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Philosophy of philanthropy: virtuous, vulgar or virtual?

by E. Blake Bromley
February 12, 1996; Canadian FundRaiser

Unfortunately, understanding what motivates a donor is one of those questions with which God has chosen to perpetually perplex us by withholding any clear answer free from contradictions. If there was a Bible for charitable giving, the Book of Ecclesiastes would be devoted to the question of what motivates a donor. Like the Preacher in Ecclesiastes, one might answer this imponderable question with the words:

"Vanity of vanities, saith the Preacher, vanity of vanities; all is vanity."

As in Ecclesiastes, however, one has missed the Preacher's point if one embraces to the exclusion of all others the first simple and simplistic answer which presents itself. The value of the question is in exploring the many complex and conflicting answers rather than being bewitched by any one answer which almost certainly has been manipulated to fit into some preconceived philosophical or marketing precept. It is particularly difficult to find a balanced comprehensive answer to the question of motivation when it arises in an Inquisition atmosphere where those posing the question are poised like the Grand Inquisitor to burn at the stake any heretic who dares to breathe the word "tax". In my experience dialogues on donor motivation are more often an exercise in identifying the infidels and apostates than a genuine quest for truth and understanding.

Reducing philanthropy to only fundraising
Like many Biblical quests, a meaningful understanding of the issues and answers is withheld from those who pursue the question for ulterior motives other than seeking truth and understanding. If one is demanding to know the definitive motivation of donors solely to design the most successful fundraising or planned giving program, I for one hope the question is never answered. There is already more than enough pressure to reduce philanthropy to nothing more than fundraising. Charities must concentrate more on fulfilling and communicating their mission and less on slick fundraising initiatives if they are to survive the funding crisis which is currently threatening their existence.

The function and funding of charities must be understood in the context of the society in which they exist. Considering donor motivations in detachment from the economic, social and political environment of the donor is a futile academic exercise. In Canada today it is absolutely necessary to factor in three contextual issues. The first is that Canadians have a profound aversion to the elites patronizingly telling the average person what is good for him or her. We are looking for real leadership, but are not content to have leaders simply pander to us. The second is that there is a tax revolt rage among wealthy donors, which puts an entirely different spin on the issue of tax motivation. The third is that people are not only concerned for, but also increasingly afraid of, the future of the social and educational fabric of Canada.

Rejecting overly-sophisticated fundraising with no program integrity
In the last election, Canadians decimated a government which was perceived as having no moral focus and an agenda and policies set by opinion polls rather than principles. Many charities are perceived as being willing to say or do anything for a donation, and are approaching the level of aversion accorded former Prime Minister Brian Mulroney. Canadian donors want to give to charities which know and carry out their mission with competence and compassion. They are in the process of massively rejecting overly sophisticated fundraising which is cynically based on marketing without program integrity.

The ability of the Canadian masses to ignore the pontifications of the elite - well demonstrated in the rejections of the Meech Lake and Charlottetown Accords - is being applied to high-powered charitable fundraising. It is difficult to determine whether ego, tax or altruism are positive motivations for Canadian donors; but it is obvious that they are reacting against overly slick marketing-based rather than program-based fundraising.

Charities must adjust to the new tax rage and populism
There is a funding crisis for charities in Canada, and many charities will not survive in their current form and function. This is part of both a domestic and international restructuring of economies and the role of governments. The fiscal and governmental framework in which charities have built their private and government funding base presumes a comprehensive government-funded social and educational safety net. This safety net is being radically rationalized, however, and many aspects of it are disappearing. Charities must adjust to a new paradigm not only in how they position their funding solicitations but also in how they carry out their programs.

Fortunately, the tax rage and populism in Canada is not as ideological or heartless as that cultivated by Newt Gingrich. Ralph Klein's Alberta illustrates that there is support for painful fiscal retrenchment, but it wants Medicare restructured rather than destroyed.

