In their new vacation paradise, the Lilienthals quickly became uncomfortably aware of the disparity between their nearest neighbors’ wealth and fame and the year-round inhabitants’ poverty. In fact, the contractor they hired to build an extension to their home told them how needy a nearby elementary school was; he knew of the school’s problems because his wife is the principal.

"It got us thinking about vacation homeowners in Second and Third World countries, and how those countries could benefit more from their largesse than some of their pet projects back in the States," Peter says. He and Sallie, at the principal’s invitation, attended a weekly faculty meeting at the Anguillan school, where they asked the teachers what sort of items would improve their classrooms. Though they didn’t specify a figure at the outset, the Lilienthals had in mind a modest initial donation of roughly $10,000. To their surprise, the teachers’ wish list was even more modest—fans for the classrooms, new light bulbs, new linoleum.

"I was a bit taken aback," Peter says. "I said, ‘No, I want you to think really big.’ It took a while to draw them out. Finally, they said if they got some computers and printers, that would be huge." A computer in every classroom was more what the Lilienthals had in mind. They did not talk through all of the details, such as whether the school’s power supply could actually accommodate that many devices, but they soon found out that setting up an ambitious giving plan in a remote spot creates its own complications.

The Lilienthals had in mind a modest initial donation of roughly $10,000. To their surprise, the teachers’ wish list was even more modest—fans for the classrooms, new light bulbs, new linoleum.

Members of the school staff agreed to create a list of names and contact information for other prosperous vacation homeowners in the community so they could start a fundraising drive and presumably boost their giving program. Staff members were confident they could obtain names through contractors on the island. According to Peter, this is the way things are done in Anguilla, and he knew better than to interfere with a cultural more and try to take on the task himself. Besides, the Lilienthals wanted the recipient of their philanthropy to be a local partner with the ability to take care of operational details.

But months passed before they heard anything more about a list. "We made up our minds that if they weren’t enthusiastic enough to take the next step and do something, then we weren’t going to push it," Peter says.

The Lilienthals’ experience is not uncommon among would-be patrons who become frustrated, according to Prudence Brown, a research fellow at the University of Chicago’s Chapin Center for Children and coauthor, with Leila Fiester, of a 2007 report, Hard Lessons About Philanthropy & Community Change From the Neighborhood Improvement Initiative. "In many community-change efforts," Brown says, "the community wants to start out with a stop sign, a cleanup drive or something that seems very modest and with little potential to transform the neighborhood." Those initial proposals may strike philanthropists as inconsequential baby steps, but, in reality, they are valuable tools for giving each party a chance to get to know and trust the other, Brown adds. "If you dismiss what the community wants, you’re already demonstrating a kind of disrespect and prioritizing your own needs as a giver over that of the institution or community."

Formality Reality
Anyone thinking of establishing a program for a small segment of the population in an impoverished foreign locale would do well to follow the example set by Michael Rauenhorst, who, perceiving a need for a microfinance institution in Kingston, Jamaica, launched one through his family foundation. What differentiates his approach from the Lilienthals’ is the formality of Rauenhorst’s plan from the start. He was successfully able to make things happen quickly through his long-standing friendship with Richard Albert, a Catholic monsignor who founded St. Patrick’s Foundation, one of Kingston’s largest NGOs, and a college classmate of one of Rauenhorst’s brothers.

TOP VIEW Travelers who vacation in a less-developed paradise are often motivated to use their funds and philanthropic experience to help the local citizenry. In many of these locations, a relatively small amount of money can accomplish great things. But benefactors must create local connections to prevent cultural miscommunication from thwarting their efforts.

Rauenhorst, a consultant to Deutsche Bank’s Microcredit Development Fund, also grew up in Minneapolis, where his father, Gerald, founded Opus, a real estate development company, as well as a large foundation. Through a smaller, separate family foundation that he serves as an advisor, Rauenhorst got the Kingston microfinance institution up and running in December 2003 as a partnership with St. Patrick’s Foundation and several individual Jamaican investors. "The idea was that it would be a sustainable for-profit company with a social mission," he says. They chose a structure that made a U.S. public charity the owner of the for-profit company. U.S. tax laws prohibit or restrict U.S. private foundations from owning for-profits, but permit the strategy that Rauenhorst devised. He had to tackle that challenge because microfinance projects are sustainable only if they turn a profit.

