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How-to Library • Featuring articles from past issues of Contributions

Ten Things You Should Know About Transformational Gifts
More and more, they are front page news

by Kay Sprinkel Grace

A $150 million gift to Stanford University from entrepreneur Jim Clark, a former Stanford professor and founder of several high tech companies (Silicon Graphics, Netscape, others) to fund a multi-disciplinary biomedical engineering initiative.

A $12 million gift to the College of the Ozarks from the estate of Dr. Joe T. McKibben, a non-alum retired physician, for scholarships and a new academic center.  

A $5 million gift to the George Washington University School of Medicine from Laszlo Tauber, restricted to scholarships for descendents of World War II veterans. 

A $3 million gift from the Wolf family of Denver and Houston to construct a building at the University of Colorado Boulder School of Law. 

of related interest

OF RELATED INTEREST: In The Ultimate Board Member’s Book, Kay Sprinkel Grace explores the role and responsibilities of board members, including the time commitment, the role of staff, fundraising responsibilities, conflicts of interest, group decision-making, board self-evaluation, and more.

A $250,000 gift to Boys and Girls Clubs of Alamosa, Colorado, from the El Pomar Foundation of Colorado Springs to construct a club house. 

These gifts - some huge, others modest only by comparison - have a common tie: their impact. Because of their size, relative to the overall budget of the organization or the project, they are transformational.

Transformational gifts may be categorized as "big" or "major" gifts, but what distinguishes them is their unique capacity to alter the programs, perception, and future of an organization. More than gifts, they are true investments in the future of an organization and of the community.

This phenomenon - the product of a robust economy and a heightened understanding by donors of the importance of philanthropy in building communities and institutions - is one of the most important milestones in the entire history of philanthropic growth in this country. 

Transformational giving is so important that it is the principal thrust of a book I am writing with Alan Wendroff, a San Francisco consultant and author, to be published by John Wiley & Sons in 2000. I am also indebted to Myrna Hall, Vice President for Development at the University of Colorado at Boulder, for her early work with me on these ideas and her continued implementation of the policies that lead to transformational giving. 

Drawn from several years of research and thinking, recently accelerated by the ever-increasing number of these gifts, here are Ten Things you should know about transformational giving and how to position your organization to attract such gifts.

1. Many of these gifts are from the "new" philanthropists.

Responsible for many of these transformational gifts are: the cyber and venture capital rich; women; ethnic and racial groups previously under-represented in philanthropy; and those who have become wealthy through the intergenerational transfer of several trillions of dollars currently underway in America. 

The old methods for identifying, cultivating and even soliciting do not always work. Many of the new philanthropists are inexperienced donors, and don't show up on the usual lists.  Further, they often seek out organizations and do not want organizations to seek them. For those who research and track potential donors, the challenges are great - but so are the opportunities.

Many of the individuals capable of transformational gifts have formed philanthropic organizations on their own: donor advised funds within their venture capital or financial firms, independent family foundations or funds located in and managed by community foundations (at the Community Foundation Silicon Valley, many such funds have been established).

In several communities (Seattle, Silicon Valley), "social venture" organizations have been created by newly wealthy younger people - organizations where the focus is not just the giving of money, but also getting involved in community projects.

2. This isn't your father's philanthropy - it is more like your mother's. 

An interesting phenomenon of transformational giving - especially from younger donors - is that it patterns the outcomes of the studies done in women's philanthropy at the University of California at Los Angeles. There, a principal outcome was the discovery that women tended to get involved first, then make a financial commitment. 

Traditional male donors, on the other hand, would often make a gift first (particularly when asked by a peer) and then (perhaps) get involved on the board later.

New philanthropists - particularly those making transformational gifts - want to get involved with both the definition of the gift and the institution it will transform.

The gift to Stanford from Jim Clark was the result of three years of conversation, visioning, exploration, communication (much of it by e-mail) and program definition. And, Clark's involvement as a former professor was coupled with his gratitude for the opportunities Stanford had provided him to develop the research that led to the founding of his successful companies. 

In another case, an anonymous couple who have contributed to Sage Hill, a start-up independent high school, are intensely involved with numerous aspects of the school's curricular and physical plant development.

The engagement of these individuals in organizations and institutions is of mutual benefit.

3. Transformational donors invest in issues and ideas - not just in institutions. 

Interviewed in the annual report of the Community Foundation Silicon Valley, one young couple, Ray and Joanne Lin, put it this way, "We fund change, not charity." 