There is some form of charitable Darwinism active in Canada and this is not in itself a bad thing. The tragedy is that in determining "the survival of the fittest", the criteria for charities surviving or failing is not their social function and contributions to society, but rather whether or not they can obtain funding. While these issues are related, unfortunately many charities that simply put their head down and get on with the job will lose their funding if they do not pay adequate attention to changes in government grants and private giving. Donors who do not have personal experience with specific organizations tend to give money to charities which have the best marketing and communicate a certain amount of "sex appeal". Unfortunately, however, there is no necessary correlation between marketability and the importance of the social service provided by the charity.

Donations based on fears about the future
While in the short run, the best way to survive this Darwinian process is to have the best fundraising program, survival in the long run will depend upon adapting how the charity operates. In this new paradigm, donors - especially large donors - are increasingly making their donation decisions as if they were investment decisions. More significantly, these investment decisions are being made based upon their belief and fears about the future rather than their allegiances to the past. Fundraising strategies based upon the charitable world and economy as we know it will have a short shelf life. As the Preacher said in Ecclesiastes:

"To every thing there is a season, and a time to every purpose under the heaven.
A time to be born, and a time to die; a time to plant and a time to pluck up that which has been planted."

The "season" of charities as they presently exist in Canada is coming to an end, and it is the time for new purposes and programs. Focusing on the issue of donor motivation and the relative importance of altruism, tax benefits and recognition presumes that the circumstances under the heaven are as they have been for the past decade. If the firmament is undergoing a cosmic shift, it can be irrelevant to argue about the significance of ego in a donor's motivation.

Focus on fundamentals
The problem becomes more concrete when one considers the changes in the healthcare field. As hospitals are amalgamated into regional health boards and whole departments are removed from certain institutions due to the rationalization of delivery of specialty services, there are far more fundamental problems than recognition considerations to analyze before talking to a donor about a million dollar endowment.

Virtuous Philanthropy - Unadulterated, virginal altruism
The Collins English Dictionary defines virtuous as "characterized by or possessing virtue or moral excellence; righteousness; upright". Charities are always happiest with donors who are virtuous and whose motivations are altruistic and pure. These people are primarily committed to the charitable purpose of the organization and respond emotively with cash to fundraising appeals.

Ego is allowed and encouraged in virtuous philanthropy, and charities shamelessly pander to ego in promoting donor recognition. In fact, recognition is forced on donors who frequently prefer anonymity, at least partly because in our modern cynical world it is difficult for fundraising professionals to believe that there are donors who have unadulterated altruism.

Another reason fundraisers like the virtuous donor is the secondary meaning that the person is chaste or virginal. It is always easier to entice the naive donor into accepting all of the charity's blandishments and representations. Consequently, the gift is given on the charity's terms with little input from the donor as to application.

Dysfunctional economy forcing fundamental change on charities
There seems to be actually an increase in altruistic virtuous donors in this decade. The difference is that they are no longer content to simply give alms to mitigate the suffering of the poor. Like the Puritans in Elizabethan England, they have become disenchanted with the interminable process of giving to the poor. Their altruism is such that they want to get past the empty promises of fundraisers and devote their funds to organizations which are promoting solutions that can fundamentally solve problems, rather than just alleviate symptoms. As in the era of the Tudors leading up to the enactment in 1601 of the Statute of Elizabeth (which forms the legal basis for the modern law of charity), these donors know that a dysfunctional economy is forcing a fundamental change in how charitable organizations must operate in the future.

Charities must adapt to this paradigm shift if they are to appeal to the significant (and increasing) portion of the donor constituency which is more interested in the value of social service provided than anything else. Charities have focused on the public recognition extended to the donor as the motivating force for philanthropy to such an extent that they have offended many donors. They have promoted the networking opportunities offered to board or fundraising activists so much that they seem to deny that many people are genuinely interested in the mission of the charity for which they are volunteering. Similarly, they have so aggressively emphasized tax benefits to large donors, the possibility that altruism motivates their giving seems to have been repudiated.

