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| Feature |
The Noble and the Needy
Matthew Schuerman
09/01/2004
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The maxim that wealth breeds wealth is as true in philanthropy as it is in
investing. While grassroots charitable organizations often struggle to raise
funds, the largest and richest nonprofit institutions have access to the
country’s deepest pockets. Deciding whether to provide life-sustaining funding
to a local community initiative or to add a percent or two to our alma mater’s
multibillion-dollar endowment requires us to weigh our preferences for personal
involvement and control against the scope and effectiveness of the institutions
we consider supporting.
 | | PICTURED FROM left, Roy Bostock, Cyndie McLachlan and John Frey. |
The fund-raising resources that large institutions
can bring to bear are little short of extraordinary. The University of Virginia,
which just announced plans to raise $3 billion, has a development office of 100
fund-raisers who, over the next seven years, will pay 25,000 visits to wealthy
graduates. These solicitations are elaborate and often time consuming. During
Harvard University’s last campaign in the 1990s, alumnus and volunteer Walter
Klein told the campus newspaper that he would work on a prospect for a year or
two before even thinking about asking for money.
The cochair of that
campaign, Robert Stone, knew how to make an impression: He would take alums out
for oysters at the New York Yacht Club. Because he had once run the place, staff
would hover about and call him “Commodore.” According to the account in the
Harvard Crimson, Stone would conclude the repast by asking, “Wouldn’t it be nice
if you gave a few million?”
TOP VIEW
The resources of elite universities, hospitals and other prominent
institutions, and the assurance that they will put our money to productive use,
make them appealing beneficiaries for many philanthropists. Others prefer to
provide seed or sustenance capital for smaller, local charities, and those in
which they may participate directly. The three profiles here provide a small
sample of the divergent strategies we may pursue as philanthropists. |
In the college development office trade this
sort of understated wooing is called total relationship management: fund-raising
professionals identify potential donors, learn their interests and slowly
persuade them to make a multiyear, multimillion- dollar gift. Most of these
institutions spend about 10 to 20 cents for every dollar they raise. Each dollar
enhances the effort to bring in another $10. That $10 brings in $100, and so
on.
Grassroots organizations lack the type of seed funding they need to
finance larger campaigns; they also lack the nostalgic tug that alma maters
exert over their alumni. Most of the strategies that small charities use are, by
their nature, not targeted at high-stakes donors; they ring doorbells, send out
mass mailings, have bake sales or sponsor fund-raising walks.
The uneven
distribution of fund-raising muscle leads, not surprisingly, to a skewed
distribution of philanthropic capital. The Foundation Center, a New York
research institute, recently surveyed 1,000 of the country’s largest foundations
and discovered that they awarded 16.5 percent of their major grants—those over
$10,000—to the same 50 institutions in 2002, primarily elite universities and
hospitals. However, these beneficiaries often pass a portion of that funding on
to smaller nonprofits.
Even so, philanthropists who support large nonprofits
may want to know whether their charitable dollars are indeed making a
significant difference. This, after all, bears on the central questions in
philanthropy: Where can our money do the most good? Where can we most
effectively leave our mark while advancing our deeply held beliefs? The
experiences of the three philanthropists profiled here show how their personal
experiences have led them to take very different approaches to these questions.
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