimated power of spending rate
Each one of these game-changing strategies in one way or another leverages the use of what institutions call spending rate — that is, the percent of the corpus of a gift that can be expended annually for a program. I think donors and gift officers alike can appreciate how a spending rate can be thought of as a “virtual endowment. “ It creates a reliable stream of annual revenues to sustain your program. While it may not be possible for every donor to provide the corpus for a large endowment initially, it may be much easier to provide that stream of annual gifts to maintain the program. In fact, donors may already be giving the funds thought their current patterns of giving, though in a less decisive or intentional way. With an umbrella gift agreement, over time, the “virtual endowment” will become a true endowment.