Switch from alleviating, to solving problems
The virtuous donor is in many respects the most vulnerable to donor fatigue. Government cutbacks mean that donor fatigue will be chronic if they can not see a glimmer of hope in finding new ways for charities to create long term solutions to problems rather than forever just alleviating the symptoms. Since these donors frequently share the government's view about the seriousness of the debt crisis and have an ideological predilection to reduced government, it is important that they adjust to the paradigm shift by adjusting their motivation from alleviating problems to solving problems.

Success in raising gifts from the wealthy virtuous donor will increasingly depend less on marketing in the traditional fundraising style than on communicating a charity's unique ability to deliver a needed service effectively- and in the long-term. A large donor wants a charity to be well enough administered that it is reasonable to expect that it will be continuing to fulfill its mission decades later. It must clarify its mission and values, and then convince donors that it fulfills its purposes compassionately, competently and efficiently. If they want to overcome donor fatigue and inspire new funding commitments, charities must change their stereotypes of large donors, and position themselves as problem-solvers rather than just permanent institutions in the social safety net.

Vulgar Philanthropy - a clear distinction in the level of approbation
The Collins English Dictionary defines "vulgar" as "marked by lack of taste, culture, delicacy, manners, etc". Anyone in the philanthropy field can immediately think of scores of examples of vulgar philanthropy. Those who work in charities think of a "vulgarian" as a person who is rich or has pretensions to good taste. Donors, on the other hand, think of charities as vulgarian when they lack taste and delicacy in their fundraising endeavours.

The dividing line between virtuous and vulgar philanthropy is self-interest. Virtuous philanthropy is pragmatic enough to accept self-interest if the donor is sufficiently upright and righteous. If the self-interest is restricted to matters of ego and tax, charities attach no moral condemnation to deny the exemplary citizen full credit for virtuous philanthropy. However, if the donor is vulgar, self-interest tips the scale to make his philanthropy vulgar. The presence, and even primacy, of self-interest does not cause a charity to reject the funds of a vulgar donor, nor is the vulgarian denied public recognition. There is, however, a not very subtle distinction in the level of approbation extended to the vulgarian.

For many, the epitome of vulgarity in philanthropy is a donation motivated by tax considerations. I must confess to personally being on the side of the Philistines on this issue. My experience is that gifts which result from careful planning to achieve the maximum tax benefit are usually driven by concerns about economic efficiency and even stewardship rather than about tax. An individual or corporation making a charitable gift, no matter how tax efficient, must have some genuine charitable motivation, as the tax savings are almost never as large as the gift.

This can be contrasted with revenues from gaming and lotteries, fees for services, government contracts and grants, business marketing sponsorships and revenues from related business activities which require no charitable motivation as no after-tax gift is made. It is ironic that donors are criticized for any dilution in charitable motivation resulting from tax benefits in an era when charities are increasingly cultivating sources of funding which require no charitable intent whatsoever. It seems perverse to suggest that funding from sources with diluted charitable motivation is tainted, while accepting without question funding from sources completely devoid of any charitable motivation.

Use tax fatigue to overcome donor fatigue
In fact, the real future growth in charitable funding is in creative tax planning. This is not to say that the real motive in such gifts is to achieve tax benefits. Instead it is to recognize that donors are as overwhelmed with tax fatigue as they are with donor fatigue. If there is anything that a donor hates worse than yet another charitable solicitation for a voluntary donation, it is the power of Revenue Canada to compel an involuntary contribution of over fifty cents of every dollar. Increasingly, tax fatigue is greater than donor fatigue.

The challenge of the creative tax planner then, is to utilize tax fatigue to overcome donor fatigue and convert the taxpayer's destructive tax revolt nihilism into constructive charitable contribution. Given the option of passively remitting 50 cents to the bottomless pit in Ottawa or actively directing that 50 cents to a worthy community cause, many taxpayers will give the money to charity even though it means adding an additional 50 cents of their tax-paid money.

Based on a presentation by E. Blake Bromley of Douglas, Symes and Brissenden of Vancouver BC, to the 1995 Annual Meeting of the Canadian Association of Gift Planners, Toronto, Ontario. First of three parts. Would you like to read the next article in the series?

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