Make your investments count

Everyone wants their investments to be successful and your desire for your charitable donations is no different.  A common question asked by donors and trustees is, "How do I know I'm making a difference?"

The best way to discover the answer to this is to answer a different question first:  "What are you trying to accomplish with your family's foundation?"

If you do want to practice effective — and rewarding — philanthropy, then answering that question is your first step.  Some examples?  

• “I want to ensure that all children have an adult in their lives who care about them.”
• “I want to share the joy of giving with my grandchildren.”
• “I want to help people who’ve hit hard times find and keep jobs.”
• “I want to lower the number of people in the U.S. who end up in jail.”
• “I want to provide clean water and sanitation to a needy village in Haiti.”
• “I want to give back to the people in the community where my wealth was created.”

You get the idea.There are so many worthy goals.But the simple act of choosing a goal allows you to make all your following decisions so much easier and it gives you a chance to achieve something worthwhile.

I’m going to let you in on a secret.Unless you are giving millions of dollars and pay for double blind longitudinal evaluations, you can’t truly know you’re making a difference. But don’t give up! There are many ways you can use proxy data to help guide your giving decisions to increase the odds of effectiveness. How?

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Focus.  The more you invest in a focus area, the more you’ll learn about it over time and the better choices you’ll make.  You’ll know about what best practices are, what has worked over time, and what the challenges are.

​Find out what others have learned.  Sometimes there is a foundation in your community that you know about and respect. They fund the same kinds of things you are interested in. Look at the nonprofits you’re considering and see if they are funded by this other foundation. If not, call them up (the program officer is a good place to start) and ask them what they think about that nonprofit.
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Build capacity.  The nonprofits you support with donations are the delivery system for the change you want to see. Strengthening their capacity to deliver those services is a common sense way to increase the odds of success.  Pay for staff training, executive director sabbaticals, specialized software and training, a fundraising staff position, succession planning, business plan development, etc.

General operating support.  If you’re going beyond donating $25 to a $1,000 to a nonprofit in response to an annual mailing, many grantmakers are attracted by a particular program that a nonprofit offers. Or something new and sexy. Or something they can put their name on. But none of these new, sexy programs can occur if the nonprofit can’t afford rent, or electricity, or the copy bill, or staff costs.  Provide a general operating grant and you’ll make a nonprofit executive director’s day.

Advocate. Many intractable problems are intractable because the system designed to address the problem is broken. Usually the government — local, state, national — is involved in that system. You may be able fix parts of that system. For example, by providing funding for educational tools, you’ll teach people about the needed change.