"You just have to be as creative as you can with the existing tax laws and legal structures," Rauenhorst says. His friendship with Albert helped the project managers untangle legal and regulatory knots and navigate streets subject to gang turf wars.

"I don’t go into those communities because it would be detrimental for the microfinance organization if it was perceived to be a foreign-owned or an American organization," he says. Well-established in Kingston, St. Patrick’s Foundation was able to work with everyone in the community—from gang members to business owners, who became board members and joint venture partners.

During the early phases of his project, Rauenhorst traveled to Jamaica as often as two or three times a month to recruit key staff members, sign documents and ensure that employees understood the organization’s objectives. He hired managers and loan officers from within the local community. Staff members had to master techniques and software before they could become adept at making projections—and sometimes, Rauenhorst admits, the training dragged on, testing his patience. Eventually, however, the local staffers were more motivated to meet their projections because they created them. "I think if you’re not coinvesting with local people and being as patient as they are or as understanding of the local needs as the local people are, then you’re going to make mistakes," Rauenhorst says.

The institution flirted with break-even performance several times before it finally balanced its P&L in May 2006, taking six months longer than Rauenhorst had anticipated. He says the organization has been profitable ever since, with a loan repayment rate of 99 percent. (Experts peg the industry average at more than 90 percent.)

Brown endorses the strategy of building a sense of local ownership into a charity. "In the end, what you want is for the organization to have the capacity to set its own benchmarks, to have its own goals and an ability to track, because that makes a good nonprofit or a good organization," she says. "It’s not because they need to perform for the funder. It’s because, at any point in time, they need to be able to step back and say, ‘Hmm, here’s our goal. Are we on the right track? If not, what corrections can we make?’ Most of the time nonprofits think of evaluation as something that’s funder-driven and not self-driven."

Looking ahead, Rauenhorst sees potential for expanding the program into Central America. He would revise the Kingston model chiefly by localizing the process even faster, using outside consultants for a shorter period of time and requiring even more local money for the startup organization—instead of providing 50 percent of the seed capital as he did in Kingston. Local investors will have more interest in the success of the project if more of their money is involved, he contends.

Steadfast Benevolence
The Lilienthals are still trying to set up a project in Anguilla, but so far the school has neither computers nor fans. New light bulbs and linoleum have yet to appear, and the couple is now considering other options for giving to the community. In May, just when they were about to give up on the school, Sallie received a call from the principal, who said they "were making good progress" on the list of potential donors. The Lilienthals and the school are talking about organizing a fundraising event next summer, but the couple realizes this stage could drag on.

"Maybe starting small is better than starting big," Peter says. "Maybe if we had started out and bought the light bulbs and bought the fans and put in the linoleum floor, they’d say, ‘Wow, these people are real.’" Meanwhile, he has offered to donate InTouch services to the Anguilla police to help collect anonymous crime tips.

"I don’t give up easily," he says. "I still feel that those of us who have second homes, who do have a mentality, a philosophy, of giving back to our communities, if we want them to thrive like the communities we live in, we have to do something."

Before You Write the Check
It is easy to see need in a poor country or community and conclude that, if poverty is causing the problem, money must be able to solve it. But studies conducted by Prudence Brown at the University of Chicago and other experts show that one of the most important assets a donor can employ is the ability to build alliances and relationships within the community and in accordance with the local cultural perspective.

Brown says the two most important qualities a philanthropist needs in a foreign country are relationship skills and a "learning stance." By that she means excessive curiosity, a capacity for learning alongside grantees and the ability to take in new information and shift viewpoints when necessary.

Brown also warns against allowing a sense of inspiration and ambition—both positive qualities of philanthropists—to outweigh considerations of available resources and realistic outcomes. It isn’t just that the road to failed donor efforts is paved with good intentions. It’s a matter of tempering visions of meaningful, lasting social change with a reality check on how quickly the society is prepared to incorporate those changes.

Randy B. Hecht is a freelance writer based in Brooklyn.

Illustration by Jim Frazier.