Another philanthropist, a young woman who has established her own foundation, commented in response to a question regarding the kinds of organizations she funds, "I don't fund organizations, I fund issues." 

While traditional "community philanthropy" - the funding of the basic arts, health, education and other institutions that comprise most communities - is still very important to experienced philanthropists and many new donors, there is this trend towards looking for the organizations that address issues (children, homelessness, poverty, domestic violence, substance abuse) and funding them not because the organization is familiar to the donor, but because the issue is important. 

This shift puts a new emphasis in the marketing thrust for nonprofits: the focus has to be on the mission (the need that is being met) and the values implicit in that mission.

Too often, mission statements and marketing pieces focus too much on the organization, and not on its values and results. Nearly 10 years ago, in an article in the Wall Street Journal, Peter Drucker commented, "People no longer give to charity, they buy into results."  As usual, Mr. Drucker was ahead of his time.

4. Transformation giving, because it transforms organizations, will often attract funding for both infrastructure and programming. 

Capacity-building grants are more common. Community and other foundations have been providing "technical" or "management assistance" for years: salary support, computer funding, and the like. Now, however, individual and family foundation funders are also investing in stability. 

The trend is related to the point in number three, above: because the issue is so important, they are willing to invest in making sure the organization has the internal systems to support continued fulfillment of its mission.

In one such instance, an organization with strong mental health programs highly dependent on government funding was given both a program grant and an organizational assistance grant by a family foundation.

The rationale was made clear in the grant: the mission of the organization was important to the funder; the dependency on government funding was a concern to them; the creation of a separate foundation to raise and manage private funding was essential to the future health of the organization; and current staffing needed assistance to create that foundation and get the fund raising started.

Thus funding was given not only for program but to provide counsel and coaching to the high-potential person already on staff to develop him for the job.

5. Transformational donors have some exciting characteristics - ones that are changing the face of philanthropy as well as the institutions and communities in which they have invested.

These are the principal characteristics that have emerged in our research, observations and interviews:

  • They invest in results and in the values implicit in those results;
  • They seek values-driven organizations, often without realizing that it is the values that are attracting them;
  • They want organizations to accept their ideas and opinions, not just their money;
  • They are impatient for results - and sometimes for the ask;
  • They are willing to make longer term investments;
  • They want to transform institutions and society;
  • They often want a base of power in the program or organization.

These attributes in some cases represent a confirmation of more traditional philanthropy, but there are several that have broad implications for the way nonprofits must re-tool some of their approaches. The next several points will deal with those implications.

6. If your organization wants to attract a transformational gift, it must focus on results, not needs. 
 

An article by Scott Kirsner entitled, "Nonprofit Motive," in the September, 1999 issue of Wired, had this subtitle: "The new breed of Silicon Valley philanthropists would make Mother Teresa crunch the numbers. Call it virtue capital."  

In the article Kirsner highlights the philanthropic leadership of Steve Kirsch, founder of Infoseek. Kirsch, according to the article, "likes groups that are ambitious, he wants his money to make a measurable difference, and he prefers that the altruism be balanced by sound business sense. He likes being intellectually stimulated by what he underwrites." 

Later, the article says the following: ".... the new breed of high tech philanthropists want to reinvent the art of generosity.  They share (Kirsch's) sense that simply giving money away is too passive and uninvolved. They want to lend business expertise, identify and support 'social entrepreneurs' hungry to shake up the nonprofit world, and quantify their results. In short, they want to create a new kind of charity. But they don't call it that.  They call it venture philanthropy." 

Our sector has two bottom lines: financial and values. We must show results in both. For the financial we provide numbers; whereas, the values are shown in both statistics (how many are helped, how many lives are enhanced) and stories (about the real people behind the statistics). 

In the same article, Vanessa Kirsch (no relation to Steve) who founded New Profit, a Boston-based venture philanthropy group, said, "Traditional philanthropy isn't based on performance and results."

Whether or not that is true, that is the perception out there. And organizations must position themselves in new ways to appear results-oriented.

7. If your organization wants to attract a transformational gift, it must also focus on the issues, ideas, and values inherent in the mission.

Often this starts with reevaluating the mission statement. Is it so corporate that it only conveys what your organization does, and not why you do it? If so, chances are strong it doesn't convey your values. 

We function in a message-driven society - so much so that it takes up to seven exposures to a message before it can break through the resistance we have developed. 

But, advertisers who seek consumers for the purposes of having them spend thousands of dollars on cars, high tech communications devices, and other such indulgences, are not shy about talking about values long before they mention their product.

