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Acknowledgements
I must first thank every donor who gives money to any nonprofit. This book is my thanks to you all. Thank you for your amazingly generous hearts, minds, and souls. The lessons you taught me are the basis of everything this book contains. Plus the world is a significantly better place because of your generosity.
Of course, how I got to know that such generous people exist at all is because of my grandmother, Ma Sproull, who was there for me when the first 20 years of my life were less than smooth. Her kind voice, generous heart, and assuring wisdom underpin the foundations of this book. Through her caring of me, I have been disproportionately blessed. Thank you, Ma Sproull.
Next, I would like to thank my three children for the essences of generosity you have taught me and shared with me. I’d also like to thank their long-suffering mother, Greta, who has extended me more grace than I ever deserved.
Putting this book together has taken me nine years. Words on top of words and I often wondered whether they were conveying what they should. And then the wonderful Emma worked through those words and cropped out the weeds to make better sense of everything. Thank you so much Emma.
Finally, I would like to thank the many people I have met and worked alongside on this journey in the nonprofit sector. Not only do I thank you on my own behalf but on behalf of the immense numbers of citizens who are blessed by your desire to engage in work that lifts the lives and souls of others.
Other resources to support you
Its likely that you will have questions along the way as you read this book. With answering those in mind, please check in to,
www.crackinggenerosity.com
…on a regular basis. If you are comfortable to do so, please register your email there so that I can update you of further resources to help you build your donorcentric fundraising enterprise as will be explained soon.
I have put all my energies into getting this book published as a first step for you but following soon after I will be providing the following.
1. An AI facility at www.crackinggenerosity.com that you can use to ask questions and receive quick answers.
2. I will be launching my Cracking Generosity podcast to enable real time chats and question sessions for anyone wanting to dig deeper in what is required to crack generosity in modern society. I intend episodes to include as many interviews with experienced social sector and nonprofit sector fundraising, supporter relations and marketing specialists from around the world as I can. Recording has already begun with the intent that episodes will be online later 2024. Watch out for those.
3. Via your subscription email I will keep you updated about the Cracking Generosity training courses to be launched in 2025 on www.teachable.com This will enable you to identify and apply specific aspects of the forthcoming content of this book as it best fits to your unique nonprofit setting. An aim in this is that the online training will also be helpful for the members of your team.
4. One to one coaching and mentoring opportunities to narrow down to how the Cracking Generosity principles can be uniquely configured for your nonprofit.
My mission is to be here to help you. Onwards and upwards.
Malcolm Sproull
Malcolm Sproull has dedicated his life to figuring out better ways to enthuse more nonprofits to embrace the power of citizen generosity to fund their vital missions. Prior to that he worked in sales and marketing in the corporate and business world.
In Cracking Generosity he applies his profit-motivated money-making experience from both the commercial and social sectors to guide nonprofits in the building of fundraising enterprises to make their income from increasing amounts of citizen generosity. His fundraising enterprises are designed to be sustainable and highly profitable well into the future.
Cracking Generosity reveals knowledge that was once more widely understood by members of Malcolm’s grandparents generation. A time when it seemed more people integrated intentional generosity into their money-making lives. But its lessons and the potential income increases for any nonprofit remain equally applicable in this day and age.
Malcolm lives in New Zealand which is one of the most generous countries in the world in terms of money donated to charitable organisations by its citizens. Based on his study of ten New Zealand nonprofits over 20 years, along with consulting to numerous others, Cracking Generosity holds gems for any person anywhere in the world involved with a nonprofit who wishes to see its mission thrive.
“The idea there is some limited capacity that individuals and organisations have already reached preventing them from giving more money to charities than they currently do is more delusion than truth. If you subscribe to this view, you have probably been misinformed.”
Malcolm Sproull
Imagine 10,000 generous donors
Imagine you manage a nonprofit. You, of course, are passionate about the good cause of that nonprofit. Now imagine there are 10,000 other people on the planet who are just as passionate as you about the work your nonprofit is doing. These 10,000 people have your back. They may not have your unique expertise, but if they did, every one of them would join you to accomplish the life-changing goals of your nonprofit. That’s how passionate they are about the good you are delivering to the world.
However, these people also understand their limitations and recognise that their skillsets lie elsewhere. They do not know how to do what the front-line staff at your nonprofit does. Many of them wish they could. Yet, the realisation they don’t possess the skills to achieve the mission does not dampen their passion for seeing your good work succeed. They have a solution to become part of helping you achieve your mission.
Imagine that one day all 10,000 of them arrive at your front door and say, “We love what you’re doing. You have unique expertise we don’t possess, but we are deeply interested to see the work you are doing get done. We propose to do the best thing we can do to help you. From what we earn by applying our very different skills from yours, we would like to donate some of our money to your nonprofit on a regular basis. What do you think?”
Possibly using a very powerful public address system, you would reply: “What a wonderful idea. Thank you. That will make all the difference because it will mean my team and I can just focus on the good cause work without tying up lots of our time and energy raising money to pay for it. And, to be honest, raising
money for this work isn’t why I started this thing in the first place, as I’m sure you can appreciate. It’s not really where my expertise lies. So, yes, thank you.”
The 10,000 wanna-be donors applaud you, and, when they return to their homes or workplaces, each sends an email to your donor-database administrator detailing how much they will give, how often they intend to give it, their home address so you can post them updates, and phone details in case that might be helpful. Oh… and they also tick the box that says they will “opt-in” to your ongoing email and social media communications about the work you are doing with their money.
A quick report from your donor-database administrator tells you that the average prospective donor has pledged $50 each annual quarter for the foreseeable future, totalling $2,000,000 per year. Some report back that they have also included your charity in their Wills as a bequest, which, in time, can add millions more for the work of your good cause.
That’s not an income to be sneezed at, considering that before those 10,000 wanna-be donors came to your door, you were running the entire nonprofit out of your garage and paying for it with the money your loving spouse was giving you from his/her earnings doing a paying job in the for-profit sector. Oh, and not forgetting Auntie Ethel, who keeps you supplied in freshly baked scones with jam and cream.
How’s your imagination going so far?
Are you with me?
This story is based on fact. Okay – maybe not the bit about 10,000 prospective donors showing up at your front door, although that would be wonderful if it happened.
But it is a fact that there are thousands of nonprofits in existence worldwide today that are financed in the way I have just summarised. Sometimes the average annual donation value from the donors is considerably higher than $200 a year (i.e. $50 each annual quarter, as suggested above). Also, because the income in such a nonprofit comes from 10,000 givers of money each year, when an economic downturn arrives, there does not tend to be much of a negative impact on total annual cash flow. That’s because the nonprofit in question receives money from 10,000 different life and financial journeys, each represented by a modest amount of donated money. Even if your charity takes a bit of a financial hit, and maybe 1000 donors are unable to donate over the bad years, the remaining 9000 will likely have the capacity to slightly increase their contributions to cover the gap for a while.
The same is typically not the case for the numerous nonprofits that rely on fewer and larger exchange transactions1 from fundraising events, grants,
1. You will be hearing a lot more about “exchange transactions” in this book. In essence it’s any form of financial transaction where the buyer is content that the money they have paid to a seller is a fair amount to gain
government contracts, retailing products, and sponsorships from businesses. Nonprofits predominantly reliant on those sources of income tend to experience significant declines in revenue during economic downturns. Plus, those working on fundraising in such nonprofits tend to get burned out at a higher rate than those whose income is mostly generated from donations.
The bottom line is this: any nonprofit with 10,000 financial donors behind it is ahead on points compared to those that do not have such a fan base. And a vital factor that we will delve further into later in this book is that income from philanthropic donations contains significantly higher gross profit than income generated by any other exchange transaction methods. When I say significantly more profit, I mean 3 to 6 times more, at least. Numerous donorfunded charities are functioning from a normal return on investment of $5 for every $1 invested in building and maintaining generosity income. Few people in the business or nonprofit sector who make their income from exchange transactions can ever hope to achieve such a high return on investment.
This book will reveal to you the components necessary to construct a generosity enterprise around a pool of passionate donors that come to the financial aid of your nonprofit. On day one, there may not be 10,000 of them, but you will learn the ageold and proven systems thinking that can produce incremental growth in your donor database. If you keep those systems going, it’s not unrealistic for the number of donors supporting your cause to reach 10,000 or more one day. If you adhere to the systems and processes described in this book, you will crack generosity. Then that generosity will bless your nonprofit. But most importantly, that generosity will bless those your nonprofit serves.
The systems you will learn about in this book can effectively be plugged into almost any nonprofit in the world.
ownership of whatever thing they purchased. And as you will soon find, such a transaction is very different to philanthropic giving.
Section One: Discovering Citizen Generosity
“I’m asking you to believe. Not in my ability to bring about change but in yours.
“Because for all our outward differences, we, in fact, all share the same proud title, the most important office in a democracy: Citizen. Citizen.”
President Barack Obama delivered during his Farewell Address in Chicago on January 10, 2017.
My ten-charity study
In 2002, I left corporate and business employment and shifted to the nonprofit sector, where I found few others were recording the reality of what was truly happening inside New Zealand nonprofits. While many academics and policymakers would comment on how the nonprofit sector “should” function, few reported facts that reflected an understanding of the granular detail of the fundraising problems within that sector.
I soon discovered that the primary inhibitors of nonprofits achieving the good they intended was a failure of income generation. By contrast, those inside the charities undertaking the frontline work of the good causes were almost always competent and skilled practitioners capable of achieving the required outcomes for which the charities had been established, if income generation wasn’t a problem.
I also came across several people who had given up on nonprofit fundraising and marketing due to an array of challenges and mysteries that left them bewildered. On returning to the for-profit sector, none of them expressed any desire to formally report on their findings during their time in that sector. They were over it. Mostly, their temporary venture into the nonprofit sector only reinforced their scepticism towards the effectiveness of nonprofits in general.
People who were competent deliverers of their good cause were falsely branded when their ability to get on and deliver their mission was hamstrung by fundraising dysfunction and ignorance.
Over time, it became apparent that the realities at play in nonprofit supporterrelations, fundraising, and marketing remained hidden from view because no one was studying those aspects of the sector. The fundraising sector was essentially full of novices, who were rarely advancing past being novices. A minuscule few would stay the course long enough to become experts in this field.
I decided that I would study the sector and report on it with the intent of identifying the repeating knowledge gaps and dysfunction that are hamstringing so many wonderful charitable missions. In writing this book, my hope is that the constant repetition of mistakes in nonprofit supporter-relations, fundraising, and marketing may be significantly reduced.
In the following pages, much of what you will learn comes from my inside observations within ten New Zealand nonprofits that employed me in some fundraising, marketing, or supporter relations capacity.
Three of the nonprofits in my study applied the cracking generosity principles that I will outline in this book, and seven did not. The three that did apply those principles continue to grow their very profitable income to this day. Of the seven that did not, one no longer exists, two are trying to be revived from the ashes, and one was rescued by a government-funded social service provider soon after its own government-funded contract payments were cancelled. The others struggle to keep their heads above water, mostly by means of grant applications, business sponsorships, retailing some product or other, and running events.
Supplementing my observations are additional findings I have made through consulting and advising with many other nonprofits outside of the ten in my study. Included is information gained in conversations with other people who have persevered in fundraising, marketing, and supporter-relations roles in the nonprofit sector in New Zealand and several other wealthy Western countries. Never to be forgotten are the lessons I have learnt from conversations with hundreds of wonderfully generous donors.
Behind my approach as an inside observer of these nonprofits is my insatiable curiosity about almost everything. Driving that curiosity is recognition of the fact that it is my own ignorance – not the ignorance of others – I want to resolve. When others tend to walk away, my own reaction is usually, “Let me take a closer look at that.” I get excited when I sense untapped potential, and when I put my business hat on in the nonprofit sector, I sense substantial untapped philanthropic, marketing, and donor-centric potential.
However, I have also found a shocking absence of the skills and knowledge required to release that potential.
My disturbing findings
Since the age of 24, I have made my living by asking people for money in exchange for something. Some people call what I have done for a living selling. Some call it marketing. Some call it both. It has long been called relationship marketing in the commercial sector, mainly because it’s a method of doing business based on working closely with relatively small databases (hundreds rather than thousands) of prospects or customers. Sometimes I would need to use broadcast marketing techniques directed at large audiences to find people who might become customers (known as prospecting or lead generation). Once found, my focus was to maintain close, trustworthy, and ethical business relationships with those customers from then on.
I can now wrap my work-life experience up into three common denominators that have constantly repeated through all the business and nonprofit incomegeneration work I have undertaken:
1. Treating the stories and needs of my customers as more important than my own story and needs.
2. Constantly selling something to somebody via relationship marketing and being comfortable doing so.
3. Managing all relationships via the use of a constituent/customer relations management (CRM) database.
Failing to care for and properly manage a CRM database is a recipe for the death of a nonprofit. Around 70% of the problems I saw nonprofits encounter in their attempts to raise funds from generous people were due to failings in the quality and care of their donor databases.
I entered the nonprofit sector with a detailed working knowledge of the power of CRM databases and first-hand experience running a profit-making business of my own, so what I encountered shocked me. I was suddenly surrounded by people with virtually no previous commercial, profit-driven, business-building work experience. The few others I encountered with truly commercial and business profit-driven backgrounds, who temporarily dipped their toes into the nonprofit sector, quietly left me to it. Driving them away were many bewildering practices within nonprofits that they and I identified would not survive in the for-profit sector.
Pick a dysfunction
Such as:
1. Misguided and poorly-qualified (if well-meaning) nonprofit board members, who were recruited using ramshackle processes that were usually about choosing the first person to put up his/her hand for the job. Plus numerous such board member recruits came with personal agendas that did not align with the original mission intent of the nonprofit founder.
2. CEOs who were not the right people for the job. This included several who had found their way into the position as a tail-end-of-career move, seeking out a pre-retirement comfort zone. Then there were many others who were classic examples of The Peter Principle2 – an observation that the
2. https://en.wikipedia.org/wiki/Peter_principle
tendency in most organizational hierarchies is for every employee to rise through promotion until they reach a level of respective incompetence. And there were CEOs who lacked previous experience raising money in either the nonprofit sector or the for-profit sector.
3. Enthusiastic amateurs employed into fundraising positions, learning to fundraise on the job with no one of experience to guide them. Most also did not come to their fundraising roles with any commercial incomegenerating work history.
4. Financial managers (sometimes Chief Financial Officers) who were also embracing a tail-end-of-life comfort-zone role and who were applying accounting methodologies designed only for exchange transaction management that they had learned in the commercial sector. They had little understanding of the huge accounting practice difference when dealing with generosity transactions of the nature of philanthropy. I will explain much more about this critical subject later.
5. Ineffective and/or inefficient processes and systems for managing cash flow and marketing.
6. Mismanaged, neglected, or even non-existent donor management databases. (This was deeply bewildering and distressing for a relationship marketer like myself, who relies on such tools.)
7. An inability to honestly illustrate whether funds raised were being wisely spent. A great deal of foggy financial reporting made it difficult for donors to see if their money was being used as they had been told it would be.
8. Genuinely wonderful frontline staff working on the mission of a good cause, often with fewer resources than they needed to properly undertake their work.
9. Nonprofit fundraising staff frequently burning out from work overload, adding to disproportionately high staff turnover (pre-COVID, the average term of employment of a fundraising manager was between 18 and 24 months). Much of that was due to boards with no understanding of generosity/philanthropic fundraising, who directed new fundraising staff to become event managers because those board members only understood methods of fundraising through exchange transactions. (Be prepared to hear a lot more about “exchange transactions” in this book.)
10. Nonprofit boards that were filled with people who constantly struggled to set aside management thinking because they had not been taught what governance thinking is.
11. Vague or missing clarity about the founder’s mission, the entire reason the charity was started in the first place. In short, staff who did not know the “why” of the organisation.
12. Recruitment of me into fundraising and management roles based on job descriptions I trusted were accurate, only to find out later were written by people who did not know what work a nonprofit fundraising director, manager, or marketer needed to do.
13. Branches of nonprofits going bankrupt, having reached that state entirely due to people not knowing what they didn’t know and yet refusing to acknowledge that fact about themselves.
14. Fundraising staff terrified to ask for money from fellow citizens because they considered their own dislike of being asked to donate to charities was the measure for all other people on the planet. (They are demonstrably wrong.)
15. Fundraising staff undertaking wasting energy and resources on events that produced a negligible return on investment. Many nonprofits struggled to even measure return on investment due to the foggy financial methods they employed.
16. Poor or zero understanding of relationship marketing. A simple measure of this was how frequently I heard from donors that they had never had a conversation with someone in that charity before talking with me. That is relationship marketing sin number one – insufficient conversations with donors.
17. Putting self-interest above the interests of the good cause and ahead of the interests of citizens who were predisposed to financially support the mission of that cause. i.e. not putting the story of the donor ahead of their own story.
18. Patch protection where divisions of the same national charitable brand would not co-operate on national fundraising strategies because of fear that it might result in one division stealing donors from another divisional territory.
19. Generous donors who withdrew their financial support as they witnessed fundraising dysfunction within the charity. Unknown to the nonprofits concerned, this included many donors removing bequests to those nonprofits because they no longer trusted that their bequest would be applied as was originally promised. In one case I came to know of, a married couple withdrew a four-million dollar bequest because of what they saw unfolding at a management level within a particular nonprofit. They saw this when they became volunteers for that charity.
20. Donors, who were unaware of the nonprofit's interior failings, falsely led to believe that their donations were being applied wisely and effectively, when I knew they were not.
21. Nonprofits with little or poor understanding of a donor’s true capacity to give more.
My list could go on… and on. You get the point, I hope. If any of these dysfunctions were at play in a business, it would soon cease to be due to a lack of profitability. In the for-profit sector, elements of the above list are behind why more than 30% of small to medium business start-ups don’t survive their first year, and nearly 70% have ceased trading within the following ten years.3
Why (only) New Zealand?
What we need is a great big melting pot
Big enough to take the world and all it's got Keep it stirring for a hundred years or more And turn out coffee-coloured people by the score
Lyrics from the 1969 Blue Mink song “Melting Pot”.
For my study of nonprofits, New Zealand is a convenient multi-cultural, multiethnic melting pot of people from all over the world. It is also one of the most stable democracies on the planet. Because of that, I believe my study reveals insights that are then applicable globally.
