In my experience as a nonprofit leader and fundraiser over the last decade, I have often been asked, “What makes a good donor?”. I strongly believe that philanthropy and charitable giving can help society as a whole where government aid falls short. The responsibility of a community to uplift their neighbors should be done by those who have the means and privilege to give back. Melinda Gates referred to this in her recent interview on My Next Guest Needs No Introduction with David Letterman.
In AMANA Mutual Fund co-founder and trustee investment leader Yaqub Mirza’s book, Five Pillars of Prosperity, he highlights Earning, Saving, Investing, Spending, and Giving, in that order, as the secret sauce to avoiding debt and living a life of faith-based prosperity. His words are a relevant and timely reminder for anyone looking for practical investment and saving advice, regardless of faith affiliation.
I wanted to focus on Giving a little more to showcase the importance of contributing to make the world a better place. Giving with time, talent, treasure, testimony and our truth will make for a meaningful gift and a good donor. These have been adapted by a common phrase in the development profession of asking donors to give their time, talent, and treasure. This phrase is relatable to the Parable of the Good Samaritan who gives of his time to help the man in need, talents to tend the man’s wounds, and gives of his treasure to pay for the man’s lodging.
The Seven Faces of Philanthropy showcase the styles, reasons, and personalities of why people donate. Maslow’s Hierarchy of Needs contemplate the journey to self-actualization. Enlightenment is on the other side of this equation. Take care of your needs, follow the Five Pillars of Prosperity, implement the Building Blocks of Giving, and your route to enlightenment begins. Of course, you can always Eat, Pray, Love your way to happiness and self-actualization, but that also includes stepping outside of your comfort zone.
To be a good donor, you need to be a solution-oriented architect. Think of what you are planning to solve by donating. Philanthropy is often defined as ‘the love of humanity’. I like to put humanity into the equation. When you flip the script and put thought into action, your gift makes a larger impact regardless of the amount and has more meaning behind it. Through philanthropy, you can find your happiness and self-actualization. A good donor knows what inspires them and what values inform their giving decisions. Maybe it’s a long-time friend has a charity or that you and your family went through a certain experience that brings affinity to your giving. Whatever the reason may be, search for what connects the dots between you and the charity to find more purpose.
It’s important we research where we give and invest our sweat equity to. Who is the founder? Who is on the board? Who are the staff members? What is their strategic plan, vision, and mission? After you ask these critical questions and feel confident that the organization serves a critical function and purpose in making the world better, you’re ready for the Five Building Blocks of Giving.
The following are my recommended Building Blocks Giving, that if you follow, you too can find more appreciation in the details and social impact of your collective giving style and overall philanthropy.
Establish a practice of volunteering your time. It will soften your heart and help you get to know a charity or organization better. It builds an affinity in a way simply donating financial assets cannot. When coupled together with gifts of the following building blocks you achieve a sense of enlightenment and understanding that generate value and create impact. This is the first building block because it will influence the following blocks the most and allow you to tell the story more sincerely.
If you have an expertise or skill set that would be valuable to a community organization or nonprofit, lend your service. Perhaps you may be an investment banker on Wall Street and want to serve on a board’s finance or investment committee. This is an invaluable asset where the return on investment appreciates and compounds in good-will created for you and the charity benefitting.
If you have followed the steps outlined by Yaqub Mirza, you’re ready to now contribute financially. The best way to do so is with appreciated holdings (stocks, mutual funds, real estate, etc.). If you haven’t begun investing but have more than your rainy day fund, it may be a good practice to use your excess cash (or appreciated assets) to setup a Donor Advised Fund (DAF). If your assets are more than $1M, a family foundation could make sense or even a Trust, listing a DAF as a beneficiary.
The benefits are multiple. You receive the deduction the moment your giving vehicle is created. You can invest your balance for future charitable growth. You can name it after a loved one in memory or in honor of your family. Decision making can become a shared practice and actively involve family. A Giving Circle can also be formed with friends or family to contribute to common causes together.
What is unique and important here is to arrive at decisions with consensus so all parties involved can share in the impact created. You don’t need a DAF, Giving Circle, Foundation, or Trust to make an impact, you simply need a heart and a dollar, however, these tools can help you build strategy and impact around your charitable giving.
You’ve seen the organization in action, you have attended events to learn more. You’ve donated. You know a board member, a beneficiary, or a staff member. Your accumulated experience of mission moments can be curated into a sound bite for the nonprofit to use. Tell your story of why you care and how passionately you feel through your first-hand learning and journey to enlightenment. Providing your insight on what inspired your first donation and why you still donate is valuable information for the nonprofit to better steward their relationship with you.
Be bold enough to share your opinion with how you feel an organization can become stronger. Feedback and constructive criticism should be welcomed and there should be a process for nonprofits to welcome this. Your opinion will be valued more if you couple it with any of the other Building Blocks. A strategic plan built through a SWOT analysis is critical to understand the external and internal gaps to fulfilling your vision and mission. A third party facilitator can guide you through the process with key leaders of your organization from the Board of Directors, Trustees, Advisors, staff, and even donors through the use of focus groups and working sessions.
A strategic plan is only as good as it is implemented. Come back to it quarterly to see how you have aligned to your goals through your tasks. Adjust on an annual basis to achieve an overall 3 year strategy. Set floor, ceiling, and sky benchmarks of where you want to be and a roadmap of how to get there with identified drivers, destinations, and rest areas and fueling stations. This helps implement an actionable plan and creates a clear path that can steer around roadblocks, traffic jams or construction. Every for-or-nonprofit entity should search for solutions that help them create more revenue and impact. A social enterprise is the best of both worlds.
Making This Actionable
As a donor, you should be involved in the process to ensure the organizations you support are being effective stewards of your gift; whether it is of your time, talent, treasure, testimony, or truth. A few ways in which you can take what you’ve learned and implement it on your own is by starting a Giving Circle or Donor Advised Fund that will let you be more strategic with your charitable giving and create collective impact.
This article first appeared on LinkedIn.
Muhi Khwaja is c0-founder and Director of Development & Philanthropy of the American Muslim Fund. Founded in 2016, the American Muslim Fund is a grassroots, national community foundation in the United States focused on creating Donor Advised Funds, Giving Circles, distributing grants, and building endowments for the Muslim community. American Muslim Fund is the 2019 recipient of Outstanding Foundation by the Association of Fundraising Professionals Golden Gate Chapter for National Philanthropy Day. He is a guest author on Halalop.