A recent advertising insert in several magazines with affluent readership had the following text:

"We build walls. With our everyday routines. And our cram-it-all-in schedules. Walls that make a nasty habit of separating us from our dreams. But, what if there were no walls? What if there were a way to break straight through to your dreams? There is. All you need is an outfitter with the right equipment. Ford is your outfitter. Outfitting you with the most far-reaching sport utility vehicles on earth. Climb in.  And watch the walls come tumbling down." 

So little mention of the cars; so much emphasis on the values.

And, you need not have a huge advertising budget to get a message across. Integrate your values even into the smallest unit of your outreach: Stanford University Libraries sent a simple thank you card to its donors.

A sketch of the library was on the front of the fold-over card. Inside, the text read: "Your gift to the Stanford University Libraries helps us assemble the sources, the arguments, the hypotheses, the wisdom and controversies of the ages. For all those here and those yet to come, please accept our gratitude." 

It was signed by the University librarian. It does not need to be poetry, but it needs to catch people's attention and engage their thinking and involvement.

For Sage Hill School in Orange County, the values of diversity, service learning, excellence, and opportunity to thrive have been the pre-eminent message in its marketing for enrollment and for the campaign to build the school.

8. Transformational gifts may be decades in the making, or they may come in more quickly than you can imagine.

A bequest of a million dollars or more for an organization with a modest budget or programming is clearly transformational. Many times, these gifts are not known until we are notified. They represent decades of involvement or observation by the donor, and a decision to make a lasting investment in an organization. 

Those kinds of gifts are more the product of faith in an organization's ability to continue operating and acting long after a person has died. 

Contrast that kind of gift with some of the transformational gifts that have been received. Sometimes, they are surprises, too.  But, because they are issues-focused, or about change, they have an urgency about them. The urgency is based not on the organization's perceived urgent need for money, but on the donor's perception or the urgency of the need the organization is meeting.

An endowment campaign feasibility study for a 4-H after school activity program in public housing projects in Oakland, California, yielded many funders interested in making a gift to the program - but not for endowment. 

The problem 4-H is working to ameliorate in Oakland was felt to be "too urgent" for an endowment approach. Instead, corporations, foundations, and individuals were willing to consider six-figure gifts that would more immediately transform the programming to these at-risk children.

And, while solicitation of transformational gifts should be done through personal conversations and meetings, the supporting dialog will often be done on the Internet. These are, in many cases, very busy people. The process is donor-centered, of course, and that includes adapting your systems to their needs.

9. Other characteristics of transformational givers provide additional reasons for looking carefully at your cultivation, solicitation, and stewardship systems.

Even more traditional donors who decide to make a transformational gift are increasingly impatient with the pace of the nonprofit sector and the bureaucracy of some institutions.  And, younger donors are very impatient, particularly those who have worked in high-tech fast-paced start ups. 

When they want information, they want it by return e-mail or phone call. The process inherent in so much of what nonprofits have traditionally done in donor development may have to be accelerated.

Internalize the steps and skip past those that don't seem necessary. And, if suggestions are made about speeding up processes or stripping out a few layers of bureaucracy, listen to these advisors. They have known success either because of their creation of wealth, their emergence into mainstream philanthropy, their climb up the corporate ladder, or their management of inherited wealth and their redirection of it into social ventures.

They are looking to make long-term investments - many are using the venture capital model of a minimum five-year investment - but they want short-term results and a non-bureaucratic environment in which to be engaged and savor the impact of their giving.

10. If you remember four "I" words, you will be better positioned to engage a potential transformational donor. 

Focus on Issues, offer opportunities for Involvement, remember that this gift is truly an Investment, and remember to focus on and convey the Impact to the donor-investor and to the community.

These Ten Things you should know about transformational gifts and givers should give you food for thought and a platform for action.  In communities around America (and increasingly, other parts of the world) there are individuals and foundations with wealth that they wish to invest in their communities. Position your organization to be an agent for their dreams.

Kay Sprinkel Grace is the author of the Ultimate Board Member's Book, Fundraising Mistakes that Bedevil All Boards and Over Goal! What You Must Know to Excel at Fundraising Today, all of which may be ordered from Emerson & Church, Publishers. Kay is a prolific writer, creative thinker, inspiring speaker, and reflective practitioner. Her passion for philanthropy and its capacity to transform donors, organizations, and communities is well-known in the U.S. and internationally. Kay lives in San Francisco and is an enthusiastic photographer, traveler, hiker, and creative writer. When not writing, speaking, or consulting, you can find her with her children and grandchildren who live in San Francisco, upstate New York, and France.

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