The largest city in New Zealand is Auckland. Within its boundaries, on an average day, some 200 different dialects and languages are spoken. That is because Auckland is one of the most culturally diverse cities in the world, and I live there.
As an example of that diversity, my white Anglo-Saxon-fourth-generation-New Zealander son, Kris, learnt to speak Mandarin (the principal dialect of the Chinese people) as a by-product of working in the center of Auckland. Before learning Mandarin, he spoke only English. He did not formally study Mandarin as many now do at University. He acquired the language as a natural by-product of finding that more than 70% of the customers in his retail outlets spoke Chinese as their first language. No, this didn’t occur in a China Town precinct operating as a separate cultural part of the city. It was in the center of the Auckland shopping precinct, where the nearby population is nearly 30% Asian. After English, when Mandarin is added to Cantonese and other Chinese dialects, Chinese languages are the second most commonly spoken languages in New Zealand4
This great cultural diversity in our main city of Auckland, including its Chinese citizens, has allowed me to have conversations with many recent immigrants from across the globe. Much of my insight into the global nature of financial generosity has stemmed from those conversations.
While colonisation first drew mainly European settlers to New Zealand shores, the number of people groups from other parts of the world seeking refuge in New Zealand escalated dramatically after World War Two As a result, by the 1960s and ’70s, New Zealand had become a brilliant ‘lab rat’ society for modelling and market-testing all sorts of ideas and technologies that might have a profit-making potential in most other Westernised countries, including the USA. I became very familiar with this reality during my time in the pharmaceutical industry, when many new research medicines were first tested in the New Zealand market before being launched elsewhere in the world.
Another example of New Zealand’s usefulness as a testing nation is illustrated by this online article in The Economist blog in 2015.5
“New Zealand’s relative isolation means that if a product needs to be modified significantly to fix faults or make it more appealing to consumers, word of its teething troubles is less likely to spread, thereby discouraging customers elsewhere from trying the improved version.
If a firm finds that a particular product, or a new feature added to an existing one, is a resounding flop in New Zealand, it can quietly be dropped without having much effect on the company’s overall reputation. Facebook tried offering Kiwis disappearing messages (in the vein of Snapchat) and a tool that let users pay a small fee to
4. Data from www.figure.nz “Most common languages spoken in New Zealand other than English from 2018 Census from StatsNZ.
5. No. 2015 is not way in the past and therefore this example is outdated. Its the point I’m wanting to convey here.
promote their status updates to friends. It abandoned plans to roll these out elsewhere after New Zealanders nixed them. “If you mess up and burn that market, it’s not that big of a deal,” says David Stewart of Fade, a photo-sharing firm.
“Not that big of a deal???” I’m not sure I fully agree with you on that, David. Maybe I should have chosen another quote about how our isolation works in the world’s favour. Also, maybe David might want to check how well New Zealanders are connected to the rest of the world through the internet and reconsider. We can make a big noise on the globe if we choose to. Just check back about how we made the Lord of the Rings movies in the early 2000s. We are Middle Earth, mate! But that’s okay. We are used to it.
Equipped with a diverse population representing a broad range of cultures and ethnicities from across the world, combined with a consumer culture that replicates pretty much every other westernised country, New Zealand also turns out to be a great place to study nonprofit behaviour because:
It’s usually one of the top three most generous nations in the world measured by the World Giving Index6. Although, as a result of the impact of COVID-19, the World Giving Index published in 2021 saw New Zealand drop to 7th overall as a few Asian and African countries really stepped up their generosity.
It’s also one of the wealthiest countries in the world.7
Its citizens reflect similar consumer behaviour as citizens do in almost all other western countries.
A large percentage of its citizens are ‘early adopters’ of new technology
New Zealanders (Kiwis) tend to be highly literate and well educated.8
Kiwis are great ‘globe trotters’. Three citizens in five have travelled to Europe at some stage in their lives.9 Currently, more than 16% of New Zealand-born citizens (about 1 million) reside elsewhere in the world.10 That means we are very much global thinkers.
8. How does New Zealand's education system compare? OECD's Education at a Glance 2017 | Education Counts
9. New Zealanders take more overseas trips than ever before | Stats NZ
10. With an expat community of over one million New Zealanders living abroad, what are we doing to make use of these people and their skills? | interest.co.nz
We have had a stable democratic government since 1900.
New Zealand was the first country in the Western world to enable women to vote in political elections (in 1893).11
There are enough of us in the ‘lab’ (five million New Zealanders, excluding those overseas) to provide large enough measures for valid tests.
It operates as one of the most accessible and most deregulated democratic economies in the world. We make our living by selling agricultural products to almost every other country on the planet. Added to this, around 30% of our income arrives in our banks as a result of tourism.
Our young culture has been significantly influenced and shaped by American, British, and European consumer behaviour and trends.
New Zealand has one registered charity for every 178 citizens.12 The average in the US in 2016 was one nonprofit for every 320 citizens.13
New Zealand is now one of the most internet-connected countries in the world.14
Based on my observations, research, and experience in nonprofit fundraising and marketing in New Zealand, no matter where you are in the world, some or all of the following steps for cracking generosity will apply to your location and nonprofit organisation.
My good fortune
To my good fortune, the first nonprofit I worked for was managed by a board of people with solid business smarts as well as a knowledge of a culture of philanthropy – the understanding that people from all walks of life can give money to good causes without expecting anything for themselves in return.
I was headhunted from that nonprofit to another, and naively thought it would be similar. What I soon discovered was that the board of the second nonprofit considered philanthropy to only be the domain of the super-rich. Their
understanding of beneficial business processes was also significantly less than at my first charity.
As I moved on to other nonprofits, the understanding of how philanthropy and business-systems thinking could be blended for the benefit of a nonprofit continued to diminish. The ultimate expression of this lack of business-systems thinking was when a nonprofit board member told me in no uncertain terms, “We are a charity, not a business!”
Her statement made it clear she could not see how business thinking was applicable in a nonprofit setting. She, of course, had never owned, operated or worked in a business. Nor did she have a track record of being a philanthropic donor. She regarded her voluntary contribution as a board member to be sufficient, without the need for her to donate her own money as well.
My fantasy about the nonprofit sector being a force for good in the world became somewhat ruffled after all these encounters, and I confess that I did play with the idea of returning to the business world. At least there I could make more sense of things.
The culture block
As I moved from nonprofit to nonprofit and encountered increasing levels of fundraising dysfunction, it became obvious that culture was the main stumbling block to cracking generosity.
A saying attributed to the famous Austrian management consultant Peter Drucker15 is that culture eats strategy for breakfast!16 It means that no matter how effective a strategy may have proven to be, it will be sabotaged by the leadership and staff of an organisation if they do not equally understand, embrace, believe in, agree on, and act on the core elements of that strategy. No matter how much a strategy has been proven effective in similar settings, if it is proposed within an organisational culture where the leadership is blind to that strategy, or worse, biased against it, then the proposer of the strategy is on a hiding to nothing.
15. Peter Drucker - Wikipedia
16. There is controversy as to whether this is what Drucker actually said verses what has been adapted by others to become a funky slogan possibly/probably derived from Drucker’s teaching. Nevertheless, it is a snazzy slogan to help make a very important point.
If my grandmother were to read that last paragraph, I suspect she might sum it up by saying, “You can lead a horse to water, but you can’t make it drink.”
My best-laid plans were increasingly dismissed because of cultures that were both devoid of any understanding of philanthropy and devoid of the profit-driven systems and processes applied in business sales and marketing. Worst of all was when I encountered cultures that regarded philanthropy as an old-fashioned and out-of-date idea. Some nonprofits swore that people were no longer as generous as they used to be and new ways of raising money were required ‘these days’. For most cultures though, philanthropy was a word that was difficult to pronounce and foreign to their life experience.
On some occasions, I sadly had to admit defeat. Those cultures had successfully eaten my strategies for breakfast. These were occasions when the list of dysfunctions I encountered, combined with the absence of a culture of philanthropy, were beyond my ability to overcome. I had to move on and “shake the dust off my sandals”17. I knew I would soon find a role in another nonprofit where I could continue to study the sector and possibly find a culture that existed to enable philanthropy.
If I felt any sadness at departing a nonprofit, it was in seeing the good work of that charity get bogged down in fundraising dysfunction. On many such occasions, I later found out that I had entered a nonprofit in its death throes.
17. A reference to a portion of the bible (Mark 6:6-11) where Jesus advises his disciples about what to do if their message is not received. In essence its time to move on and leave them to their fate.
Why stay?
Based on these dysfunctions – the absence of cultures of philanthropy and the poor or absent integration of smart business practices – you might ask, “Why would anyone in their right mind stay on in the nonprofit sector?”
Good question. More than once, I have wondered if I was in my right mind to stay in this sector.
A chunk of the answer for why I did not leave returns us to my grandmother, Ma Sproull. She instilled in me a worldview that making personal wealth is neither central to one’s life nor the primary reason a person is to engage with our communities.
“Malcolm,” she said, waving her 82year-old finger in front of my 15-year-old face, “there is only one good reason to make more money than you need, and that is so you can have more to give away.”
Possibly due to her teachings, making personal wealth was never a high priority in my life. Although Ma would always balance this perspective by adding, “Money doesn’t make the world go around Malcolm, but it sure greases the axle.”
While the profit motive is a vital part of why any business exists (and we are all required to provide for our families and keep them out of poverty), my grandmother was at pains to emphasise that there is more to profit than just feathering our own nests. For Ma Sproull, profit was for sharing.
Often when I had a bad day in fundraising, I would make a random telephone call to one of that nonprofit’s financial supporters, simply to have a chat. Through such conversations, I discovered that donors were very familiar with humanity’s flawed nature and understood that people working in nonprofits were likewise not always as competent as desired. Nevertheless, the donors exhibited faith in the mission of the good cause and the need for it. Often, they were equally delighted to talk with me about the mission of the nonprofit I was working for. Focusing on why the mission mattered to them personally boosted my courage and energy to carry on my fundraising work.
Ma Sproull when I photographed her on her 90th birthday in 1978.
With Ma Sproull’s wise voice echoing in my ear, as well as the encouragement of generous financial supporters, I remained determined to find the best ways to help nonprofits raise the money they needed to advance their world-changing missions. In that process, I uncovered a new and powerful motivation to stay in the sector.
“The sole purpose of being rich is to give away money.”
Andrew
Carnegie (1835
– 1919)
Irreversibly hooked
While I already knew prior to entering the nonprofit sector that people gave money to charitable causes, I had never fully appreciated how many New Zealanders there were who practised such intentional generosity18 On entering the nonprofit sector, it was as if I was introduced to a shadow community of people who had not been visible to me before. These people shared the belief that there is only one good reason to make more money than you need: to have more money to give away.
As I began encountering more generous people with giving hearts like that, I discovered that most gave money away with an absence of the self-serving ego motives that are such a normal part of people buying things within the commercial sector. I became irreversibly hooked on remaining in the fundraising sector because of the pleasure of being in the company of such people. These were people who set up their financial lives with intentional generosity in mind, and it was a joy to work with them.
One case was Ted, a retired maths and sciences teacher. After six months of retirement, he found himself ‘going nuts’ from boredom. Ted contacted a few high schools in the district and offered to teach maths and science part-time again – if they were interested. They were very interested, and Ted soon found himself again earning a salary teaching 20 hours a week. However, over his lifetime, Ted had managed his affairs well and retired comfortably with no real need for this new salary. It was simply the joy of the work that Ted wanted, so he started a hobby of giving his salary away.
18. Just to be 100% clear, “Intentional generosity” is when a person establishes a habit of always setting aside a certain amount of their income to be available to give away to others who might need assistance in life.
Not all of his earnings went to charities. Fifty per cent went into a trust he established for his grandchildren. But the other 50% he strategically gave away to a range of nonprofits that mattered to him. Being a maths and science teacher, Ted had a shelf in his office with a ring-binder for each nonprofit in which he kept all the appeal letters they sent to him. Each quarter, he would assess the work that each nonprofit had most recently reported to him and decide how much he would give each in return. If I recall correctly, before long, Ted was distributing donations to about sixteen different charities.
Not customers
Generous citizens like Ted are wonderfully different in their attitudes to life than the customers of a profit-making business None of Ted’s donations to his favourite charities were exchange transactions. His motivations were different to the reasons behind why people buy things, and they were wonderfully refreshing to my soul.
While the nonprofit sector can learn much from how businesses engage with customers, the nature of the intentional giving away of money by individuals to charitable causes is the point where the word “customer” needs to be discarded from discussions. Instead, those involved in raising money for philanthropic purposes need to be fully aware that donors and yet-to-be donors have a very different mindset from commercial sector customers. At the root of that difference is citizen generosity, and I have found that it resides in the hearts, minds, and souls of almost every person on earth. Probably all of them.
But before any person involved in a nonprofit can engage with thousands more generous people like Ted, they must first overcome what is a massive impediment negatively impacting the nonprofit sector. I call it exchange-transaction mindblock syndrome. Curing that syndrome goes a long way to resolving a great deal of the dysfunction I listed earlier.
Exchange transaction mind-block syndrome
For every consumer in the world, almost every money transaction they make over a lifetime will be an exchange transaction. That’s when a consumer pays money in exchange for a product or service where they could also possibly find a better deal for that product or service from another supplier. Balance in their financial minds
only occurs when the result is a fair exchange for the consumer and generates adequate profit in the deal for the supplier.
That constant process of spending by making exchange transactions becomes embedded in their minds as the only form of cash exchange there can be. This process indoctrinates consumers into developing exchange-transaction mindblock syndrome. The block produces a blindness to the idea of there being any other form of financial transaction. Included in that blocked mind state is a tendency to regard any process of asking for monetary donations to a charity as a form of begging. That negative connotation creates an additional block to being able to see the place and power of philanthropy.
At the same time, business people also only ever consider there to be one way to make a buck: by focusing on finding a constant flow of more profitable exchange transactions Therefore, the constant baseline in the mind of both the consumer and the business person (supplier) is the pursuit of an exchange transaction.
For example, when a customer buys a coffee, they know and expect that if the price is a bit higher than the price at the café down the road, that should mean that the quality of the coffee should be proportionally a bit better. If it’s not, then the consumer will probably buy their next coffee elsewhere.
If the going price for a cup of coffee is – say – $5.00, a customer is unlikely to pay $20.00. That is because the purchasing of cups of coffee through cafes functions in a competitive marketplace in which coffee buyers set the price, knowing that they can leave one café in preference for a better deal at another café.
Buying coffee, paying your broadband service provider, filling your car with petrol (or gas for US readers), buying groceries, paying your insurance, mortgages, etc. are all examples of common exchange transactions occurring in their billions every second across the world.
In those types of financial transaction exchanges, the market tends to set the relative value that everyone pays, decided by a universally agreed definition of a fair deal. A fair exchange.
However, imagine this.
What if someone arrives at the reception desk of your broadband service provider and says, “I love the service you guys provide so much I want to donate $10,000 to you so you can provide the same service to a bunch of other people for free.” Or, what if someone rocks up to a café and gives the owners $500 so they can provide the next 100 coffees to their customers for free?
If such a cash exchange were to occur, the strange (generous) people offering to do that would be proposing to undertake a non-exchange transaction. They would provide the money, but they would not get the service or product in return.
Now, as ludicrous as it may seem for such a thing to happen at the reception desk of your broadband provider or at your local café, I have seen exactly that type of financial transaction offered at the reception desks of many nonprofits on numerous occasions.
Something in the lives of such givers has motivated them to step outside of the exchange transaction mind-block syndrome and offer to cover the cost of providing a product or service for another human being who is not them.
The motivations for such people doing so are diverse. I’ve encountered some who have done this as an exercise in penance, making a donation to help compensate for having done something wrong in their lives. Often, people are religiously motivated to give. In many cases, people donate as a gesture of commemoration of a loved family member who has died. In my case, my grandmother raised me to be generous and told me, “There is only one good reason to make more money than you need, and that is so you have more to give away.”
A multitude of motivations for being generous via non-exchange transactions can apply in the hearts and minds of givers. But rarely are they made up of the same motivations that stimulate a consumer to buy a thing. At their purest, nonexchange transactions of money are given so a nonprofit organisation can use that money as it sees fit. Such giving does not require an equivalent return value for the giver. It is based on absolute trust that the recipient of the donated money will use that money as they said they would and do so to improve the world in the way they said they would improve it. Also, the giver in such a transaction is delighted to release that money into the charity’s care.
Understanding the difference between these two types of transactions is critical to understanding everything else that follows in this book.
Table 1 (next page) illustrates fundraising methods commonly applied in the nonprofit sector to help add clarity on the difference between the two transaction types.
* e.g. Op shops / charity shops, cookbooks, cake stalls, grocery products, etc.
Table 1: The difference between exchange and non-exchange financial transactions as they are often applied to raising money for nonprofits / charities / the social sector.
I found that whenever a person with previous commercial business sector experience became a first-time staff member within a nonprofit, they would, without exception, enter with exchange-transaction mind-block syndrome. They had once been involved in businesses that sold plumbing, real estate, insurance, technology, mortgages, cars, boats, dairy products, agricultural products, entertainment, tourist travel, fitness, food, machinery, publishing, advertising, and so on and so forth At the heart of it all, consumers purchased their products or services through financial exchange transactions.
An experienced accountant joining the nonprofit I was then working at said to me upon our first meeting, “I come from the corporate sector, and they have a lot
of money. So when I was considering taking this role, I began wondering how you can get more money out of them for the work you do. But I have no idea about what they get for their money. What would they get for their money? Can we provide them with something in exchange?”
It was a perfect example of exchange-transaction mind-block syndrome at work.
Because this new staff member was a trained accountant, I thought I would experiment with my answer by throwing in the two financial transaction terms I have just introduced to you. “As much as possible, we try and encourage donors to support us through non-exchange transactions instead of seeking exchange transactions.”
Then I waited.
Nothing but an expression of confusion came to her face.
“What’s a non-exchange transaction?” she asked.
“Money that is given to us to use as we see fit.”
“But what does the giver get in exchange?” She was still confused.
“The satisfaction that they helped the world become a better place by financing our ability to help children caught in extreme poverty.” I smiled.
“And you have people who give you money just for that reason?”
“Yes. About 9000 of them just now, but we are finding more and more,” I said.
