October 07, 2008
Donor Questions Fund-Raising Pitch
Holden Karnofsky, founder of GiveWell, a grant maker that offers advice to other donors, questions a popular way that many nonprofit groups raise money by telling potential contributors exactly what their donation would pay for.
For example, Mr. Karnofsky points to a women’s group that promises that for every $45 gift it receives, it will teach an African woman basic reading skills and how to write her name.
Mr. Karnofsky writes on GiveWell’s blog that if this is literally true — that a donation directly benefits one aid recipient — “this would seem a horribly inefficient way to run projects — spending all the overhead to pay staff, set up the class, etc., and leaving one woman out because of a $45 shortfall.”
Yet if the pitch is simply a way to appeal to donors and the money actually flows instead into the charity’s general coffers, “your donation is really an unrestricted donation to a large organization; to understand your impact, you need to understand the entire organization.”
“All in all, I’m skeptical of any claim that says ‘your $1000 buys X.’ It’s a good way to make things feel tangible, but a donor truly trying to understand his or her impact should take a different approach,” he writes.
In a separate post, Mr. Karnofsky suggests that donors conduct research on a charity’s “strategy, priorities, and activities” and give unrestricted gifts, instead of ones for specific efforts.
What do you think of Mr. Karnofsky’s argument against the fund-raising pitch?
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Calling Holden Karnofsky a ‘donor’ elevates him to a status far above his true position in the giving world. Enough of his generalities. Let’s see some of his results.
— Donna Donor Oct 7, 12:25 PM #
It’s ironic that Holden is described as a “donor,” given his history of nondisclosure in blog posting and other on-line activities to which he apologized for. I think it would have been appropriate to call him charity commenter or something to indicate he is not a typical donor. As for his point, I’m employed as a fundraiser and have never heard a donor raise his point. Could be a concern but nothing I’ve heard in 15 years.
— John Pepperdine Oct 7, 02:02 PM #
Certainly Mr. Karnofsky must know that most charities that use this form of appeal are moving ahead with their work to teach literacy to women or feed hungry children, etc., regardless of whether a donor has sponsored or funded the specific work. In most cases, the donors’ $45 or $1,000 is paying for work that is already being done, or has already been accomplished. In essence, the charity is replacing dollars that have already been spent.
This is not only an efficient way to do business — it is commendable.
— Kevin Feldman Oct 7, 02:05 PM #
I think Karnofsky is confusing levels of donors. For newer and less experienced donors or for donors just being introduced to an organization, it is useful to demonstrate what $50 does. Donors with more experience will look at other indicators of an organization’s performance and measure how it is using money. We can’t confuse the direct mail piece with major donor work!
— miriam Oct 7, 02:10 PM #
I agree that Mr. Karnofsky is speaking only in generalities or, worse yet, from his own gut. Has he measured the number of donors who think this kind of pricing signifies a poorly run organization? I work in a non-profit, and I consider it a sign of good management when those running the program are able to tell me how much it truly costs to deliver service to one person – it shows that they are measuring their efficiency per case.
— Skeptical of the Skeptic Oct 7, 02:14 PM #
I guess it all depends – is that $45 a true, total cost? Does it include all the program and G&A/overhead costs? If so, is each donor linked up to women individually? If not, then isn't the nonprofit being dishonest about what the donor is buying, when in reality, the donor might be subsidizing other activities that have higher ‘per result’ costs that are undesirable? If the total cost is true and the donor/beneficiary link is true, then I think this is a wonderful, appropriate way to do business.
— Brandon Oct 7, 03:14 PM #
It’s really hard to take Karnofsky’s gripe seriously. There are any number of valid ways to look at the cost of providing a product or service (and there are probably a far greater number of invalid ways). Assuming, as Brandon noted, that a solid case can be made for the $45 cost, then, yes, this is one of the ways to understand what a donor’s gift accomplishes. And, indeed, there is a point in many such programs where an additional dollar or two might make a very big difference for a client.
— Ruth Conner Oct 7, 04:22 PM #
Some need to conceptualize the difference a gift of any type would make to an organization. However, major donor appeals should not be co-mingled with donor acquisition techniques.
— Jennifer Oct 7, 05:07 PM #
I think it’s about how you frame the statement. If you say “Your $45 will be used to teach a woman to read,” then you need to spend that $45 on teaching a woman to read.
On the other hand, if you are talking about program levels and dividing # served into cost of the providing the program I’d say you should be more careful in how you word your appeal. It might be effective with some donors to give a tangible result for their gift, words do matter.
— annetta Oct 7, 05:57 PM #
Read this and enough said re: Mr. Karnofsky’s perspective and expertise on donor realations and communications:
http://tacticalphilanthropy.com/2008/01/holden-karnofsky-givewell
— Nancy C Oct 7, 06:19 PM #
Given Holden’s track record, I’d be assuming that – like plenty of his other questions and criticisms of the sector – this post is a veiled attempt to direct more donors away from other charities and towards Givewell. Everyone seems to overlook the fact that Givewell is not solely a donor – they also raise funds, competing with the charities they claim to want to assist.
— Noble Oct 7, 11:48 PM #
I can’t believe anyone still pays attention to GiveWell. There are so many other useful blogs you could have talked about. Have you read Tom Peter’s Blog lately?
— JFundraiser Oct 8, 11:54 AM #