Money, so they say…

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By Muneezay Jaffery, Co-Founder of Development Three (D3)

I always wondered what people did with a rich list? At times I ask myself how is this wealth being measured? Other times I think, why publish a list in the first place? Is it for big business players to scout competition or measure their own performance? Is it for the rest of us to think “well they had humble beginnings” or, it could be for charities to think “Someone out there is awful nice, they compiled a list of High Net worth Individuals (HNIs)* for us”

High Net Worth Individuals, HNI, a nonprofits most coveted friend? It can be a destructive friendship to say the least, one that creates dependency. However, their involvement, in many ways, can give nonprofits the financial and confidence boost to set the wheels in motion. Simultaneously, we always advise nonprofit clients that this should not be there only mode of income- in fact, a long term strategy for any nonprofit should involve diversifying their funding channels- this can involve HNI, grant-writing, fundraising events and also a social enterprise arm.

But is it safe to assume that as long as there are rich people there will be philanthropy and HNI?

The above statement is one I occasionally find myself asking. After all, we wouldn’t want people to stop giving, and there is no shortage of start-up and growing nonprofits in need of resources. A recent article about a billionaire who is reinventing the way philanthropy is done touches on that. It is interesting to see the use of ICT, social media and celebrities in the development of philanthropy. But is it enough to just attract HNIs and get money? Is it that arbitrary?

Donor education is a way for philanthropic/ HNI giving to be formalised. As awful as it sounds, donor education allows HNIs to decide where they give their money. It allows them to determine causes, organisations and individuals that sit best with their personal interests. It also gives then an idea of what to look for when trying to achieve a Social Return on Investment (SROI) when they invest. Development Three write SROI reports to assist HNIs to better understand how their money is contributing to development.

When it comes to giving, a change in mind-set is often required; we believe it is more than writing a cheque but not quite the same as investing money in a business. It is the cloudy space in between. And, depending on the particular charity, to see any sort of return can take longer than anticipated. HNIs must understand their involvement is determined by nonprofit requirements and to see an immediate SROI is very difficult. This is where donor cultivation comes in useful. According to Carlos Miranda of I. G. Advisors:

Engage donors with your work in a meaningful fashion that is unique to you. While many organisations will have similar remits and activities to your own, no two organisations are ever truly the same. Define what sets you apart.

Donor cultivation takes time and the aim should be to have “repeat donors” which brings not only regular funding but also credibility. When a donation is received, reporting back to the HNI is a significant step nonprofits must take. Be it providing newsletter updates, inviting individuals to events or sending photographs of their progress. A nonprofit can show HNIs that their relationship isn’t purely about the money; the more personalised the feedback, the better it is. Perhaps the HNI is interested in a particular format, as a start-up there is room for individualisation and experimentation.

So you could be a nonprofit going through Sunday’s list looking for a potential backer. Or you may know a HNI  looking for a cause to support. It is useful to keep some of these points in mind when pursuing a philanthropic venture.

*High Networth Individuals (HNI) can also be referred to HNWI

The article title is from the Pink Floyd song Money (Dark Side of The Moon, 1973).

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