“Really?” she asked. “That’s interesting. Very different.”
“Yes. Quite different from the commercial sector. Welcome on board to where that difference makes a very big improvement to the lives of tens of thousands of otherwise impoverished children.”
On that occasion, this gracious lady was immediately open to learning about a method of financial transaction management she had never been exposed to before. However, I have met many others, who remained stubbornly convinced that all cash transactions on the planet had to be exchange transactions of some sort because why would any sane person hand money over when there wasn’t an equivalent exchange?
Not infrequently, when I tried to suggest to business people that the motives that drive a non-exchange transaction are very different from the motives that drive people to engage in exchange transactions, I received hints that I might just be a bit mad. Commonly mixed in was an inference that I was also to be pitied for my ignorance, along with a matching premise that they (the business people) had a better understanding of how cash moves about in the world than me.
Many nonprofit leaders shared this mind-block syndrome and therefore believed only business people possess the magical skills necessary to make money The result was a constant sense amongst many nonprofit leaders of deep gratitude towards anyone from the business sector putting up their hand to help. The consequence of that was a gathering of leadership thinking united in their
exchange-transaction mind-block syndrome. In such cases, philanthropy never stood a chance.
As we continue, I will delve more into how non-exchange transactions of money are significantly different from exchange transactions. For now, please understand that exchange transaction mind-block syndrome is real and a potent negative force impacting the ability of nonprofits to crack generosity. It’s the reason why many nonprofit fundraising departments in my study were dysfunctional.
Clarifying dysfunctional
Despite frequently encountering the dysfunctional nature of the fundraising side of nonprofits, my time in that sector nevertheless highlighted how vital nonprofits are in any healthy society. Through their missions, even when they are a bit shaky on the fundraising side, nonprofits enhance the lives of millions of people worldwide.
I want to ensure you understand that I am NOT applying the term dysfunction to the total operations of the nonprofits I have studied. As we work through this book, you will soon see that I divide a nonprofit into two enterprises. The first is the Beneficiary-centric Good Cause Enterprise (BGCE), responsible for delivering the life-changing work at the heart of any nonprofit’s mission. This is the part of a nonprofit run by people who know best how to address a particular unmet need in our world.
BGCE people might be aid or development specialists providing assistance to the poorest of the poor in far-off lands. They might be counsellors and social workers, helping the victims of domestic abuse, or nurses providing an angel’s touch in the last days of a person’s life. They could be animal welfare inspectors who ensure that animal cruelty is stopped or never allowed to start in the first place. They can include dancers and artists creating performances and works that lift onlookers' souls. They can also include radio producers and broadcasters who craft messages that move listeners to remove hate from their lives and replace it with new thinking about love. And they can be medical researchers who are developing improved cures for childhood diseases.
In the nonprofits I observed from the inside, the people who founded those nonprofits never did so with the intent of becoming fundraising experts. They were Beneficiary-centric Good Cause Enterprise people. They didn’t come from an earlier life of being experts in raising money, making money, or asking people for money. Also, none I knew had ever made a living before by being business-income generators. Instead, those BGCEs were operated by people with high levels of expertise in their specialist fields that had always been devoid of a need for money making expertise.
Never was there a time when I was not in awe of the specialist expertise of those working in the BGCE side of the nonprofits I studied. It was a delight and a privilege to witness them practising their life-lifting expertise in ways that were well beyond me. If there was dysfunction in the operation of their side of a nonprofit, I rarely saw it, and I was not qualified to comment on it even if I did. My expertise was in an entirely different arena; finding the funding for any BGCE so those working in it could continue delivering their life-enhancing missions without worrying about where the next dollar would come from.
However, for all the reasons I have explained before, I was much less in awe of the people I found staffing the fundraising enterprises of most of the nonprofits I observed. And it is only about the absence of necessary expertise in the fundraising enterprises of nonprofits that this book is about.
With that, here is a vital observation: I have found that such a lack of expertise is fixable as long as those employed in a nonprofit fundraising enterprise and the nonprofit leadership are teachable.
Each of the nonprofits I observed aimed to bless the world by addressing an unmet need in our society. It was just that their fundraising enterprises were frequently letting them down to the degree that a number of those nonprofits had to close their operations entirely or were left teetering on the edge of doing so. Rarely, if ever, was the problem centred on their Beneficiary-centric Good Cause Enterprises.
Sometimes the level of dysfunction of a particular fundraising enterprise would start to get me down. At such times, I would often remedy my low mood by randomly chatting with someone working in the BGCE of the nonprofit employing me. In the same way as donors to that charity, the BGCE staff would return my focus to why the mission of that charity/nonprofit mattered, not just to them personally but to the beneficiaries of their work.
Almost without exception, BGCE experts tended to be more concerned about the well-being of others ahead of their own well-being. They focused their lives on making the stories of others more important than their own stories. Their selflessness would reinvigorate me to push on with the fundraising work I had been employed to do so that they could push on with theirs.
What is Citizen Generosity?
In 1980, my first son, Ryan, was born. Ryan provided me with a unique experience of love. In Ryan, there was not just innocence but delight in living. I often struggled to leave for work because I would rather stay home and play with him.
When Ryan was two years old, my wife called me at work one day to express her distress at seeing our son’s generosity being tested. Other children had come to visit with their mothers, and Ryan had enthusiastically offered them each jelly beans from a bag I had given him. As was typical of Ryan (and still is to this day), he gave those jelly beans away before he took any for himself. Before long, all his jelly beans were gone, with none left for him, and he began to cry at the realisation.
My wife had been struggling not to cry on the phone as she recalled the event. My heart dropped. I left work immediately and, half an hour later, arrived home with the biggest bag of jelly beans I could find. If I recall correctly, I didn’t go back to work that day. Ryan and I just ate jelly beans and played instead.
In 1984, I discovered my then two-year-old daughter Julia crying. She was looking at the front cover of a brochure from World Vision that had arrived in the mail. When I asked why she was crying, she said it was because of the photo of the sad-looking child on the front of that brochure. “Why is she so sad, Daddy?” she asked through her tears.
Of course, because of Julia’s compassion at age two, we ended up sponsoring a World Vision child. How could we not?
A few years later, when my third child, Kris, was three years old, I recall watching his amazing gentleness and kindness with other people’s babies. He was a big lad for his age but gentle of heart. By age five, not infrequently, his humour
would have me rolling on the floor in uncontrollable laughter. Not only was he innately kind, but he also made other people happy with his antics as well.
As each of my children grew, I found I could not protect them as I wished from the broken condition of our world. In time, each of them encountered mistreatment that caused hurt to their hearts, minds and souls. Each had their innocence and innate kindness challenged as they got older. Watching each occasion unfold during their formative years was cruel. I’m sure it’s a painful pattern of raising children that many parents have experienced to varying degrees.
My experience as a parent and as an observer of other parents confirmed for me that children start out with generosity in their DNA. While I am not so naive as to ignore the misbehaviour of children, it’s been my experience that children start life with generosity in their hearts and it is either repressed or sabotaged by forces mostly beyond their control. I am convinced that before all of us lost our collective innocence, we used to be innately generous.
Some in the world go further and say that generosity is at the beginning of everything.
Generosity is the beginning of everything
On June 23rd 2018, twelve boys, who were members of a football team, and their coach became trapped while exploring a cave complex in the northern province of Chiang Rai in Thailand. Thailand’s rainy season produced a downpour that flooded the tunnels while they were inside, leaving them no way to get out. Rescue workers from all over the world soon gathered to attempt to save them from drowning, starving, or running out of air in the deep dark caverns.
The rescue required unique skills of diving into the water-filled caverns using aqua-lung breathing equipment. Amongst the hundreds who volunteered to help was former Thai navy SEAL (Sea, Air and Land) Sergeant Saman Kunan, who died during an attempt to install a chain of oxygen tanks deep within the cave system. Former Sergeant Saman was given a hero's funeral in Thailand, and deservedly so.
In 2021, a film called The Rescue was released about this remarkable story. The directors of this documentary, E. Chai Vasarhelyi and Jimmy Chin, explained, “We
wanted to make this movie for many of the same reasons that the story of the Thai children trapped in the cave captivated the hearts and minds of the world in 2018. It was an against-all-odds story that gave you hope. It brought out the best in people, who united from many different nations to help these kids. There’s a line in the film that says, “Generosity is the beginning of everything,” and that’s ultimately what the film is about.”
Those words, “Generosity is the beginning of everything,” were spoken during an interview with Sergeant Kunan’s heartbroken wife, Valeepoan. They were words born of the worst heartache any of us can imagine. Valeepoan spoke of how she and her husband shared one another's breath. How in the future would she breathe?
Yet, from such depths of grieving, Valeepoan acknowledged that her beloved husband had paid the ultimate price of being a person who put others first, even at the cost of his own life. From the depths of that agony, Valeepoan shared what I also have come to believe through my time in the nonprofit sector. Generosity is the beginning of everything. If we stop our hectic chase for more things for just a short while, soon we start to see how so much of what we already have has been generously given to us in one way or another.
No education we have had was not preceded by self-sacrifice and giving on the part of our parents. No freedoms we enjoy were not preceded by self-sacrifice and giving on the part of our forefathers and mothers. At no time in our lives can we say we are happy, delighted, joyous, or even at peace without having arrived at such a point because of some level of self-sacrifice and giving by others before us.
In Thailand, the Thai people have already erected a statue of Sergeant Saman Kunan. I would like to stand in front of his statue and salute him. He has set a standard of generosity that expresses what it is to be truly human.
When Valeepoan spoke those words about her husband, she was not just declaring the vast depths of her love for him. I believe she was making a statement about the hearts of all humankind, once the shallow stuff of life is removed. For me, her words had echoes of those of my grandmother: “Malcolm, others matter more than self.”
Citizen generosity has its roots there. In the moments when we realise how much has been given to us and for us. Moments when we glimpse what others have sacrificed on our behalf. Moments that might shock and distress us, or, at the very least, shake us. It's at such times that innate citizen generosity can bubble up within our souls and prompt us to give back. To share. To uphold. To uplift. To share our blessings.
Generosity’s common denominators
Whatever the mix of forces that shape our lives, I have found these three common denominators remain in the hearts and minds of most people in every walk of life everywhere in the world:
1. Because of their life experiences, good and bad, tragic or joyful, almost all adults everywhere have a small collection of causes and issues that they would like to financially support if they had the capacity to do so.
2. Those with some capacity to give more money generally have little knowledge of the charities currently addressing those problems in the world.
3. Most such predisposed people would give money to causes addressing the problems that matter to them personally if they were asked after first being shown the impact their giving would make.
Such people represent a huge and mostly untapped existing pool of predisposed prospects, who would be keen to donate to a mission of deeper interest to them. Within this pool of people is wealth waiting to be given away. This is where as-yet untapped citizen generosity can be found. However, it tends to remain dormant in many people because:
1. The charities undertaking the work that would be of interest to them are not visible to them. Nor do the charities know (or believe) that these predisposed people exist or are even interested in what the charity is achieving in the world.
2. There is a lack of stewardship19 of the predisposed people before and after making their first donation, when they have displayed an initial interest in the cause.
3. There is a lack of a reliable and sustainable enterprise that addresses points 1 & 2 above and that keeps finding, cultivating, and enthusing those who are predisposed to happily give, give again, and keep on giving.
I am concerned I may have covered those last three points too lightly. Please reread them, because they represent the extraordinarily simple core of this entire book.
19. The definition of stewardship I am using here is “the responsible and proactive overseeing and protection of something considered worth caring for and preserving.”
By contrast, whenever I have been able to:
1. Make a charity visible to people predisposed to supporting what that charity is doing in the world, and
2. Religiously20 and meticulously maintain excellent stewardship of the relationships with those people, and
3. Establish the systems and processes required to repeatedly and reliably continue to address both 1 & 2 above forever -
- the result has always been an incremental rise in highly profitable income for those cooperating nonprofits.
I have come to find that citizen generosity is simply a state of mind within most people in our communities across the world that predisposes them to want to be supportive of certain needs in the world. These are people who are not working within the nonprofit sector themselves, but who have gained the financial capacity and inclination to donate money to a cause of their liking.
Based on the latent generosity formed in their DNA and present the day they were born, combined with how their life journeys have unfolded, citizen generosity is what they would do with some of their money if they ruled the world.
If you ruled the world
I love to illustrate the innate presence of citizen generosity in people groups by conducting my ‘If you ruled the world’ surveys. One of the best places to do this is in a pub early in the evening, before the full impact of alcohol has kicked in.
This is how it works.
Preferably using a microphone, I ask everyone in the pub to give me their attention for a few minutes.
“I’m conducting some research and need you to answer only two questions, please. Using the pen and paper that is being handed around, please write down the top three social and well-being issues in the world that you would fix immediately if you suddenly had the power of the President of the United States and the wealth of Elon Musk. Just list the first three that are topmost in your mind if money and power were no object.”
“Then, underneath that, again if power and money were no object, please write down the top three social and well-being issues you would fix in your local community. Go for it. Thanks.”
20. No, not in the sense of following a religion. In the sense of “with consistent and conscientious regularity.”
Most people in the room are interested to know what everyone else has written, once the pieces of paper are collated. When possible, I share those results within 30 minutes. Usually, all participants will be silent as I report which issues were the most selected amongst that crowd. It is rare that such a list does not become the centre of discussion among the group soon after.
Of course, you will always have to expect a smart Alec or two to appear in the group who might write down a list such as “1. Free toilet paper for everyone, 2. Free beer for everyone, 3. Freedom from do-gooders,” as happened on one occasion. But more often than not, I have found most people in the room get behind the idea.
Hint: Good audiences to work with are those meeting at pubs for a quiz night event, when people have formed themselves into teams beforehand. They often represent a diverse group who are also slightly more inclined to engage than the general pub attendees normally would.
In undertaking such a survey, what I am actually measuring is not the list of specific social concerns that were on the minds of any particular group (although, that makes good reading as well).
What I am much more interested in is that:
1. Almost always, more than 80% of participants can list their top three social concerns for each question without delay. That is because those social concerns exist in their minds and have touched their hearts due to something that has already occurred in their lives.
2. Many struggle to reduce their top issues to just three.
3. The resulting spectrum of issues that are top of mind is diverse. A rule of thumb is that a room of 100 people will typically produce a list of up to 30 different global social issue categories and about the same number of different local issue categories they would address if they had the power of the US President and the wealth of Elon Musk.
These impromptu tests of groups of people reveal this: given the capacity to do so (i.e. the money and power), most adults in the Western world21 would give money to causes addressing their top three global and local issues of most concern. Any nonprofit representative of a good cause undertaking such an exercise as this will have identified a subset of the group who probably have further interest in what their nonprofit is achieving in the world. Such a subset within that group would be open to further conversations about that charity’s mission and the option of financially supporting it.
I must point out that I am not suggesting some advertising agency takes the reality of these impromptu surveys and develops an advertising campaign based on invading people in pubs who are minding their own business to help raise money for a specific cause. God forbid!
This is a very casual measure of the existence of citizen generosity in groups of people. Still, I have found it to be encouraging, even though I suspect social scientists might consider my method and conclusions to lack scientific “validity”. But the “if you ruled the world” survey is more about helping others start to see what people think by using community conversations rather than strict scientific principles. It’s also about helping you and others realise the latent presence of citizen generosity in almost all people.
I encourage you to give it a go and not just once. Do it as many times as you can find opportunities to do so and with diverse audiences. If nothing else, it will raise your awareness of the degree to which people are fundamentally more generous than you might have previously believed them to be. It will also confirm for you that people predisposed in favour of your cause in the community do exist. That might inform you of ways to better connect with such people and begin forming relationships that will enable them to give money to your cause when the time and circumstances are right for them.
By undertaking such surveys, I hope it will illustrate that even if they have never given a dollar to any cause in their lives before, the latent desire to support causes that matter to them is resident in most people's hearts to some degree. Such people are yet-to-be donors. When they discover a cause that matches what they want to see done in the world, new doors open in nonprofit fundraising.
21. I say “in the Western World” because I have not (yet) tested this in developing countries. But I hope to one day do so.
My Citizen Generosity Discoveries
I think we can all agree that some people in the world are stubbornly unconcerned about others, but in my experience they are a relatively small percentage of the population. Instead, I have found that:
1. While a person’s interest in seeing a particular nonprofit cause addressed may not yet have been expressed through generous financial donations, that does not mean that latent citizen generosity is not resident in such a person. A classic example of this is the not infrequent arrival of a bequest to a charity, where that charity has no record of ever previously receiving a donation from the bequestor.
2. Citizen generosity is released in proportion to a potential donor’s knowledge about the work of a charity. Yet-to-be donors don’t know what they don’t know. But then, how can they know if you don’t tell them?
3. Most people innately want to help their fellow citizens if they can.
4. Many of those same people (yet-to-be-donors) don’t know that a philanthropic gift can be the best way to help. This is especially the case when the nonprofit sector wrongly reinforces the idea that the best way to help is to buy a ticket and attend a charity event. The yet-to-be-donors don’t know any different because they have not been taught otherwise. The opportunity exists for nonprofits to do the teaching.
5. Asking donors and yet-to-be donors to give is not an uncomfortable process for them unless the nonprofit doing the asking makes it so. The worst mistake a nonprofit can make is to try and persuade a person to donate when that person’s life journey to that point in time has not made them predisposed to do
so. That is where most discomfort towards a charity tends to originate for yetto-be donors. But when a match is found, asking is easy.
6. If a potential donor does not want to give their surplus cash to a particular nonprofit, that is because there is a mismatch between what that nonprofit told them it is doing in the world and what the potential donor wants to see get done. It does NOT mean they lack latent generosity. More than likely, another good cause is a better match for them. Once a mismatch becomes apparent, a wise nonprofit representative accepts their decision graciously and stops trying to manipulate them to act against their will.
7. If a nonprofit continues to bother people who don’t have that good cause in their top preferred charities/causes, then the donor or yet-to-be donor is being disrespected, and they are justified in getting angry. If a nonprofit representative does annoy them, their best next step is to apologise, thank them for their time, and leave them alone.
8. For an array of reasons, latent citizen generosity is an amount of money that is either withheld or spent by a citizen on other non-essential things instead of being donated to charity. But, importantly, the money is there, waiting for the right match and waiting for a nonprofit representative to ask for it.
