Instinctively, as a donor, I want my donation to make a difference, serve the cause, and be put to good use. These desires are entirely laudable and, at first glance, appear impeccably logical. But are they?

For organizations, administration costs are bread and butter

None of us wants to throw money away. Of course not. Regrettably, however, we have been conditioned to believe that, for charities, administration costs should be kept as low as possible. We imagine that administration costs nibble away at our donation dollars and don’t directly serve the cause. Not true!

In fact, for organizations, administration expenses are bread and butter. They allow charities to attract, mobilize and retain the most talented people to move their cause forward, and to raise their profile and make their work better known. Charitable organizations already live close to the line financially. If we want to be consistent in our generosity, then, we need to allow them to offer decent salaries and attract new donors.

By ignoring the need to underwrite administrative costs, we are holding charities back. It is as if we were saying, “Stay small, don’t look farther ahead or expand your work, chase those funding dollars every year. Your cause is so worthwhile that you’ll just find the right people!” The cause is undoubtedly worthwhile, but being worthwhile doesn’t pay rent or supplies. When you support a cause dear to your heart, understand that the organization will make optimum use of your donation, and that a portion of it will go to cover things like salaries, rent and advertising. But be proud of creating a snowball effect that will attract other donors. Whatever you give, think big.

Directed donations and strategic donations

Wanting only to support the cause at the grassroots level also has led us into the pitfall of directed donations. This phenomenon is very well‑known in the health care field, where individual physicians have set up funds, and even entire cardiology or cancer care departments, in their name. Usually these donors make a directed donation to the related foundation, requiring that the money be used for a single, specific purpose.

That practice is a donor’s privilege, but it can also be a considerable administrative burden for an organization. For example, a community organization can receive directed donations for its food bank, for clothing, and for fire victims. What happens if its fire fund is healthy, its food fund is depleted, and a hungry family comes to the door? The organization’s hands are tied. It is required to respect the donor’s wishes; it is not allowed to switch money from one fund to another. While this is an oversimplified example, it is as if the donor is saying to the organization, “I know better than you do.”

Making a strategic donation doesn’t mean imposing a strategy on the organization. Instead, it means working together in the long term to give the organization room to develop its strategic vision.

Learn to trust and to develop a bond with the organization. Understand that directed donations can be a good idea, but aren’t always. That can put pressure on day‑to‑day financial management, and they don’t always allow organizations to respond to urgent immediate needs.

Small donation, big impact

Someone named Aristotle once said that the whole is larger than the sum of its parts. He was right. Taken together, large, small, spontaneous and planned donations create an unbelievable snowball effect, fostering good works and supporting organizations’ capacity for development. Together, we can help change things, as long as we choose our charities wisely and give them room to grow.

If there’s one thing that crowd-sourced, micro-donation Internet funding sites such as La Ruche and GoFundMe have shown, it’s that cumulative small donations matter: they can change lives; they can change the world. You, or I, or anyone, can be a philanthropist. All we need to do is deprogram a few outdated ideas and salute the incredible expertise of organizations that are changing the face of our societies, one donation at a time.

This article explores a theme presented in the blog post How to Become the Perfect Donor published on the Imagine Canada Internet site, and is also based on the consistently relevant Technology, Entertainment and Design (TED) talk The Way We Think About Charity is Dead Wrong by Dan Pallotta.

Daniel H. Lanteigne,
Senior Consultant and Director of Business Development for Montreal ASC, C.Dir., CFRE, CHRP