The Robin Hood Foundation gives teenagers $25 worth of food stamps—a week’s supply for a single person in New York—and challenges them to buy their own food for the week. The eye-opening exercise is part of a seven-day summer camp the foundation started for children of its donors.
Robin Hood, an antipoverty group that relies heavily on the wealthy for donations, started the camp and two other youth programs as a way to stand out in the competition for big gifts by catering to a growing concern among its supporters.
Today’s donors increasingly want “to be sure their children have a balanced world view and learn the importance of giving back to those less fortunate,” says Patricia Smith, the charity’s marketing and communications director.
While Robin Hood’s youth programs are an ambitious way to court the rich, charities nationwide say they must work much harder now to meet the needs of wealthy donors.
While nonprofits had already faced growing demands for personal involvement from baby boomers and their children, the bad economy has exacerbated their demands for control, says Philip Purcell, vice president for planned giving at Ball State University Foundation.
“The mantra of boomer giving is 'I love you, but I don’t trust you.’ Donors are well-meaning, but their philanthropy is not unrestricted.”
Donors are also looking well beyond traditional gifts, experts say. Here are some ways to deal with the demands and changing interests of the affluent:
Pursue for-profit ideas and recruit entrepreneurs. A growing number of affluent donors are investing in business opportunities that produce a financial return while doing good, notes David Wills, president of the National Christian Foundation, which offers donor-advised funds.
Over the next decade, Mr. Wills predicts, it will become common for wealthy people to talk about their philanthropy in terms of two pools of money: a fund or other entity that makes outright grants, and investments that earn both a social and a financial return.
To take advantage of this trend, says Mr. Wills, charity leaders must stay on top of new techniques for financing good works, such as social-impact bonds or low-profit businesses that primarily serve a social purpose, he says.
Social-impact bonds, for instance, give people a financial return for investing in charitable projects that produce socially desirable results.
Charities that thrive in this environment will be those that find “financially sustainable ways to accomplish their mission,” says Mr. Wills.
As a first step, he advises charities to recruit more entrepreneurs and people with business skills to their boards.
Seek gifts from donor-advised funds. Christine O’Donnell, a Bank of America official who advises wealthy donors, says her clients are increasingly likely to have a donor-advised fund, which lets them set aside money in a charitable account and later disperse it to nonprofits.
Donors who have such funds aren’t required to disclose their grants or even the existence of the funds. That’s frustrating for fundraisers, Ms. O’Donnell acknowledges, but it’s still wise for nonprofits to talk about how donor-advised funds can support their organizations in all of their appeals. That might prompt donors with the funds to step forward.
Figure out what donors want to accomplish. Kathryn Miree, a lawyer who advises many nonprofits, says some charities risk losing gifts because they focus too much on what a donor says he or she wants rather than teasing out the person’s real goals.
Ms. Miree recalls working with a diocese that was approached by a wealthy donor who wanted it to start a church school. When the diocese told him that the project was outside its mission, she says, the donor got angry and walked away.
If the charity had instead asked, “What do you really want to achieve with this gift?” it might have learned that the donor wanted better teachers, and that might have been something the diocese could have worked toward, she says.
Know when and how to say no. Mr. Purcell of Ball State says donors often push things he knows his university can’t do for ethical, legal, or practical reasons. In response, he explains this, and donors often back down. “You also try to offer alternatives or compromise,” he says.
When donors are seeking too much control, Mr. Purcell offers, for example, to keep them posted on how their gift has been put to work or introduce them to beneficiaries of it.
But sometimes, he says, the only answer is no. He recalls a tough situation in which the relatives of a donor who started a scholarship fund wanted to get involved after the donor died.
The university agreed, hoping the relatives would become donors too, Mr. Purcell says. The relatives now actively participate in talks about how the scholarship funds are spent.
But the heirs soon argued that times had changed since the gift was made and insisted the money should be spent another way, he says. “They rattled their sabers, and they thought they had legal recourse.”
Armed with written instructions from the donor, Mr. Purcell says he had to “look them in the eye and let them know there was a limit.” He adds: “It was difficult to say, and it was difficult for them to hear, but we had to say it.”
The heirs have since dropped their demands, but he says the university’s relations with them are still tense. “You want to leave the table with everyone smiling,” he says. “Instead, you are faced with negotiations that feel more like an arbitration or mediation. A great deal of time can be spent on this. There are both time and opportunity costs.”