9. If a nonprofit finds a group of people who are a match for its good cause, then that nonprofit is well on its way to cracking generosity.
By:
routinely talking with generous individual donors over two decades, who have donated millions to good causes
undertaking my random “If you Ruled the World” surveys
analysing the trends in public spending in New Zealand and across the Western world
analysing the findings of my ten-charity study
…I have become convinced that:
The idea there is some limited capacity that individuals and organisations have already reached preventing them from giving more moneytocharitiesthan theycurrentlydoismore delusion than truth. If you subscribe to this view, you have probably been misinformed.
So, unless you have evidence to the contrary, let’s move to a deeper dive into where citizen generosity becomes a generosity transaction.
How generosity transactions are different
From this point on, I will be calling a non-exchange transaction a generosity transaction, which I believe is a more accurate representation of the intent of such a transaction by its giver.
The principal characteristics of generosity transactions are that:
1. They are financial transactions given in trust by a citizen with the primary expectation that the money will be used as the asker (i.e. the nonprofit/charity) says it will.
2. They represent a dollar value not just determined by how much the nonprofit/charity asks, or based on some idea of a competitive marketplace made up of other nonprofits also seeking donations from the same individual. The amount given tends to be a measure of the degree to which the work of the nonprofit inspires the giver. The giver will make the gift as large as they are able to, when a cause is doing work that deeply resonates in their hearts.
3. The gift contains little or no thought of trying to get a bargain.
4. There is considerably less work required (and therefore less cost) on the giver's part to give and on the charity’s part to solicit generosity transactions than in exchange transactions. For example, the giver does not need to cover the cost of dressing up to go to an auction event they would rather not attend. Neither does the nonprofit need to get entangled in the cost of running such an event. The nonprofit needs only to ask.
5. The receipt of a generosity transaction to the cash flow of the nonprofit is mostly not time-constrained. Within the intent to use the money as seen fit, the donor is happy for the money to be used as best suits the work of the charity, not when or how the giver wants the donation to be used. By contrast, grants or government contracts come with time constraints, terms, and conditions, which is one of the reasons they are classified as exchange transactions and not non-exchange transactions in the earlier table on page 32.
6. The donations contain no pressure for the nonprofit to provide commercial payback, as is typically expected with business sponsorship. The purest of generosity transactions have no commercial strings attached. Since there are always strings attached to sponsorship transactions, I classify them as exchange transactions and not generosity transactions.
7. They do not require a charity to manage a warehouse of stock and inventory with all of its associated overheads, unlike charities that undertake campaigns like Red Nose Day. Nor do they need to pay a commission to a franchise holder of a fundraising brand from the money raised by such campaigns (as I once heard was the case with Red Nose Day appeals across the world)22 .
8. The giver of a generosity transaction will usually give again when asked and is happy to do so if they can. Of course, they are more inclined to do so when they have been shown that their last donation was applied in the way the charity told them they would apply it.
9. The profit in a generosity transaction tends to be significantly higher than any other form of income from exchange transactions. Generosity transactions are the best way, bar none, for a nonprofit to achieve the directing of at least 80% of donated money to the work of a good cause. Donors and yet-to-be donors are usually happy for up to 20% of their donated dollar to cover marketing and administrative costs23 , but preferably less when possible.
If all this is true, where do we find the generous people willing to make generosity transactions that benefit a nonprofit?
Meet my intentionally generous teachers
To learn more about releasing more citizen generosity, I have found it is best to start by meeting intentionally generous people like Ted, who I mentioned earlier. So, here are four more such people who inspired me and taught me about intentional generosity.
22. I was told this once by a person managing a Red Nose Day appeal in New Zealand. I have not been able to verify that as an absolute fact, and the terms and conditions associated with such arrangements may differ across countries. However, the creating of a branded concept such as Red Nose Day is not uncommon and some companies in the world exist to create revenue for themselves by such means. Branding kitset reselling like this is not uncommon in the commercial world especially as sold to supermarket chains for instore promotions.
23. From data on file at Sproull & Associates, combined with numerous donor conversations.
Meet Tom
A frequent mistake made by nonprofits in pursuit of generosity transactions is to apply the same thinking as when seeking an exchange transaction in the commercial sector. Early on in my fundraising career, I fell into that trap, but just one conversation with an old philanthropist called Tom woke me up to the difference between asking for a generosity transaction versus trying to extract an exchange transaction from a person.
Sales and marketing techniques have evolved solely to extract more exchange transactions. Tom taught me that such practices need not apply to the getting of generosity transactions. I have subsequently found that using commercial sales and marketing techniques to pursue generosity transactions actively undermines the amount of resulting money a yet-to-be donor will give. Trying to twist the arm of a person who is not already predisposed in favour of a particular charitable entity only annoys them. If such a process results in any money, it tends to be the minimum amount required to get the asker to go away and leave the giver alone.
In the first nonprofit I worked for, I created a concept whereby donors could financially support the cost of one hour of the broadcasting time of one of that charity's radio programmes. I called the concept The Hour Treasury with each hour donated costing $1000. The “treasury” part of The Hour Treasury concept was about storing up the value of as many hours as possible so that we could draw down that money quickly when a new broadcasting window of opportunity was presented to us. Often we might only be given as little as a few weeks to accept such an opportunity before the commercial radio station would offer it to a another producer. So we needed to be ready at any moment.
At the time, their radio programmes were intended for mass consumption on commercial radio stations and designed to convey the essentials of the Christian faith to those who mostly did not understand those essentials. In a secular country like New Zealand, that’s about 90% of the population. The mission of the charity was to get its programmes on commercial radio rather than onto channels broadcasting to the much smaller audiences who listened only to Christian-specific radio channels. In the words of the founder of that charity, “If too many Christians are listening to our programmes, we are doing something wrong.”
I joined this first nonprofit because my grandmother had installed in me an appreciation for the fundamentals of the Christian faith. It's been my experience that societies that apply them tend to experience more peace and prosperity. I like peace – and I’m quite fond of prosperity.
Working at that first charity took me back to my days in my own first small business. It was a charity that employed only two people at the time; the guy who made the radio programmes, and me, who brought in the money to pay for those radio programmes.
My method of finding the people I could present this offer to was via telemarketing to existing financial supporters I found in that charity’s donor-
database, which had grown to contain about 1500 givers. As a tiny charity, there was no money to subcontract the telemarketing, so, in the evenings, I undertook the work myself. Yes, I became one of those annoying telemarketers. If not me, then who? In the corporate sector, I would have had a budget of thousands to recruit a telemarketing service. But not so in this much smaller operation. At the time (2002), that charity was only turning over about $250,000 a year, which is about as much as many small businesses.
This meant I got to talk with a wonderful collection of generous people who were polite and supportive, even if they said no to what I was asking. But many said yes.
One of them was Tom, an old philanthropist who had a giving history of being generous to many charities. When I began talking with him one evening about what that charity needed, I repeated the same process I had applied to every previous call. Remember that this was my first year in the nonprofit world as a fundraiser. I was essentially a novice fundraiser amid a steep learning curve.
After introducing myself to Tom, I began my pitch to him as if I was selling double-glazing, a holiday cruise, or an insurance policy. Yes, I was utterly caught up in exchange transaction mind-block syndrome.
I outlined the nature of The Hour Treasury and then began explaining its features, advantages and benefits (FABs). I will explain much more about FABs in Step 10: Get comfortable with Asking. In essence, the idea is to quickly convey to prospective buyers the benefits to them of buying what you have on offer. Then the next process is to get the prospective buyer to ask targeted questions because when they do, you know they are finding something of interest in what you are offering.
So there I was, about ten minutes into my sales pitch, when Tom interrupted me and said, “Malcolm. I’m 84. I could die tomorrow. All we philanthropic people ever need to know is the answer to two questions. Will my money do what you say it will do, and can you prove it? Answer those, and you will get my money. Can you quickly answer those?”
“Um… well … yes. I can.”
I answered both questions. Quickly.
“Good. How much do you want, and when do you need it?”
And from that conversation with Tom, a light went on.
Tom was already a convert. He already wanted to see the thing that charity was doing get done. I did not need to re-convert him. He was predisposed in our favour from the get-go. If I just talked to more people like him who are predisposed in our favour already (i.e. converted prospects), then I needn’t bore them to death with my sales pitch. I did not need to try and convert them again. I simply needed to explain the concept (or the need) and show them that I could answer those two questions:
“Will my money do what you say it will do?”
“Can you prove it?”
Simple. So, so, so, so simple!
In fact, for a while, it seemed too simple, and I soon found myself falling back on my sales pitch approach as if I was seeking an exchange transaction. But, little by little, with more conversations with more donors like Tom, who were already predisposed in our favour, I found that all I had to do was follow Tom’s advice. I just needed to present my case and answer those two questions. Some supporters of that charity said they could not contribute at the time but might be able to help the next year. Okay. I made a note in the donor database to call them the following year.
That small campaign, with me alone doing the telemarketing, raised close to $300,000. The average donation was about $700. I would discover that this concept could easily be scaled up for charities turning over millions. One of the charities where I proved that to be the case was Oxfam New Zealand.
Meet Oxfam100 member # 26.
When Oxfam New Zealand employed me in 2007, I created for them a philanthropic fundraising product I called the Oxfam100. Like The Hour Treasury concept I created for the previous charity, it was based on providing predisposed supporters with the ability to pledge an amount that they would fulfil later – at a time and in a way that worked best for them.
For Oxfam, I wanted to find 100 New Zealanders who would raise the bar in the fight against global poverty by asking each to pledge at least $5000 a year for three years to aid the work of Oxfam New Zealand I figured that if I could find 100 such generous people, Oxfam would raise at least NZ$1.5 million for its poverty-reducing work in South East Asia and the Pacific. Also, at the time, the New Zealand government was providing a matching funding element to Oxfam’s overseas projects. This meant the end result was around NZ$3 million raised for Oxfam’s projects through that campaign.
One day, I received a phone call from a young lady who wanted to become a member of the Oxfam100 after reading about it on the Oxfam website. I was curious when I sensed that she was probably under 30 years of age. Typically, people of that younger age group do not have the financial capacity to give at the level I was asking.
I arranged to meet her face to face and had expected to see her arrive at the café in an expensive car, possibly driven by a chauffeur. Instead, she left her bicycle at the front door and entered with what looked like a student bag over her shoulder.
I was concerned.
I explained the Oxfam100 programme with my mind focused on spotting some aspect of what I was proposing that was not what she expected. But I was wrong. She fully understood and confirmed her desire to become part of the group.
Eventually, my curiosity got the better of me.
“I hope this is not being too nosey, but I have to ask. How is it that someone as young as you can afford to make such a sizeable pledge as this?”
Very politely and humbly, she replied, “Well, last year, I received a salary increase of just over $5000, and I decided I didn’t need it, so I thought you guys could make better use of it.”
Honestly, and as absurd as it may sound, I seriously did think at that moment of dropping down on one knee and proposing marriage to her.
She was not a customer. This was a young woman who could have done what so many other customers in the world have done and spent her surplus money on herself. A bigger flat-screen TV. A Pacific Island holiday. But, no. She regarded her salary increase as being surplus to her requirements and others in the world could make better use of it.
That is a philanthropic gift!
That is a true generosity transaction.
That is citizen generosity released and applied.
And it is this form of genuine generosity that she and thousands of others like her are prepared to contribute, but which numerous nonprofits are failing to release.
That young woman was a person predisposed to releasing generosity into the world. Her aim before doing so was simply to be confident that she had found the right match. And it was my responsibility to ensure that she had.
She became Oxfam100 member number 26.
Three years later, she (and her new husband) repeated her pledge for another three years.
Meet Agnes
When I was the national fundraising manager for the Royal New Zealand Society for the Prevention of Cruelty to Animals (RNZSPCA), I created a direct mail appeal posted to about 3000 supporters on that charity’s database.24 I was only
24. Three thousand supporters on a database for a charity like the RNZSPCA may seem a low number relative to the popularity of the cause and population of New Zealand. The reason the national office database was so minimal was that the RNZSPCA was operating as a federated model at the time. That meant our database was only one of approximately twenty others functioning nationally. Some years later
able to undertake such a campaign because someone before me had religiously maintained the RNZSPCA donor-database with accurate street addresses.
One of the past donors was Agnes, a lady who had given about $40 each time we had sent her a similar quarterly appeal over the previous eight years.
However, when her reply envelope came back from that special direct mail appeal, it contained a cheque for $NZ50,000. On that occasion, the particular aspect of the work I highlighted in the appeal letter resonated so much with Agnes that she revealed her full giving capacity to be well above an average $NZ40 donation.
This was, once again, a campaign I created that was seeking funding ahead of the need, as had been the case with the product I created in my first nonprofit and again when creating the Oxfam100 It was about building a supply of cash that could be rapidly accessed when need arose.
Agnes’s response showed she fully understood that having surplus cash available to use when needed was a legitimate request. In that case, the money was needed so that branches of the RNZSPCA could quickly access funding for legal fees when prosecuting people who abused animals. Prior to this initiative, some prosecutions were going stale in the legal system as local branches ran out of the money needed to complete the process. This resulted in those who had perpetrated animal cruelty going unpunished.
When relatively large donations of that nature occur, my rule of thumb is to brief the nonprofit CEO to quickly make a thank you call while checking for any signs that the giver may not be fully compos mentis25 . The last thing a nonprofit needs is to receive a donation from an elder in a family that was the essence of what was otherwise a family inheritance.
As I watched the RNZSPCA CEO almost fall off his chair in laughter during his thank you call to Agnes, I knew she was very much compos mentis. “If that doesn’t work to help stop the buggers,” Agnes told the CEO, “then I have a gun you can use.” I have a feeling that Agnes and Ma Sproull would have liked each other.
Agnes’s story is yet another that shows what levels of generosity exist when people are predisposed to seeing the mission of a particular charity succeed and have the capacity to make a generous response in support of that mission. This is where good matchmaking occurs between a nonprofit and the wishes of a donor with more giving capacity than previously revealed. Even when I calculated the cost of all the mailings to Agnes over the previous eight years, the profit in her total donations (i.e. the profit within her lifetime giving value) was more than 90%. All
when the federated model was disbanded, their national combined database became around 25,000 supporters.
25. ‘Compos mentis’ means able to think clearly and be in control of and responsible for your actions: e.g. She was very old but still compos mentis.
that profit went to delivering the good cause work of the RNZSPCA, and she was delighted to hear back about how we had applied her donations to that work.
That is just another example of the potential scale of citizen generosity when it is released. When such generosity transactions as those from donors like Agnes are cultivated over time26, a charity's incremental income increase can be remarkable.
Meet a pet millionaire
In the first nonprofit that employed me, we had access to a gentleman I called our pet millionaire. As a member of the New Zealand top 100 rich list, he had access to considerable discretionary spending. He, however, hated that he was ranked in the top 100 list because it was published in the New Zealand Herald every year and resulted in his personal secretary fielding as many as 15 calls from charities each month, all expecting him to throw money their way.
When I was allowed an audience with him, I did not ask him for money. Instead, I asked if I could check in with him from time to time about ideas we had for raising money. I also asked if he could help us better understand people as wealthy as he was. For example, how they thought about supporting charities and other aspects of what they thought about contributing to society.
He was delighted to be asked and happy to help.
Given that approval, my first question for him was, “What is it that motivates you to give money to charitable causes?” His answer was one that I hope every fundraiser working for a nonprofit will remember.
“I give for the same reason that a little old lady on a pension gives. The charity is achieving in the world something I want to see addressed because somewhere back in my life, that issue touched my heart.”
He continued, “I dislike being regarded as a philanthropist, as if my donations matter more than those given by that little old lady on a pension. When it comes to generosity, she and I are, at best, equal. On many occasions, her generosity is ahead of mine. It would annoy me if she was not respected for that.”
“Do you have any other aspects of being approached by charities that annoy you?” I asked him.
He was quick to answer. “Most definitely. If any charity approaches me and implies that I should give them money because I have wealth, that will be the last time I have anything to do with them. It's for no one else to judge me as if my wealth has been acquired by some method they don’t approve of. As if my wealth has been acquired in some unfair and corrupt way. Or worse, as if all wealthy people should give their money away as decided by people who don’t know how to make money. I’ve booted more than one of those out the door.”
26. Take note of those two words “over time”. They hold a vital clue to success in cracking generosity as you will soon see in the next section.
His message was clear.
Over the years, I learned more about our pet millionaire. At our first meeting in 2003, he had a net worth of approximately sixteen million New Zealand dollars. Most of his wealth had been gained through the music industry, resulting in millions of people having their spirits lifted through the music he produced. Ma Sproull would have approved of him.
Without any public fanfare, he quietly gave thousands of dollars away to charities that were doing, “something I want to see addressed because somewhere back in my life, that issue touched my heart.” He managed to get himself removed from the New Zealand top 100 rich list so that fewer nonprofits hassled him. At the same time, he continued making more wealth by ethical means in ways that few others in New Zealand had the ability to do. He is known for inviting people to visit and enjoy his beautiful home and yachts. In short, he is generous with his wealth.
I’ve had the good fortune to have met many others like him over my time in the nonprofit sector. Very rarely have I met a millionaire who wants to have their name on a brick at the base of a building they have donated to help build. Very rarely have I met any who wanted a wing of a building named after them, even if they had donated millions. It has bemused me on numerous occasions when I have witnessed the organisers of major donor campaigns consider it essential that a ‘significant donor’ has their ego stroked or be publicly patted on the back. Most certainly, these donors need to be properly thanked. However, almost without exception, I have found that such generous and wealthy givers appreciate a quiet thank you from the charity CEO more than being made a fuss of in front of a crowd. Any suggestion of glorifying themselves is totally against their typically humble natures. To put it in my grandmother’s words, “They know they are not short of a bob27 or two, but they don’t need that fact flashed about too much.”
Finding more like them
During a presentation in front of fundraisers from a particular national charity, I presented the case of Oxfam100 member number 26. When I revealed the slide displaying her response to my question asking how she was able to find the money I was seeking (“Well, last year I received a salary increase of just over $5000, and I decided I didn’t need it, so I thought you guys could make better use of it”), there was stunned silence in the room. The first person to break the silence was a lady who had recently switched from commercial marketing to her new role in
27. A reference to a coin more often known as a shilling in the currency of pounds, shillings and pence used in New Zealand over most of my Grandmothers lifetime, before decimal currency arrived in New Zealand in 1967.
nonprofit marketing and fundraising. She said, “Wow. That’s pretty rare. If only there were more people like her in the world.”
