Gifts vs. Investments

Gifts vs. Investments

A word that is exceptionally prominent this time of year is a simple one – gift. And while gift giving during the holidays can be both a rewarding and stressful occasion, gift giving to charities is something that provides a bit more tension for those nonprofits on the receiving end. But what if instead of considering your financial contribution to a nonprofit a donation, more individuals thought of it as an investment for the community? What levels of engagement are nonprofits missing by asking for charity?

An interesting anecdote in The End of Fundraising by Jason Saul goes as follows: let’s say you have $100 to buy shoes. You would likely do your research, go into a store or to an online space, and buy the shoes you think would bring the most benefit to you, either in aesthetics or practicality. Now think if you gave $100 for someone else to buy shoes for their own needs. What questions would you be likely to ask? People tend to ask if you actually bought shoes with that money versus asking the quality or impact those shoes will have. This is the main difference between accountability and value. And this is also the same difference between making a donation and making an investment.

Most people, when giving a gift, like to know that the gift went to where it was supposed to go. The same logic applies to nonprofits. The main attributes of charity rankings, which we have discussed previously, oftentimes rely on overhead ratios, infrastructure expenses, and amount spent vs. raised. These websites make it possible for nonprofits to be accountable to their donors. But nowhere is there talk of the value provided by the nonprofit, and what their work is worth.

The idea of investing in, instead of donating to, a charity is one worth exploring. The idea, though, inherently changes the communication around fundraising as a whole. Investments come with the expectation of dividends, rewards, or ownership of the idea or product purchased. Which begs the question – where is the flaw in donors having more ownership over the causes they support? Isn’t this what every nonprofit hopes for when they receive donations – a more engaged, active constituent base that has a longterm relationship with the cause and organization?

Kickstarter and Kiva have already shown the impact of having a more personal relationship with the project from a donor perspective. Thanks to the requirements to use each service, nonprofits and for profits alike are finding new ways to prove both social impact and show financial accountability. People who give to these campaigns also have more stake in the organization thanks to their investment – being a part of the solution instead of giving blindly to a cause.

As the gift giving season continues, and as nonprofits prepare to send out their final fundraising pushes of the year, it is important to consider the potential impact of moving away from being simply a charity and moving towards an organization worth investing in. Investing means providing donors more than just the “feel good” factor – it means allowing donors, or rather investors, to feel responsibility in achieving the mission of the organization. It means a more committed and thoughtful donor base that will support your nonprofit for years to come. And it means your nonprofit can change your impact.

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