I bit my tongue. I was almost at the end of the time I had been allocated for my presentation. Other people in fundraising nodded their agreement with that new fundraiser's sentiment. Given the time constraints on me, I simply replied, “No. She is not that rare. There are thousands of others out there like her.” On hearing that, I was faced again with a room of quizzical expressions looking back at me. But my time was up.
I had hoped that some of those mostly novice fundraisers might have found me later to ask about finding more people like Oxfam100 member number 26, but out of a room of 30 people, only two did. Over a glass of wine that evening, I told them that the reason new fundraisers believe people like Tom, Oxfam100 member 26, and Agnes are rare is a measure of how deeply conditioned in exchange transaction mind-block syndrome most people are. Put another way, most people entering into nonprofit marketing and fundraising have had barely any previous exposure to people who donate money. That leaves newcomers to the nonprofit sector wrongly believing that a person like Oxfam100 member number 26 is such a rare case that finding others like her is unlikely.
I have found that novice nonprofit marketers and fundraisers, who often last less than two years in their roles in the nonprofit sector, have been raised in cultures where they rarely, if ever, encountered philanthropic people. We shall soon delve into why that is an increasing trend in our societies when I describe more about the enemies of generosity and how they negatively impact the process of cracking citizen generosity. But be assured, you will also learn how to overcome those enemies to find more people like Tom, Oxfam100 member number 26, Agnes, and my pet millionaire. Because I swear that hundreds of thousands more like them are out there to be found. I know this because my book is not big enough to record all my stories of meeting people who generously donate money to charitable causes.
And that leads me to show you where such generous people are living and the true scale of the opportunity before you.
The fourfold citizen generosity opportunity
“One person with a belief is equal to a force of 99 who have only interests.”
John Stuart Mill, Nineteenth-century English economist and philosopher (1806 –1873)
1. The match-making opportunity
I hope by now I have illustrated that people are willing to help others financially if the need resonates with them. This represents the heart of citizen generosity opportunity for nonprofits.
Such willingness to help others is often most profoundly illustrated when disasters occur. In New Zealand, we saw this happen when a major earthquake struck Christchurch in 2011. Coming to the aid of one of its South Island cities,
New Zealanders quickly donated millions to help their neighbours recover from that disaster. Many services were overwhelmed with offers of donated money.
In 2004, when a devasting tsunami hit the coast of Indonesia, New Zealanders were also swift to donate to international rescue agencies such as Oxfam. In the two months following that tsunami, Oxfam New Zealand doubled the size of its donor-database with people keen to provide financial support.
While higher levels of media attention undeniably also influence such outpourings of donations during a disaster, it yet again speaks to the pre-existing willingness of people to help one another. At the genuine risk of overstating it, I will say it again and again. Nothing in my time working closely with thousands of generous people diminishes my belief that people everywhere tend to have a huge willingness to give money to help others if they are able to do so.
The predisposed
As we have seen, most adults in Western countries are already predisposed in favour of specific nonprofit missions. Their lived experiences have already made them want to see a particular improvement occur in the world. Therefore, this part of the fourfold opportunity is about making a match between what a predisposed citizen already wants to see get done in the world with the nonprofit that is making it happen.
John Stuart Mill’s quote: “One person with a belief is equal to a force of 99 who have only interests,” might suggest that the people we are looking for are only about 1% of the population. While John Stuart Mill was an economist and therefore knew his numbers, we can take from his quote more about his philosophical background. He is somewhat exaggerating to make a point.
While it is convenient to think about the 1 in 1oo who truly understand the work of a charity, I have found that a very exciting new reality of the actual number (and percentage) of such people reveals itself when we take a closer look at the citizens within our own countries.
One example was my neighbour.
Now you’re talking, Malcolm!
In early 2014, I was at a neighbour's BBQ. The hostess, Lou-Anne, overheard me explaining to friends about a new role I had taken as the fundraising and sponsorship manager for the Royal New Zealand Society for Prevention of Cruelty to Animals (RNZSPCA). Lou-Anne’s response to my news was enough for her to proclaim, “Now you’re talking, Malcolm!”
With that, I realised I had my next RNZSPCA direct mail appeal almost written for me, as you will see on the next two pages.
While Lou-Anne is a very charitable person and accepts numerous evening phone calls from other charitable concerns, the RNZSPCA has a special place in her heart. One reason is that she, her husband, and her daughter are rural people, who have many animals on their 26-acre life-style property. But also, she has had many occasions in her life when an animal lifted her spirits during a tough time. What I found that day was a perfect match. Numerous aspects of Lou-Anne’s life journey had long since formed the worldview that so enthused her about the mission of the RNZSPCA. Even though Lou-Anne had been aware of other charitable causes I had represented in the preceding years, she had never donated to any of them. None of those causes matched the issues that Lou-Anne wanted to see attended to in the world. Of course, when I asked if I could feature Lou-Anne with her cat, Tardy, in the direct mail cover letter to help her favourite charity in the world, she quickly agreed.
The mission of the RNZSPCA was one that Lou-Anne strongly believed in. She was the one in a hundred to which John Stuart Mill was referring. Lou-Anne is a perfect example of a person predisposed by life to see a particular charitable mission succeed. While my discovery of that fact on that occasion was mostly happenchance, people with such predispositions are not hard to find. One of many ways to find them is to start with your neighbours and work outwards and backwards. I will describe a lot more about how to find predisposed people like Lou-Anne in the upcoming Step 7: Work Backwards from a Raving Fan.
By the way, the direct mail campaign featuring Lou-Anne and Tardy was very successful, and it helped me tease out more donors like Lou-Anne. More believers. More of the ones in the hundreds. If I had Lou-Anne answer the question, “What top three causes in the world would you address if you had the power of the president of the USA and the money of Elon Musk,” I have little doubt that preventing cruelty to animals would be listed among them.
However, even if millions of people like Lou-Anne have a strong inclination to want to help their favourite causes financially, we still need to understand whether or not such willing citizens have the financial capacity to do so. The best way to begin uncovering that information is by looking into their existing household incomes and spending habits, which takes us to the second opportunity.
2. The household giving capacity opportunity
According to Statistics New Zealand, in 2018 NZ$125 billion (after-tax) passed through the doors of New Zealand households. Of that money, about 1.2% was donated to charitable causes (rounded off to NZ$1.6 billion).
I used household spending survey data from 2018 (again from Statistics New Zealand) to calculate the total household essential spending and the resulting discretionary spending money left over, which gets us this result (Chart 2-1):
All NZ households income ($125 billion) and spending in 2018
Individual giving, $1.55
Billion, 1.2%
Discretionary spending, $52.5
Billion, 42%
Essential spending, $70.6
Billion, 57%
Chart 2-1: All NZ household income in 2018 showing amounts allocated to charitable giving, essential and discretionary spending.
This reveals that in 2018, NZ$52.5 billion was at the disposal of New Zealanders to choose to spend on whatever they wanted to (i.e. discretionary spending). Of New Zealand’s total resident population of 5 million, about 4 million are adults (over 16 years of age) who tend to spend about 90% of that NZ$52.5 billion. That works out to around NZ$13,000 in pocket money for an average New Zealand adult in that year (2018).
Sproull’s 60/40 Principle
In my research into charitable giving in New Zealand, I often apply a breakdown of household income on a 60/40 ratio. I do that because (in ballpark figures) I have found that the top 60% of the wealthiest households in New Zealand tend to receive about 80% of all household income. That leaves only 20% of all New Zealand household income distributed to the least wealthy 40% of New Zealand households. If we then factor in that the average New Zealand household donates about 1.2% of total household income to charity, we get this picture:
Spending in 2018 by wealth of New Zealand household
$60.0 Billion
$50.0 Billion
$40.0 Billion
$30.0 Billion
$20.0 Billion
$10.0 Billion
$00.0 Billion
Donated money, $0.30 Billion
Least wealthy 40% of NZ households
Donated money, $1.24 Billion
Wealthiest 60% of NZ households
Essential spending Discretionary spending
Donated money
Chart 2-2: Spending and giving by the least wealthy and wealthiest households in New Zealand in 2018.
The first critical point illustrated by this chart (Chart 2-2) is the amount of discretionary spending power available to those occupying the 60% of highestincome New Zealand households compared to the lowest-income 40% of New Zealand households. But also note the amounts of donated money from each portion of these two New Zealand household groups. At first glance, it can appear as if the highest-income 60% of New Zealand householders are a very generous bunch of people donating four times as much money to charity as the lowestincome 40% of NZ householders. But as we dig deeper, a different insight emerges
Percentage of discretionary spending donated by wealth of New Zealand household in 2018
Least wealthy 40% of NZ households
Wealthiest 60% of NZ households
Discretionary spending 2018
Chart 2-3: Percentage of discretionary spending allocated to charitable giving by least and wealthiest New Zealand households in 2018.
This chart (Chart 2-3) reveals that those living in the lowest income 40% of New Zealand households tend to donate a higher percentage of their discretionary spending money to charity than the wealthiest 60% of New Zealand households. That raises this question: what if the highest-income 60% of New Zealand householders were to donate the same percentage of their discretionary spending money as the 40% of lowest household-income New Zealanders (i.e. donate 3.8% instead of 2.7%)?
If that happened, the chart on the next page (Chart 2-4) would have been the result in 2018.
Potential increased giving from NZ wealthiest 60% of households in 2018
$2.50 Billion
$2.00 Billion
$1.50 Billion
$1.00 Billion
$0.50 Billion
$0.00 Billion
Increased giving potential (Billions)
NZ POTENTIAL 2018 giving increase, $0.47 Billion
NZ ACTUAL 2018 giving total, $1.55 Billion
Chart 2-4: Potential increase in available money given to charity if the wealthiest New Zealand households matched the percentage of discretionary spending money given to charity by the least wealthy NZ households in 2018.
In 2018, if those living in the highest-income 60% of New Zealand households matched the percentage given to charity from their discretionary spending as the lowest-income 40% of New Zealand householders, an extra NZ$0.47 billion would have been provided to the New Zealand nonprofit sector. Just to be extra clear, NZ$0.47 billion is NZ$470 million. I’m confident that amount would have been a welcome increase for the New Zealand nonprofit sector to help them achieve their life-enhancing missions.
Here is something else to consider.
If that percentage increase by the 60% of highest income New Zealand households did occur in 2018, those living in the wealthier households would still have access to NZ$43 billion dollars to spend on other things! To put that another way, each citizen over 16 years of age in the wealthiest 60% of New Zealand households would still, on average, have more than NZ$17,000 leftover each year to spend as they see fit28. In the meantime, those living in the poorest 40% of New Zealand households would only have an average of NZ$4,500 as pocket money each year based on those 2018 figures.
Unsurprisingly, these learnings show that it is not amongst the poorest 40% of New Zealand households that the greatest capacity exists to find more donated money for the nonprofit sector. Also, I believe that fundraisers have a moral obligation to avoid pressuring less wealthy people to donate more. The least wealthy 40% of New Zealand householders are already doing a sterling job in that regard. Consistently, the least wealthy in most Western countries tend to give the largest percentage of their discretionary income to charity compared to those living in higher-income households.29 & 30
Our opportunity is in the 60% of wealthier households. Yes – it’s the Robin Hood principle to some degree. But less about stealing from the rich and more about asking them to kindly give more. With a bit of help from ethical fundraisers, of course.
Parental generosity
Over the years, I have often undertaken surveys of the donors to particular charities. I include an array of questions, broken into three sections, that tend to be similar in nature for each survey for any charity. They are:
28. My definition of “spend as they see fit” includes spending on addons for schooling, sports activities, holidays, general entertainment, clothing etc. The kind of spending that is not about covering the costs of survival like food, water, sanitation, health, shelter and warmth.
29. Poor people are more generous than the rich: Study - Starts at 60
30. Giving in Australia: the fast facts ›› Philanthropy Australia
Section 1: What does the donor know about the particular unmet need the charity is trying to address? E.g. What might they know about the problems faced by the poorest of the poor in developing countries?
Section 2: What does the donor know about how the charity is doing the work of meeting the otherwise unmet need?
Section 3: What are the generosity characteristics of the donor themselves?
In that last section, I always ask donors, “Was charitable giving of money demonstrated to you by your parents?” From the result of that question (when the data is available), I then connect their answers to their lifetime giving values as recorded in the nonprofit CRM/donor-database to see if there is any co-relation of a donor’s tendency to become generous with whether they did (or did not) witness generous giving by their parents. Chart 2-5 shows the result from that question in my most recent of those surveys (mid 2023).
Was financial giving to charity demonstrated to you by your parents?
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
$5,729,827
$6,372,424
Total lifetime giving value
Chart 2-5: The influence on life-time giving value on the children raised in a household where parental financial generosity was displayed.
This chart reveals that donors whose parents demonstrated financial giving have a much higher lifetime giving value to a charity than donors whose parents did not demonstrate financial giving.31
This confirms that, as well as having the predisposition to see a charity's mission succeed, the ideal donor is one who was also raised in a home where their
31. There were 1200 responders to the survey from a donor-database consisting of about 7000 donors.
parents demonstrated generosity. This data illustrates that people raised in generous homes tend to become more generous themselves.
Now that we are seeing with more clarity the value of focusing our pursuit on such generous donors from households that have integrated intentional generosity into their family cultures, might my findings suggest this capacity exists in the wealthiest 60% of households elsewhere in the world?
I propose it does.
What about other countries?
My New Zealand research points to a universal truth about the latent potential amounts of money that are yet to be given to nonprofits. But let's see if my findings also apply to our nearest neighbour, Australia.
In Chart 2-6 we see that using 2018 figures32, the highest-income 60% of Australian households donated $8.54 billion to the nonprofit sector compared to $1.96 billion donated by the lowest-income 40% of Australian households. Just as with my New Zealand figures, the amount donated by those living in the wealthiest 60% of Australian households can appear pretty generous at first glance. But once again, let's look deeper (Chart 2-7).
$400.00 Billions
$350.00 Billions
$300.00 Billions
$250.00 Billions
$200.00 Billions
$150.00 Billions
$100.00 Billions
$50.00 Billions
$00.00 Billions
Chart 2-6: Spending and giving by the least wealthy 40% and wealthiest 60% of households in Australia in 2018
Percentage of discretionary spending donated by wealth of Australian household in 2018
Least wealthy 40%
Australian households
Most wealthy 60%
Australian households
Other discretionary spending per year
Chart 2-7: Percentage of discretionary spending allocated to charitable giving by the least wealthy 40% and wealthiest 60% of Australian households in 2018.
In the Australian case, the gap in the percentage of money donated to charity (from the percentage of their money classified as “discretionary”) between the bottom 40% of lowest-income households and the top 60% is less pronounced than in New Zealand (a gap of only 0.84%). While that can seem to be a small gap of little consequence, let's see what might happen if the wealthiest 60% of Australian households were to match the bottom 40% in terms of the percentage donated to charity from their discretionary spending money.
Potential increased giving from Australian wealthiest 60% of households in 2018
$15.0 Billions
$10.0 Billions
$5.0 Billions
$0.0 Billions
Increased giving potential (Billions)
AUS POTENTIAL
2018 giving increase, $2.1 Billions
AUS ACTUAL 2018 giving total, $10.5 Billions
AUS POTENTIAL 2018 giving increase
Chart 2-8: Potential increase in available money given to charity if the wealthiest Australian households matched the percentage of discretionary spending money given to charity by the least wealthy Australian households in 2018.
We find using 2018 figures (Chart 2-8) that an increase of donated money from discretionary spending of just 0.84% by those living in the highest-income 60% of Australian households could have produced another AU$2.1 billion increase in annual nonprofit sector funding that year.
Wouldn’t that have been nice!
Given more time, I’m confident we could continue analysing numerous other Western countries to find similar potential giving capacity. I will continue to do so with the help of researchers and publish the findings on my website33 as those findings come to hand. In the meantime, if you are not in New Zealand or Australia, you might want to source your own country's data on household spending to get a sense of the potential of citizen generosity in your location. I believe you will find results that excite you to the potential that is awaiting.
Anecdotally, everything in my fundraising career over more than two decades points to the fact that the wealthiest 60% of New Zealanders and Australians (and very probably the wealthiest 60% of most Western countries) have significantly more capacity to give money to nonprofits than they currently do. More than once, I’ve proven this to be the case by raising more money from the wealthiest 60% of New Zealand households than those before me in nonprofits thought was possible.
While there is breath in me, I intend to continue unlocking more citizen generosity based on my findings. For now, I hope you will join me while we both embrace the next element of the fourfold opportunity.
3.The asking opportunity
Now we can see that most people are willing to support particular charitable causes and have the capacity of money to become more generous, the next element in our fourfold opportunity requires action from the nonprofit sector. I’m sure you have heard it before: If you don’t ask, you don’t get! This is a fundamental law of philanthropy that we will explore further later in this book.
The opportunity to raise more income is constantly missed in nonprofits because the people in fundraising remain unaccustomed to asking. I have found that most nonprofit supporter relations, marketing, and fundraising people invariably come from backgrounds devoid of earning an income dependent on them asking people for money. By asking in this context, I mean asking a person directly, face to face. Many people employed to raise money for charitable causes will have created as much income as they could from what I call shielded asking. This is the use of bulk communications via email or direct mail, where the actual
33. www.crackinggenerosity.com
ask is embedded within the advertising collateral. It sure as hell isn’t as effective as face to face.
Human Resources people often advise that what is needed to address this problem is more people like me, specialists in the art of asking. The inference is that it is an art and requires finding someone who was somehow born with the ability to do that work. Indeed, I do sometimes feel I was born disturbingly comfortable asking people for money. For most of my adult life, it has not been an issue for me to do so, and that does tend to make me a rare person. However, I do not consider it came naturally. I had to learn how to do it.
It took time, and it took lessons. It took learning about the reality of how others react or may react when asked compared to the fear of how people think others will react when asked for money. The nonprofit sector is riddled with people who fear fundraisers looking like beggars.
A famous falsehood I am tired of hearing in this sector is that people don’t like being asked. Yes. It’s true that some people don’t like being asked. But it’s also true that such people are a tiny minority when asking follows a process of putting the story of the donor or yet-to-be donor first. When that becomes a routine, I have found that most people are fine with being asked to give. Also, as we will further discover, when such people are asked in a way that shows them the respect they deserve, they feel totally comfortable saying, "No."
When we get into the steps required to build a Donor-Centric Fundraising Enterprise, I will elaborate more on how to activate asking processes that any person in a nonprofit can undertake, whether or not they have previously asked people for money. I will show how to do so painlessly for both the asker and the prospective giver. Once we embrace this part of the fourfold opportunity behind Cracking Generosity, new donations will materialise.
For now, take note. Cliché or not, if you don’t ask, you don’t get. And, of course, if you do, you do. The income increase by ramping up appropriate asking for multiyear philanthropic donations can singularly decide whether a nonprofit survives or fails. That is the power of asking.
The previous two elements of the fourfold opportunity identify the true nature of the Cracking Generosity potential. Asking releases it.
But there remains one massive aspect to our fourfold opportunity that often sabotages all the good work done to find and ask a new donor: enthusing them to make a second donation.
4.The donor retention opportunity
Take note of this constantly re-occurring statistic reported from within the nonprofit sector in Western countries for many decades.34 Typically, between 60% and 70% of first-time donors never make a second donation to the same charity!
Stop and think about that for a while. We have seen there is a willingness on the part of people to give more when there is a match found. We have seen that the capacity to do so exists in most households in countries like New Zealand and Australia, especially in the top 60% of income earners. We will soon (with the help of the next section of this book) overcome our inhibitions around asking. And so, lo and behold, the person we ask makes a donation!
Brilliant. We pat ourselves on the back. Job well done.
Then that person becomes a statistic in a nonprofit donor-database that may or may not be properly managed (by that, I mean the database may not be wellmanaged, but usually bad database management correlates to bad nonprofit management). Subsequent communications might get caught in the organisational treacle that often infiltrates the systems and processes needed to reassure a donor their money is being used as promised. Or maybe someone does send them a follow-up email, but misspells the donor’s surname.
Factors influencing donor retention can be many. Sometimes the giver simply loses interest in the mission of the nonprofit. Sometimes they have other personal financial priorities that impact their ability to give. Donors share the shifting fortunes of life we all do. Sometimes they have spare money to give, sometimes not.
Whatever may be going on in a donor’s life, there are many tools at the disposal of nonprofits that can significantly improve first-time donor retention. When those tools are consistently applied after a first-time donor appears, the improvement in donor retention can translate to a charity receiving millions of dollars more in generosity transactions than it otherwise would. Central to making that happen is the forming of a collaboration that is the result of proactive stewardship.
Proactive stewardship = collaboration
Donor retention is a two-way process between the donor and the nonprofit. It is about proactive stewardship that enables life long collaborations with donors. Donors who become co-operators in supporting a good cause to flourish because
34. Anatomy of a Stellar First-Time Donor Gift AcknowledgementBloomerang
you have invited them to do so because the nonprofit mission aligns with what they want to see get done in the world. Plus you are constantly proving that you are doing it.
Proactive: - controlling a situation by causing something to happen rather than waiting to respond to it after it happens.
Stewardship: - the responsible and proactive overseeing and protection of something considered worth caring for and preserving.
Collaboration: - the situation of two or more people working together to create or achieve the same thing
Failing to proactively steward donor relationships is one of the weakest links in holding onto first-time donors. Keep this in mind: most, if not all, first-time donors are donating as a process of collaboration with the nonprofit to achieve its mission. Stewardship of first time donor relations revolves around that one thing I have been harping on about a lot - making the story of the donor more important than the story of the nonprofit. Then it is about proactively attaching steps of donor care to a first-time donor relationship in a disciplined process to ensure that they and their story are respected and cherished into the future. The goal being that the donors intent to collaborate with the nonprofit is never allowed to be broken. Never.
In the next section (Unlocking Citizen Generosity), we will see that stewardship is inextricably connected with the meticulous care of a charity donor-database. Excellent and proactive stewardship of donor relations equates to significantly higher numbers and sizes of donations in the future. Poor donor retention (i.e. poor donor stewardship) is one of the main forces negatively influencing nonprofit income from generous donors.
I have placed donor retention as the fourth and last element of the fourfold opportunity because it alone can either bless or destroy the previous three opportunities. I say this, having too often seen that happen in the nonprofit sector.
In short: the fourfold opportunity only yields the full potential of its compassionate profit if robust, proactive, disciplined, and well-maintained donor retention stewardship is a routine element of all nonprofit supporter relations, marketing, and fundraising.
The fourfold citizen generosity win
When nonprofits proactively focus on:
1. Matching the pre-existing willingness of citizens to give to causes that matter to them with the causes doing that work,
2. The financial capacity in the top wealthiest 60% of most Western country households and their more generous off-spring,
3. Applying painless processes of asking that enable predisposed citizens to respond comfortably,
4. Proactively maintaining stewardship of the found donor relationships to form bonds of collaboration with donors
…then I can absolutely assure you they will receive more money from generous people who will keep giving more money to help that charity’s mission succeed. Many of their donors will even leave a bequest so that the charity's mission can continue to be addressed long after they have died.
Predictable incremental winning
The Cracking Generosity 12 steps I’m about to teach you are methods that will enable predictable and incremental income growth in any nonprofit that puts these steps to work. It’s not unlike the financial investment concept of compound interest (or earning interest on interest).
In fact, compare the following Compound Interest graph depicted in Chart 29 with the graph showing the predictable outcome when the Cracking Generosity 12 steps are applied over 20 years as illustrated in Chart 2-10.
Chart 2-9: Katie Kerpel {Copyright} Investopedia, 2019. This shows how predictable compound interest is. And how profitable. Forget all the formulas and take note of the green line.
The Cracking Generosity 12 steps when applied over 20 years
Accumulated contribution to the good cause, Year 20, $18 million
Accumulated contribution to the good cause, Year 10, $1.6 million
Closing donors
Accumulated contribution to the good cause Annual Contribution to compasssionate profit
Chart 2-10: A glimpse of the potential income for a good cause when the Cracking Generosity 12 steps teachings are applied consistently over time when starting philanthropic fundraising from scratch.
Chart 2-10 is produced from a spreadsheet calculation not too dissimilar to the spreadsheet that might have been used to calculate the compound interest shown in Chart 2-9. The bottom line is this: financial planners who manage sums of money on behalf of investors can easily show that when certain constants remain at play across time, the resulting return on investment can be predicted with a high degree of accuracy. I have found that the same predictability applies to our fourfold opportunity.
If the constant factors I describe in the next section are allowed to continue to function undisturbed over time, then the results of Chart 2-10 are predictable. The only reason this method may not produce such results is because of something I will discuss more at the end of the book – tampering. Compound interest as a tool for increasing one’s wealth over a lifetime is only ever sabotaged when the investor tampers with the process of letting the compound interest keep working. As we now move forward, my call to you is to consider the next section as a wholistic solution that will work best for you and any nonprofit if you can resist tampering with the processes about to be described.
Also, keep Chart 2-10 on your mind as we now move into how to make such a chart into a reality for your nonprofit.
Section Two: Steps to Unlock Citizen Generosity
Before we embark
If you choose to embrace any or all of the following steps required to release citizen generosity, please undertake those steps with the following sentiments in mind:
“I believe that, as long as there is plenty, poverty is evil.”
President John F Kennedy.
“Intentionally becoming more generous is intentionally becoming more human.”
Malcolm Sproull, September 11, 2021, twenty years after the 9/11 attacks on the New York Trade Centre Twin Towers.
By undertaking the next twelve steps, you are embarking on work about a lot more than just raising the money your charity needs. It is also about cherishing, nurturing, protecting, and preserving relationships with other humans to help them become more human. To help them learn the society-building, barrierbreaking, evil-removing value of adding intentional generosity to their lives.
It is for the children who see that their parents are givers as they watch them giving from their hard-earned income to add balance to some out-of-balance situations in the world. It is so these children see parents giving from their hearts and sometimes through tears so that those children may do the same in the future. It is for the giver who discovers that giving fills their soul in a way that nothing else can.
It is not just to cater to the unmet need your charity has identified and wants to address. It is to help address the unmet need for connection within the hearts and souls of givers and yet-to-be givers as well.
By embarking on the next twelve steps, you are not just learning how to create a fundraising enterprise or refining your nonprofit marketing and fundraising skills. You are embarking on a calling. If you have read Cracking Generosity this far, you are a rare and precious person. I salute you, I applaud you, and I am excited by you. Your actions in life will enhance the lives of more than just those of your charity's beneficiaries.
Thank you for coming this far. Now let’s embark on the work of Cracking Generosity to build your fundraising enterprise.
Step 1: Become a twinenterprise nonprofit!
By now, you have seen me use the terms “Beneficiary-centric Good Cause Enterprise” (BGCE) and “Donor-centric Fundraising Enterprise” (DFE). We must now drill deeper into the reasoning behind those two terms to highlight why it’s vital that any nonprofit wishing to release citizen generosity organises itself into both of these enterprises35 .
When it comes to raising sustainable generosity transaction money for a nonprofit, two enterprises are better than one. The reasons for that will become more apparent as each of the following steps is explained.
What I discovered in my study of 10 charities and my other fundraising experience over 20 years was that the reason why more people don’t appear to exhibit greater levels of generosity towards charitable causes is almost entirely a problem of nonprofit enterprise design. In other words, fundraising problems were almost entirely about a lack of consistent and effective systems, processes and cultures within the fundraising side of nonprofits. A consistent feature contributing to this problem in the seven underperforming nonprofits in my study of ten, was a tangle of the work flows36 and cash flows37 required to deliver on the promise of the nonprofit mission and the work flows and cash flows required to raise the necessary money to fund that mission. So the solution became clear: what
35. The definition of an “enterprise” I am using here is: A system of industrious activity that produces some form of beneficial output.
36. I define “work flow” as the sequence of processes through which a piece of work passes from initiation to completion.
37. I define “cash flow” as incomings and outgoings of cash, representing the operating activities of an enterprise.
the underperforming nonprofits were missing was an enterprise that untangled the tangle. An enterprise that separated the oil from the water.
But then I spotted another massive problem blocking the way for any nonprofit fundraising department to raise the money needed by its good cause: the lack of a profit motive.
For a nonprofit, the work of making money (whether profitable or not) is typically an add-on after first determining what work flows are required to take on the challenge of addressing some otherwise unmet need in society. Then when establishing money-making work flows and cash flows, the nonprofit sector has tended to operate almost entirely devoid of a profit motive. That may not sound surprising to you, since the organisations in question are called ‘nonprofits’. Yet, in all nonprofits where I worked, it became obvious that the absence of any integration of a profit motive was a constant sabotaging force working against effective fundraising and, therefore, working against the nonprofit’s ability to effectively serve it’s mission.
So before we go, lets get clear about the profit problem.
What even is profit?
In the ten charities in my study where I saw this “oil and water” cash flow and work flow problem prevail, nonprofit board members and leaders often struggled to see how a profit motive could fit their unique nonprofit culture. Many would say, “We are sort of like a business but sort of not. We sort of need profit to survive, but we don’t know if we should ever use the word profit in case we might be liable for some form of tax that we otherwise wouldn’t.”
Remarkably, I even encountered nonprofit financial managers and accountants who also seemed to regard profit as a risky word they avoided due to fear of attracting unwelcome attention from the Inland Revenue Department (IRD). Even though the reality is that there is no need for any such concern. The New Zealand IRD would gladly say so if asked, as I dare say would also be the case with all tax gathering agencies in the western world.
The thinking that prevailed was if they were a charity, and therefore a ‘not-forprofit’, they couldn’t look like a business and make (nor declare in their financial reporting) any form of profit. But at the same time, they were not a ‘not-for-loss’ organisation either. While they had to admit that some form of money to cover operational costs had to be found, the accountants and financial managers had all been conditioned to never apply the word profit in their roles. Instead, they used terms like surplus.
But surplus is profit. Isn’t it?
Well, no, not always. It seems for many in nonprofit leadership, it very much depends.
At one nonprofit leader’s forum, I presented the idea of the need to factor profit into planning any fundraising activity to assess whether or not the proposed activity was worth undertaking.
In response, one of the leaders attending described a case where they decided to tap their surplus to complete a particular project. On hearing his response, I realised he was interpreting my use of the term profit to mean his ability to apply cash reserves (surplus) built up over time in a bank account. He was not grasping that my question was about the profit any single fundraising initiative might raise, not how much profit had been accumulated over time and parked in an investment fund. I wanted to convey that the true profit-making potential of any proposed fundraising initiative needs to be well-considered before embarking on that proposed fundraising venture.
When nonprofit fundraising is devoid of a clear and disciplined pursuit of profit, it quickly gets side-tracked by activities that create turnover with little regard for the profit within that turnover. As any person whose business has failed will tell you, “Turnover is not profit.”
As an example, one nonprofit in my study reported to the public that it had raised NZ$2.5 million from fundraising events and business sponsorship on a particular year It didn’t report that its cost of operations for the same year was also NZ$2.5 million. That left zero money going to the good cause for which they told the public they were raising the money. This was not a criminal neglect situation, even though it could appear so. All the full time paid fundraisers at that organisation were hectically busy raising money. It's just that all of the money they raised was unprofitable.
Waking up to profit
Coming into the nonprofit world from the business world, the word ‘profit’ was why we got up in the morning. People from a background in business have no fear of that word, apart from the fear of not making enough of it. In a business setting, it’s a comfortable and logical component of everyday life. The degree of profit achieved from our activities in the business sector determined where to focus one’s limited supply of energy each day. The profit motive was behind every daily decision about the actions a business person would undertake. The understanding of what was profitable and what was not was clear.
But on entry into the nonprofit sector, I found this clarity and positioning of the word profit was misunderstood and often an uncomfortable term. Among the clear majority of workers inside New Zealand nonprofits (as I have since found is also the case in many international nonprofits), there seemed to be an idea that
money could be found without it being the result of someone somewhere making a profit.
Why was there such a poor understanding of profit and such an associated resistance to finding a way by which the term ‘profit’ could apply within a nonprofit setting?
One key reason I found was that most people working in the nonprofit sector had little or no previous exposure to profit-making as any part of their career histories. In one social service agency where I worked, less than 1% of the 700 staff had any previous experience earning a living by selling something to someone. That included their marketing people!
The fact is that the nonprofit sector tends to attract workers at all levels (including board members and management), where most are not, and never have been, entrepreneurial business people or self-employed. Instead, I found that they tended to be social service people. Or academics. Or technicians. Or exgovernment employees. Or people who worked in human resources-related roles in the corporate sector. I rarely encountered one whose previous wages or salaries were geared to their abilities to generate profitable income.
Their primary reason for connecting with a nonprofit is to be a functional part of the good cause side of the charity. Mostly they were BGCE people. You know –people who did the good work stuff. The stuff that made onlookers say, “Good on you!”
While such nonprofit leaders, volunteers, and staff recognise someone somewhere needs to bring in money, fundraising was not part of the good work the clear majority of nonprofit staff joined up to do. Many believed such considerations would be the domain of people they could recruit as needed along the way, with little understanding of how such recruits would do it.
Amongst numerous nonprofits in New Zealand, I found that a constant telltale sign of this was when the subject of a budget arose. Sometimes, I came across nonprofit staff who thought of a budget as a plan for how best to spend the money. Often, I was faced with bewildered expressions when I would suggest that the budget also needs to factor in the process of creating the money to spend. Or, more accurately, creating the profit to spend. On one such occasion, I was told, “That’s not my concern. That’s what you’re here for.”
Yet the cold, hard, and constant reality remains: if any nonprofit organisation does not make a profit, it can’t afford to do its good work.
Time and again, I have witnessed financial crises within nonprofits where people with no previous money-making experience are left scratching their heads, trying to determine where the next dollar is coming from. All live in hope that some wonderful entrepreneur will miraculously walk in the door and donate millions to save the day. If such a donor does surface (an extremely unlikely event unless someone has asked them to do so), the nonprofit leaders will thank them profusely and promptly forget that any such wealthy benefactor was only able to be so
generous because of their ability to – wait for it – make a profit! And that the generous donation was some of that profit.
So, there I was, trying to use a word that the culture of most nonprofit organisations seemed to reject in every way, or were simply unable to comprehend. But the reason I insisted then and do now that the term profit must have a place in the nonprofit sector is, once again, because of Ma Sproull
This marvellous illustration by Jim Flora (1914-1998) captures beautifully what seemed to be the most common mind state of the word “profit” for most people I encountered in the nonprofit sector.
Cleaning up a dirty word
When my grandmother said, “Malcolm, there is only one good reason to make more money than you need, and that is so you have more to give away!” she gave me a concept of profit that is intentionally engineered to be large enough to create a surplus available to help others.
It was a form of thinking derived from the colonial spirit of her parents and that of her Glaswegian husband, my grandfather. They had settled in New Zealand to escape the excessive wealth gaps in Great Britain at the time, but also because New Zealand offered them the ability to gain from any profits they might have made.
Ma Sproull - a quietly generous woman.
What I found in the nonprofit sector was that few nonprofit staff, if any, came from a similar culture as mine. For most, profit seemed to carry an emotionally charged and negative meaning. For socialist-leaning staff, it seemed to scream capitalism and the exploitation of the world’s natural resources. For others, it was loaded with all sorts of connotations of corporate greed.
So, I referred back to my grandmother’s concept of profit. What I realised was that my grandparents’ unspoken understanding of the profit they made through their business was missing in the nonprofit sector.38 Our family understood that any profit made through running a business required factoring in making enough surplus profit to share with others who may be down on their luck. It went unspoken because it was integrated into our family culture.
So I began placing my grandparent’s unspoken word in front of the word ‘profit’ when talking with people in the nonprofit sector, and, voila, the perceived negative sting in the word profit all but evaporated.
That unspoken word, which my grandparents sewed into our family culture was compassionate. Now nonprofit people could see that I was referring to a form of money that is not inherently corrupted by evil and greed. It is not about exploiting the poor to make a select few rich. Instead, it is created and applied for the best outcomes for humanity. It’s like a shovel designed to dig holes and turn over soil. You can use a shovel to bash someone over the head or to create wonderful soil beds that grow life-giving vegetables and beautiful flowers. In the
38. My grandfather was a self-employed master paper hanger, house painter, glazer and plasterer who employed many apprentices and staff over his career. My father was one of them as were two of his brothers, my Uncles. Each became self-employed soon after they finished their apprenticeships.
same way, profit is just a neutral tool. From the perspective of how it can be applied in a nonprofit setting, as long as there is a compassionate intent in its making, and the making of it does not exploit people’s ignorance, then my long-departed grandmother would be happy. And, therefore, so am I.
To enable us to move on with the next steps, I therefore suggest we now define compassionate profit as:
Compassionate profit:
The financial gain that is the difference between the amount earned and the amount spent in running a fundraising enterprise where that financial gain is applied entirely to the operating costs of a Beneficiary-centric Good Cause Enterprise.
Let me wrap this up with one final observation about compassionate or commercial profit and the making of profit generally.
When we in the nonprofit sector can speak to the business sector in ways that show we comprehend what profit is and their need to make it, it opens new doors for businesses to further engage with the nonprofit sector. As every business person soon learns, it's very hard work to make enough profit to keep the wolf from the door. Upwards of 30% of small to medium business startups fail in the first year, primarily because of not being able to make enough profit in that time.
It significantly raises the credibility of any charity in the eyes of business owners when a nonprofit representative shows up with a genuine understanding of how profit matters to a business. Given such an understanding, a charity is likely to get a better chance of financial support from businesses. I have lost track of the number of times I have heard from friends in businesses who have encountered people in the nonprofit sector expressing an over-simplistic and flawed concept of profit and how they understand (or don’t) how profit is made. This can be most evident when a nonprofit comes knocking at their door and presents to them in a way that reveals a lack of comprehension about how hard it is for any business to make a profit in the first place.
Therefore, please do not shy away from gaining a better understanding of the importance of profit. Not only for your own nonprofit interests but so you have a much better understanding of the givers of the world, all of whom are paid salaries or wages, or who earn income in other ways, derived from making some form of profit.
Now, with all that made clear, the real problem within nonprofit organisations becomes when no one knows if they’re responsible for making profit or not. Which returns us to the oil and water problem.
The oil and water problem
In my study of ten nonprofits, what I observed was the people hired to work in administration, financial control, fundraising and marketing, supporter relations, and service delivery almost always exhibit confusion about the flow of money through their organisations.
Some days they were required to be passionate about cost-effectively delivering the mission of the good cause (e.g. meeting the unmet needs of the beneficiaries of their nonprofit). On other days, their thinking required them to figure out where the money was coming from to pay for the good cause. On some occasions – and reinforcing their often confused and split focus –the nonprofit leadership would tell their staff, “We are not a business. We are a nonprofit.” But then a new board member would arrive, declaring exactly the opposite as they promoted the need for the nonprofit to operate more like a business.
I frequently saw new board members leave due to difficulty making sense of this oil and water issue combined with the oscillating mind states of the leadership at the time. Others, however, would stay and learn to live with the confusion while often remaining oblivious that they were dealing with an ‘oil and water’ state of affairs.
Particularly within the seven underperforming nonprofits in my study, the constantly resurfacing question of nonprofit staff became, “Which part of the day are we like a business and need to produce a profit, and which part of the day are we not? Which part of the day am I the passionate supporter of the beneficiaries of this charitable mission, and which part of the day am I required to be a dispassionate and rational business-like thinker? Oh, and am I even allowed to use the word profit?”
In an attempt to help highlight work flow and cash flow tangles in one nonprofit, I once asked its board members who they considered was more important to the organisation, the beneficiary of the good cause or the person who donates to the nonprofit. One board member soon responded by saying, “Well –we are principally here to serve the beneficiaries of our social services. That must come first. But, of course,” she added as an afterthought, “we can’t ignore those who donate to help us.”
Then that board member concluded “Yes. The beneficiaries, of course. Right? Am I right?” was the somewhat uncertain reply as she looked to the other board members for endorsement.
So which person should be given priority? The donor or the beneficiary of the good cause? The answer the board member gave was wrong. If you ever want to crack citizen generosity the answer must always be both in equal measure.
Time to divide
The way for nonprofits to engage the compassionate profit motive from citizen generosity on the one hand, while serving the beneficiary of the nonprofit mission on the other hand, - and to do so in equal measure - is to divide the oil from the water by giving each ‘hand’ a separate work flow and cash flow enterprise.
On the one hand, you create a “Beneficiary-centric Good Cause Enterprise” (BGCE) and on the other hand your create a “Donor-centric Fundraising Enterprise” (DFE). By so doing, the beneficiary of the good cause becomes the singular focus of the BGCE and the donor becomes the singular focus of the DFE.
Of course, many nonprofits have attempted forms of this by opening secondhand stores, setting up events businesses, or playing with some form of social enterprise. However, in every case I have studied, the common denominator with these fundraising ventures was that any profitability was, once again, based on income generated from exchange transactions that produce minimal profit and rely heavily on free volunteer labour. Some nonprofits did also run fundraising departments to acquire forms of generosity transactions, possibly hoping to hedge their bets. Nevertheless they all remained entangled by oil and water cash flow and work flow problems.
I found that the central failure of these tangled forms of fundraising enterprise was the constant blindness by their leaders to the view of their nonprofits through the eyes of donors and yet-to-be donors. The overwhelming culture within such nonprofits continued to regard buyers of their goods, services or experiences as no more than customers, all of which is are profoundly common symptoms of exchange transaction mind-block syndrome.
By contrast, the significant difference in the twin-enterprise nonprofit is that the money-making side of the nonprofit can return the focus to donors and yet-tobe donors rather than customers and yet-to-be customers. It can become singularly focused on raising money by increasing the acquisition of donors who will give, give again, and keep on giving.
The other enterprise within a twin-enterprise nonprofit caters singularly to the work flow and cash flow required to deliver the promise of the good cause mission (i.e. addressing the needs of the nonprofit’s beneficiaries).
One of the core reasons the donor-centric twin-enterprise approach works so well is that it addresses the issue that confounds those in the business sector who
are trying to comprehend how to bring their business understanding of value to the nonprofit sector.
When seen through business eyes, there is only one type of person who keeps any business going: the ubiquitous customer. Of course, no business person engages with customers for free. To do so would be business suicide. Whereas, a nonprofit that aspires to release citizen generosity must engage with two types of people: a generous donor, who may only on occasion be a customer, and a beneficiary, who rarely, if ever, pays for the services the nonprofits provide for them.
When a business person becomes aware of this two-sided nonprofit situation, in which the donor is (usually) not a customer and is (usually) not the beneficiary of what the nonprofit produces, they often become stumped, losing sight of how any profit motive can be applied.
Such thinking prevails because business-minded people are locked into a singular enterprise mindset that only worsens their other ailment of exchangetransaction mind-block syndrome. Their entire business careers have never required them to divide their thinking into a twin-enterprise approach because they have never dealt with a nonprofit’s oil and water cash flow and work flow mix. They have never undertaken business activity that requires them to provide their products or services to people for free. They have only ever worked in an enterprise that is singularly focused on making a profit by selling something to a customer. Consequently, when faced with an organisation that even has the word ‘nonprofit’ in its reason for being, the false conclusion is immediately formed by business people that the profit motive can’t have a place in such organisations.
But, when you approach almost any nonprofit and re-organise it into a twinenterprise structure, as I am outlining here, the compassionate profit motive can be applied at a level not unlike it would in the for-profit sector. That, in turn, opens the door to building better systems and profit-minded thinking that enable such a twin-enterprise nonprofit to crack citizen generosity
To further clarify the advantages of the twin-enterprise approach, let me break it down.
Enterprise 1: The Beneficiary-centric Good Cause Enterprise
“I don’t know how you do it. I could never ask people for money!”
Whether recognised or labelled as such, a Beneficiary-centric Good Cause Enterprise (BGCE) of some description already exists within every nonprofit on the planet. It is the part of a nonprofit that applies work flows and cash flows to
deliver its mission. A BGCE operates to serve the beneficiaries behind the nonprofit’s reason for being. The work of the BGCE benefits the people in society that the charity was first established to help serve.
In the twin-enterprise nonprofit structure, all work flow, cash flow, and related systems and processes within the BGCE prioritise the needs and requirements of the beneficiary of the nonprofit before the needs and requirements of any donor to the nonprofit.
For those working in this enterprise, the relationship with the nonprofit beneficiary matters most.
Staff in this enterprise are not required to raise funds or have anything to do with raising funds, but they are required to wisely spend the funds provided to them. The BGCE best suits most nonprofit workers, specialists, employees, volunteers and technicians. Making money was not why they joined up. BGCE people possess the strengths and expertise required to serve the beneficiary's needs. These people say to those who work in fundraising, “I don’t know how you do it. I could never ask people for money!”
Staff in the Beneficiary-centric Good Cause Enterprise are measured by the degree to which the mission of the nonprofit is achieved and by how costeffectively they achieve it.
Enterprise 2: The Donor-centric Fundraising Enterprise
“I don’t know how you do what you do for our beneficiaries, but I delight in telling our donors and yet-tobe donors that you are doing it and asking them to donate more so you can continue doing so.”
For this enterprise, the primary focus is not on the beneficiary of the nonprofit’s mission. The primary focus of the Donor-centric Fundraising Enterprise (DFE) within a twin-enterprise nonprofit is the person or organisation that donates money so that the resulting compassionate profit from those donations can be handed over to the BGCE.
In a DFE, all work flow, cash flow, and related systems and processes prioritise the needs and requirements of any donor or yet-to-be donor to the nonprofit before the needs and requirements of the beneficiary of the nonprofit.
For those working in this enterprise, the relationship with the financial donor or yet-to-be donor matters most.
In a smoothly operating version of a DFE, staff effectiveness is measured by the amount of compassionate profit raised from fundraising activities, which can then be given to the BGCE to spend wisely. Driven by that motive, the DFE pursues
where the most profitable compassionate profit is to be found and that is through philanthropy.
However, in the mix of pursuing the optimum compassionate profit to be found in philanthropic donations, all aspects of fundraising come under the fold of the DFE. This includes fundraising and awareness-building events, retailing of products (including supervision/management of retail outlets like charity shops and online channels like Shopify), all grant writing and applications, all government contracts, all business partnerships/sponsorships, crowd fundraising, bequests, all major donor fundraising, all regular giving, plus all casual donor appeals as well as online and offline fundraising of any type.
Finally, all marketing and brand messaging are also managed by the DFE. That’s because, at its core, the DFE is selling the BGCE, and in doing so, the DFE must constantly and effectively know how to represent the brand to donors and yet-to-be donors.
Workers/employees/technicians in this enterprise are primarily recruited because of their comfort with raising money and asking for it from donors and, sometimes, also from buyers. But they are also recruited because of their openness to being taught what is required to become comfortable with raising money and asking for it from donors and yet-to-be donors.
Another key measure of the effectiveness of the DFE team is their ability to follow strict processes and systems that enable the DFE to operate reliably, consistently, and sustainably.
While people working in the DFE may have deep empathy for the work achieved by the BGCE, they are better skilled in maintaining donor excitement for the nonprofit’s good cause mission. They tend to be people who say to those working in the BGCE, “I don’t know how you do what you do for our beneficiaries, but I delight in telling our donors and yet-to-be donors that you are doing it and asking them to donate more so you can continue doing so.”
Its possible for nonprofits to get creative and call their DFE by another name. For example, it might be known as the Fundraising Division. Or the Fundraising Department. Or just plain ‘Fundraising’. However, if you drop the word donorcentric from the title or the mission of a Donor-centric Fundraising Enterprise, before long, it will become just another fundraising events business. I say this having seen exactly that happen over time in numerous nonprofits. Dropping the term “Donor-centric” opens the door for newcomers to shift their focus away from donors and yet-to-be donors and begin opting instead to seek income from the much less profitable forms of money making that I have highlighted earlier. The result will always be that it will make much less profit, not least because it will cost more to operate. And it will lack the predictable incremental and highly profitable income growth factor inherent within philanthropic fundraising.
In short, the word donor-centric is another critical factor required to crack citizen generosity, and it’s why a focus on compassionate profit matters so much.
Why compassionate profit matters
The absence of a focus on pursuing compassionate profit has been at the heart of most of the fundraising dysfunction I have witnessed in the nonprofits I studied.
That’s how important pursuing compassionate profit is.
By always factoring the compassionate profit motive into fundraising, nonprofits are reminded to report back to the public and donors that a dominant percentage of the money raised is going to the work of the good cause. An increasing portion of the generous public want to see this proven. I would go so far as to say it’s now vital to routinely provide transparent evidence that the lion’s share of compassionate profit is going to the work of a good cause.
Here is one of the main reasons why: When more members of the public see that donations (generosity transactions) rather than buying stuff (exchange transactions) are the best way to help a nonprofit hand over 80% 39 or more of the money raised for a good cause, they realise that giving has more impact than buying. Plus, when they see the true amount of profit going to help the beneficiaries of the good cause, their trust in that nonprofit increases.
When the compassionate profit motive has a legitimate and central role in nonprofit operations, it helps untangle the previous ‘oil & water’ mix of work flows and cash flows. The twin-enterprise approach enables the DFE to make as much compassionate profit as possible, and then hand it over to the BGCE to spend as it sees fit.
I have found that the twin enterprise concept is such a paradigm shift in thinking for those employed in nonprofit fundraising that the following explanations of the benefits are vital to be understood before we go further.
Benefit 1: Compassionate profit remains internal
Unlike profit made in the commercial sector, compassionate profit made by the DFE does not escape the closed loop of a twin-enterprise nonprofit structure. No compassionate profit will fall into the hands of investing shareholders. The DFE operates within the confines of a single nonprofit entity, which means that every dollar produced by the DFE is accounted for and mopped up by the BGCE.
39. Usually this is defined as “gross profit” by those in accounting but others might define it as “net profit” on occasions given that it’s the money left over once the full costs of running the Donor-centric Fundraising Enterprise are covered.
It’s critical that internal acknowledgement be given to this fact.
From a financial reporting perspective, the external charitable status of the twin-enterprise nonprofit remains unaffected by this internal twin-enterprise structure. All an external onlooker sees is that the nonprofit is creating adequate revenue to function, by enthusing more philanthropic giving. And that’s all any onlooker needs to know.
This approach means that the culture of pursuing compassionate profit within the nonprofit is no longer foreign and unacceptable. Making the most compassionate profit possible becomes a priority to give the BGCE the best chance to address the nonprofit’s mission.
Benefit 2: It’s a profit-driven business
A twin-enterprise nonprofit now contains a compassionate profit-driven business (the DFE) within itself and is no longer a single enterprise nonprofit trying to act like a business. The Donor-centric Fundraising Enterprise is a business, but it has considerable advantages over a commercial sector business. That is because of the unique form of financial transactions by which it can produce its compassionate profit through the pursuit of philanthropic donations.
By enabling the DFE to focus on making a compassionate profit, we can start to apply proven and tested profit-making, business-building strategies, principles, and tools to help that enterprise operate. The nonprofit is no longer confused and entangled with the all-inclusive ‘nonprofit’ motivations of the Good Cause Enterprise.
Board reporting is also simplified with this twin-enterprise and profit-driven structure in place. Board members and managers can more easily see a track record of cause and effect. They can easily see which fundraising activity provides the most compassionate profit to the BGCE. In time, they see that well-managed philanthropy is by far the most profitable form of income, and that has a positive flow-on effect of encouraging the board to continue embracing a culture of philanthropy. In fact, the nonprofit board members become leaders of such a culture.
Benefit 3: Role clarity
Lack of distinguishing the difference between turnover and profit can easily result in drawing the Beneficiary-centric Good Cause Enterprise (BGCE) staff into the business of fundraising when it really is none of their business.
When this mindset prevails, it creates a diversion of human resources away from the actual frontline work for which the charity was created in the first place and which they were employed to undertake. To say nothing of adding undue
stress to frontline staff who were seldom ever previously involved in moneymaking.
I once suggested the twin enterprise structure to the leadership of the Royal New Zealand Society for the Prevention of Cruelty to Animals (RNZSPCA). After explaining it, the national director of the frontline staff hugged me. His team was the only other group of people outside of the New Zealand Police who had the power to make arrests of people who abused animals. Trying to work out how he was also going to bring in the money that had, until then, been required of him each year was not only keeping him awake at night, it was yet another intrusion on his already overwhelming workload. He was a “good cause enterprise” person and an expert in his field. In presenting him with the twin enterprise approach to running the nonprofit, he had the freedom to return to focusing on where his innate gifts were best applied and leave the money-making to me.
Bother none of the BGCE people with the making of money, but hold them very accountable for their spending of it.
Benefit 4: Mission clarity
The twin-enterprise approach operates under a different mission structure within a single nonprofit as a whole. Let me explain.
In New Zealand, at this writing, there are over 28,000 charities registered with the New Zealand Charities Commission. That’s about one charity for every 178 New Zealand citizens.
Most are simply one or two people committed to doing a thing in the community that matters to them and they are convinced benefits their community. If I asked each of these thousands of charities to be crystal clear about their reason for being, I have little doubt I would receive back about 28,000 different mission statements. Each BGCE mission statement would be uniquely specific to how it intends to meet a particular unmet need.
But, if each of those thousands of charities operated under the Cracking Generosity twin-enterprise structure, we would find that each of their DFEs would only ever require a single mission statement to explain why it exists. And it would be this:
Toacquireandretainprofitabledonorsandprofitable donations so that the resulting compassionate profit can serve the needs of … [insert the name of your Beneficiarycentric Good Cause Enterprise here].
Here are two vital points about these different mission statements:
1. The mission of the BGCE is public-facing. It is what the nonprofit wants and needs the public to understand about what it aims to achieve in the world.
2. The DFE mission statement only needs to be shared within the confines of the nonprofit. It exists only to keep those working within the DFE to remain focused and on track.
While the good cause missions of nonprofits can vary greatly, the DFE mission within any twin-enterprise nonprofit structure remains virtually unchanged in each case. There is no need for long-winded brainstorming session to work it out. The default setting for the DFE is that it is only ever in operation to serve the financial needs of the BGCE, which in turn benefits the unique mission of the charity. It always does so by enthusing more people to donate in support of that mission. Simple.
Benefit 5: Less need to innovate
BGCEs must overcome many complex challenges in order to deliver on their nonprofit missions. Not so for the DFEs associated with them. Almost every aspect of how a Donor-centric Fundraising Enterprise is best operated can be copied from decades of simple and proven methods from both the business and nonprofit sectors.
I once shared with a successful businessman how underrated copying was. I told him that I had copied how to create the photographic products I sold in my first small business. My customers gave me the credit for being creative, which helped justify the prices I charged them. At that time, I was marketing my name as the guy who could create beautiful pictures. The reality was that I kept my creativity to an absolute minimum and mostly copied what others before me had proven to work.
I also copied the best accounting methods and customer relationship management tools needed for undertaking the best relationship marketing with my clients and customers.40
When I entered the corporate sector, I did exactly the same. I copied the sales and marketing techniques that others in that sector had found most effective. I explained to my successful business friend that I could not recall inventing anything much along the way and pointed out how tangled some people seem to get when they keep trying to reinvent solutions when the world is flooded with best practice examples that can be copied instead.
40. Just as a reminder, my first small business was a photography studio I opened in 1977 and sold in 1989.
It seemed to me that such re-inventing occurred because people are inclined to think that anyone who copies is somehow lacking in talent or falling behind their competitors. Plus, I discovered that many people think the problems they are trying to address are so unique that no one else would have previously faced the same issues.
I summed it up by telling him that if I could claim any small success in business, it was because I spent a lot of time copying the success of others. After listening to me, he replied, “It seems like you have uncovered the key to staying profitable in business.”
“I have? Do you mean by copying the success of others?”
“Well, sort of. I sum it up this way. You have been rushing to be second.”
Then he shared stories in his own business life where he had done just that. He pointed out that virtually all big names in the business world have gained success by applying that same principle. It can be argued that Facebook was a copied idea. As was Google.
His point was about being quick to copy. That was what had made all the difference in his business success. When he saw an idea that someone else had proven and that he could apply to his own business to make it more profitable, he would quickly copy that idea.
He explained to me the key advantages of this approach: “It’s about conserving energy so you can better use it elsewhere.”
Rushing to be second is at the heart of everything I present in this book. All aspects of the steps you are about to read are already proven to work and work ethically and profitably. They are not inventions of mine. Every one of them is copied from others who have proven them to be successful.
That leaves you to copy those methods and, by doing so, raise the money needed for any nonprofit you represent or are interested in supporting.
As we rush to be second, let's move on to Step 2 in the process of setting up a profitable Donor-centric Fundraising Enterprise. Step 2 is about overcoming otherwise potent barriers to success in cracking citizen generosity.
SPECIAL NOTE:
In this appetizer of my book, I’ve now included Step 13: Plan for Sabotage starting on the next page. I thought I would prepare you because that helps make it clear that “the best-laid schemes of mice and men go often awry.” You will get that when you read the next section. To know that in advance will better equip you to apply the 12 Steps to Cracking Generosity when you order my complete book.
There are eleven more steps you can learn in the full book. They are:
Step 2: - Know your enemy............................................................... .
Step 3: - Get crystal clear ................................................................... .
Step 12:- Simplify through Silo destruction ...................................
Step 13: Plan for sabotage
“The best-laid schemes of mice and men Go often awry, And leave us nothing but grief and pain, For promised joy!”
Exert from “To a Mouse” (standard English translation) by Robert (Robbie) Burns (1759 to 1796).
I stand on every word written in this book as being valid, true and effective in helping you find and retain people in the world who are pre-disposed to give you money to achieve your charitable mission.
However, I want to speak about how your best-laid schemes can be sabotaged, because, even if you are now one of those who can see how the 12 Steps to Cracking Generosity can result in significant income increases for your nonprofit, I need you to be prepared to encounter push back against this approach as has frequently happened to me.
Expect unbelievers
I remain unrepentant in my placing of nonprofit boards as generosity enemy number 1, largely because of their frequent failure to take the time to understand the 12 Steps of Cracking Generosity. None of the teachings in this book will bear any fruit for your organisation if you are unable to get your nonprofit board to first read this book themselves. Or, at the very least, get them to skim read it to get a sense of the 12 Steps. By having them do so, you will be well ahead on points towards activating the lessons I have provided.
Then you will need to get your nonprofit board to commit to:
1. Agreeing to endorse your application of the 12 Steps to Cracking Generosity as described in this book in such a way that it establishes a Donor-centric Fundraising Enterprise within your nonprofit that outlasts the time your board members are in governance of it.
2. Document their commitment of point 1 above in the board minutes with a pledge to their replacements that the twin-enterprise approach as outlined in Step 1 of this book remains the basis for all philanthropic fundraising in the years and decades ahead. Because sticking to the 12 Steps over the decades ahead is how the greatest rewards will be realised.
In the process of getting your board to understand the income potential, can I suggest you start by showing them the following chart? You have seen it before. It illustrates the profitable outcomes that are realistically achievable if the 12 Steps of Cracking Generosity are consistently undertaken. My hope is that it will get your board excited enough to want to learn more.
The Cracking Generosity 12 steps when applied over 20 years
$25.0
$20.0
$15.0
$10.0
$5.0
$0.0
Accumulated contribution to the good cause, Year 20, $18 million
Accumulated contribution to the good cause, Year 10, $1.6 million
However, even with my best evidence laid on the table to illustrate how the green line in the chart does become a reality in time, I have still encountered board members who are sceptical. Typical of some of the objections they continue to raise are:
1. It looks wonderful – if it works. So what other nonprofits are applying these methods with success?
Tell them this.
Malcolm Sproull knows of three nonprofits from his study of ten over 20 years who are applying these steps in varying degrees with solid success to this day. They remain financially stable and growing compared to the other seven who have not applied the 12 Steps of Cracking Generosity. Two of those seven no longer exist, three are stumbling along, trying to recover, and two were rescued when they were absorbed into bigger charities funded by the government. A consistent reality amongst those seven is their failure to adhere to the 12 Steps of Cracking Generosity.
2. It looks expensive to implement.
Is it though? How can a question/statement like that be answered without considering and knowing the return on investment by applying the 12 Steps to Cracking Generosity. A core element of the 12 Steps is to engage with the highest possible compassionate profit return as based on solid
evidence. When that is known – as it is – then the answer may simply be to compare the nonprofit’s current return on investment based on whatever else is being done to raise money currently. If it can be shown that the ROI from other current income generation is better than what can be achieved by the 12 Steps to Cracking Generosity, then, yes, it may be too expensive to implement. Having said that, I know of none that beats the ROI of funds raised by way of the 12 Steps to Cracking Generosity.
I believe I can present a very strong case illustrating that it is too expensive NOT TO implement the 12 Steps to Cracking Generosity.
3. We have urgent needs on our laps right now. We need money quicker than what the 12 Steps to Cracking Generosity can achieve.
Can I suggest just directing that board member to Step 5: Embrace the Speed of Philanthropy. With special emphasis on “The Now Thinking Dilemma”.
What nonprofit isn’t dealing with some urgent need? However, here is a case I want your board members to consider.
The charity I refer you to is United St Saviour’s Charity, based in the Parish of St Saviour, Southwark, London. Charitable contributions for its mission of building and supporting Alms Houses (a forerunner of retirement homes today) began in 1541. Over the centuries – yes –centuries – parishioners left land and money to help the mission of providing housing for the elderly poor. Places to live out their last years in dignity.
United St Saviour’s Charity is an outstanding example of the result of nurturing and maintaining relationships with people pre-disposed to support a good cause over time. Get it?! Over time. Over decades and even centuries of time.
The ultimate win is reflected on The Donor-centric Pathway at stage AR+5, when many St Saviour’s parishioners had entered a gift (a bequest) in
their Wills for the United St Saviour’s Charity. With the rewards of such generosity building up over decades, United St Saviour’s Charity stands as an outstanding example of the results of applying the 12 Steps to Cracking Generosity as explained in this book. The accumulation of the resulting gifts in Wills over the centuries has been invested in such a way as to provide more than sufficient income to maintain the charity well into the future.
So the question now is, how big is your vision?
If your current nonprofit board members wish to avoid seeing their replacements in 100 years continue being entangled in short-term concerns about where the next penny will come from, then I suggest they think like the parishioners of St Saviour’s some 400 years ago. Plan for less need to be reactive to emergencies in the future by applying today the Cracking Generosity teachings that those parishioners of St Saviour’s clearly understood. And in the not too distant future, your nonprofit will reap the rewards as your donors intended would be the case.
I present these examples here as a starter to helping you embrace:
1. That no board member objection I have encountered alters the fact that those nonprofits applying the 12 Steps to Cracking Generosity are demonstrably more profitable and sustainable than those who don’t.
2. That every objection raised by board members (or anyone involved in nonprofit fundraising) can be addressed from the evidence contained within this book as derived from my central study of ten nonprofits over 20 years.
Apply Cracking Generosity FABs
Remember the section Step 10: Get comfortable with asking where I explained FABs (features, advantages, and benefits)? When you experience push back, the people who might be doing that will be presenting you with objections in a manner similar to when yet-to-be donors query any nonprofit. Prepare yourself by knowing the content of Cracking Generosity to such a level as you have created a list of Cracking Generosity features, advantages, and benefits that you can present in response. To help you get started, here are a few:
Feature: Become a twin enterprise nonprofit Advantage: [which means that]
The good cause enterprise staff are released from any concerns about raising money so they can focus on what they are best in the world at doing.
Benefit: [so the benefit to you is]
You and they don’t get side tracked from the mission.
Feature: Become a twin enterprise nonprofit
Advantage: [which means that]
All work done in the Donor-centric Fundraising Enterprise is driven by the compassionate profit motive.
Benefit: [so the benefit to you is]
More compassionate profit for the Good Cause Enterprise to build their capacity to address the mission.
Feature: Learn about the enemies of generosity
Advantage: [which means that]
You have a greater awareness of the realities of the forces at work in society competing for the donated dollar.
Benefit: [so the benefit to you is]
Greater understanding of where to focus your resources to build a database of raving fans who are less effected by the enemies of generosity.
And so on…
You get the idea. Maybe you could go through this book and make a list of the FABs so you have them ready when objections arise. That will result in you being very ready for any push back as you present the Cracking Generosity teachings to the fundraising teams in your nonprofit.
However, with one potential type of person within your nonprofit, no amount of well-reasoned argument in favour of the 12 Steps to Cracking Generosity will get through. To use the analogy made by Jim Collins in his book Good to Great, these are mostly the wrong people to have on your bus.
Narcissists and saviours
We live in an age where self-interest and mini-dictators are popping up with increasing frequency across our societies, including in the West. Such self-driven people are more interested in their own fame than the success of the charitable mission and will obliterate your best laid plans. In my study, I sadly saw this occur all too frequently. People who were more about promoting their own stories than prioritising the stories of others, were often undermining the well-established foundations of the nonprofits that employed them.
Not to put too fine a point on it, get rid of them. I say that being a person who wants to see the good in everyone, but who has had to change my perspective. Too often I have provided such people more string than I should have, and it has resulted in me being tripped up.
If I am to point a finger at the two personality types within nonprofits that have been major contributors to the demise of the seven underperforming charities in my ten charity study, it was narcissists41 and saviours.
A key indicator of narcissists is their chronic inability to see through the eyes of donors. They applaud the concept of innovation ahead of copying because their ego needs feeding by being acclaimed for their innovative new and unique solutions. And by working in an environment where they feel they can gain power and control over others.
Saviours, on the other hand, might suddenly have what I call a social conscious seizure and wake up convinced they possess the talents and insights the nonprofit world is so desperately in need of. I call this saviour syndrome, but it is also known as saviour complex42
There are many who are drawn to nonprofit work out of motives that are more about them than the good cause. Weed them out. They are the sort of people who have come into the nonprofit sector so that people will applaud them and they can be seen as “good” people. It is often important for their egos that their unique definition of right and wrong is allowed to rule, which happens at the cost of the well-proven fundraising methods of the past.
41. Narcissism is a self–centered personality style characterized as having an excessive preoccupation with oneself and one's own needs, often at the expense of others.
42. In psychology, a savior complex is an attitude and demeanour in which a person believes they are responsible for assisting other people.[1] A person with a savior complex will often experience empathic episodes and commit to impulsive decisions such as volunteering, donating, or advocating for a cause.[2] A person with the complex will usually make an attempt to assist or continue to assist even if they are not helpful or are detrimental to the situation, others, or themselves.[3]
Here is a quick test for spotting the saviours and the narcissists. Neither of them like checklists. They see such methods as not allowing their unique creativity to have its proper voice. Think about that for a moment. If a checklist when followed produces the desired profitable relationships with donors and yet-to-be donors, why would anyone not follow it? The answer I have found consistently is that the person who is being asked to follow the checklist but who refuses to do so is not getting the credit they want for themselves for the work they do. Following a checklist is beneath them. That would mean they are simply following instructions and that would mean they are just servants. Narcissists and saviours tend not to like being servants. Checklists don’t provide them with their needed supply of power, control, and public acclaim.
Be on your guard. None of the content of Cracking Generosity can or ever has flourished in the hands of such self-centred people.
Again I say, weed them out.
Taking your eyes off compassionate profit
Way back on page 91, I said this;
"... in all nonprofits where I worked, it became a common discovery that the absence of any integration of a profit motive was a constant sabotaging force working against effective fundraising."
Let me illustrate what will happen to your income if you let that happen.
As imagined at the beginning of this book, if you have 10,000 donors who give you regular donations of $50 per quarter, that equates to an annual income of $2,000,000. But it typically takes between 15 and 20 years to achieve such a number of donors and level of annual turnover. Given that the 12 Cracking Generosity Steps are consistently applied over those years, then that is achievable over that time frame. If that is the case then a typical resulting return on investment looks like Chart 13-2.
You will see that the ROI on generosity transactions far exceeds that achieved through exchange transactions. Both are ways to make a compassionate profit to be handed over to the Good Cause Enterprise. But the outcome by years 10 and 20 shows at least double the compassionate profit achieved through generosity transactions than is possible through exchange transactions.
$3.00
$2.00
$1.00
$0.00
ROI (compassionate profit) per $1 invested
Chart 13-2: In this model of a nonprofit beginning to acquire new donors using the 12 Step Cracking Generosity principles, the green bars show the increasing ROI for every dollar invested in attracting generosity transactions compared to a nonprofit that elects only to make its income from exchange transactions.
The difference in total income from these two forms of income transaction translates to millions of dollars. So now, here is a tragedy I want to ask you to avoid so that those millions of generous dollars keep coming to your nonprofit in the future.
If you take your eyes off the pursuit of the levels of compassionate profit that is only found through philanthropic giving from generous citizens, then expect the following financial disasters:
1. By not remaining consistent annually in recruiting new donors to support your good cause financially, you will see the reduction of compassionate profit begin to occur.
2. If consistent acquisition of new donors has been allowed to fall behind for a while, it can take 3 to 5 years to recover the lost revenue once a nonprofit returns to consistent annual donor acquisition. That often sends the ROI back several years to only in the range of years 3 and 5 on Chart 13-2. And that equates to millions of dollars of compassionate profit lost over those years.
Whatever it takes, never take your eyes off the pursuit of compassionate profit produced by consistently activating the 12 Steps of Cracking Generosity. Never! And the same goes for anyone else in your nonprofit.
Be prepared for newcomers entering your nonprofit suffering from exchange transaction mind block syndrome who will often want to concoct other ways to bring in the money. Stand you ground. Defend the process of donor acquisition and donor stewardship with your life.
Please.
My final ask of you
Even though the foundational principles are ancient, there are few people conveying the Cracking Generosity knowledge to the nonprofit sector today. This translates to it being very new knowledge for the vast majority of people in society, including those working for short bursts in the nonprofit sector. That is the very reason I have spent eight years writing this book, based on my more than twenty years of study of the sector.
This is knowledge that works now no more or less than it has done for centuries. So, let me be 100% clear of the benefits of applying the 12 Steps to Cracking Generosity:
1. More nonprofits will flourish if they follow the 12 Steps to Cracking Generosity.
2. More citizen generosity will be released, resulting in more intentional generosity becoming a part of the mind-set of more people and their communities.
3. It will lead to healthier and happier communities that are served by the generosity of those citizens and the nonprofit that their generosity supports.
To put it in the terms of Dr W. Edwards Deming, “Everyone will win; no losers.”
The only obstacle blocking that win is people in nonprofits not knowing what they don’t know. I call on you to be the one who changes that by introducing or re-introducing the 12 Steps to Cracking Generosity within our society through your connection with a nonprofit.
When you try to share these teachings, there is a lot of unlearning and new learning that will be required by the student. Cracking Generosity provides teaching that is very much in conflict with the heavily indoctrinated consumer brain of the Western world. Plus, as you have heard me highlight frequently throughout this book, exchange transaction mind-block syndrome is also very much alive and well in the nonprofit sector.
When I have presented the Cracking Generosity teachings to a new audience, whether from the nonprofit sector or not, the initial response is commonly some form of pushback. So, if you seriously want to gain the profits waiting within citizen generosity, expect the same pushback when first presenting the contents of this book. For the vast majority of modern western citizens, including those working in nonprofits, it requires a considerable shift in mindset.
Prepare for it.
Don’t run out of steam when you hear the same objections again and again from people the first time you present the Cracking Generosity teachings. Expect to hear responses like:
“Maybe in the old days. It’s a different and very digital world now. Times have changed.”
“The cost of living has never been higher. People can’t afford to give money away.”
“That won’t work for a charity like ours.”
“We are too small to put the 12 Steps of Cracking Generosity teachings to work. That’s for the big boys.”
Grit your teeth, then smile back and use the information in my book to counter that misinformation. Oh… and don’t tire of repeating it a lot. You will see what I mean once you get started. It takes quite a lot of repeating for the penny to finally drop.
And please, please, please don’t buy a copy of this book and leave it on a bookshelf somewhere. Open it regularly. Review it regularly. Regularly tweak your processes compared to the teaching in the 12 Steps to Cracking Generosity. As God is my witness, you will incrementally increase the amount of compassionate profit your nonprofit receives.
That’s it really.
It’s now up to you, citizen.
“I’m asking you to believe. Not in my ability to bring about change but in yours.”
“Because for all our outward differences, we, in fact, all share the same proud title, the most important office in a democracy: Citizen. Citizen.”
President Barack Obama delivered during his Farewell Address in Chicago on January 10, 2017.
