June 26, 2008

The Importance Of Small Gifts 

By Eugene R. Tempel

It’s the names of the largest nonprofits that are most quickly recalled. And it’s the mega-gifts that capture attention. But this focus doesn’t reflect the great diversity of philanthropy and the nonprofit sector. This might cause both the public and nonprofit professionals to devalue the generosity and potential of donors who make smaller gifts and the contributions made by small nonprofit organizations.

While the importance of major contributions that help organizations construct new buildings or expand services shouldn’t be ignored, the importance of small gifts from loyal donors, coupled with the critical services provided by small organizations, is too often overlooked.

In most communities, large and small, the kinds of things that get done by small organizations literally keep a community and its people going. They provide services that are often invisible, but essential. They are often taken for granted, at least until they are no longer available. And the opportunities they provide for volunteer service are part of community pride.

For example, Jasper, Ind., population 14,000, is served by an all-volunteer fire department. A spot on the firefighter squad is the most prestigious volunteer job in town.

The 2007 Nonprofit Almanac, published by the Urban Institute, suggests there are far more small organizations then most people realize. Of the total 1.4 million nonprofits in this country, slightly more than half -- 900,000 -- have gross receipts of $25,000 or less. Research by Kirsten Grønbjerg, Efroymson, Chair in Philanthropy at the Center on Philanthropy at Indiana University, shows that the majority of nonprofits in Indiana are also very small: 62 percent claim gross receipts less than $100,000 and only 52 percent have paid staff.

According to the Urban Institute’s National Center for Charitable Statistics, many of these small organizations are parent and teacher groups, scholarship and student financial aid funds, historical societies, fire prevention organizations, animal protection and welfare groups, community service clubs, and local sports clubs.

Small nonprofits are widely dispersed geographically and are often critical service providers for small communities. But they play key roles in larger communities, too. Small nonprofits are often a primary way people participate in communities. A quote from the late Peter Drucker illustrates this point: “The major challenge for nonprofits is to give community a common purpose. Forty years ago, most Americans no longer lived in small towns. But they had still grown up in one. They had grown up in a local community. It was a compulsory community and could be quite stifling.

Still, it was a community. Again and again, when I talk to volunteers in nonprofits, I ask ‘Why are you willing to give all this time when you are already working hard in your paid job?’ And again and again, I get the same answer: ‘Because here I know what I am doing. Here I contribute. Here I belong. Here I am a member of a community.’ Community is an important part of what philanthropy is about.”

Gifts to nonprofits, whether of money or of time, are often the way people build a mutually dependent community, giving what one can, when one can; receiving when in need of assistance, from healthcare to childcare.
Just as analysis of the nonprofit landscape shows that most nonprofits are small, studies of giving illustrate that most gifts also are small.

In 2007, the American Express Charitable Gift Survey conducted by the Center on Philanthropy at Indiana University asked donors about their most recent gift. The study, which sought in part to determine how much people give at any one time to types of charitable recipients, revealed that the median charitable donation was $50 and two-thirds of donations were $100 or less.

With the increased focus on mega gifts and major gift fundraising in recent years, it is easy to overlook what should be the fundamental belief in the fundraising profession -- that every gift matters. Especially in small organizations, gifts of all sizes make a significant impact.

All development officers know intuitively that small gifts become the basis for larger or major gifts. A study at one major university shows that 44 percent of donors gave at lower levels for 13 years before they made a $50,000 gift. The first gift was generally $250 or less. Another university found that the common characteristic of those who gave $50,000 or more is that they had been $1,000 annual donors. So smaller gifts are also an important part of major gift programs at larger institutions. But valuing the donor of smaller contributions only because of his or her potential to make larger gifts raises ethical issues and often rings hollow with donors.

A few years ago the then-mayor of Kansas City opened a conference of fundraisers by chastising fundraisers for focusing all their attention on major donors. He told a story from his campaign. Once, when he finished a campaign speech, a woman in the crowd approached him with a quart of motor oil. She said she had been widowed and did not have much money but she had found a quart of motor oil in her late husband’s garage. She wanted to contribute that oil to his campaign because he must be doing plenty of driving. The mayor said he kept that can of oil on his desk to remind him that all contributions matter. Everyone wants to make a difference.

Small gifts give individuals a voice. They engage people and involve them in their community while also making a difference. Half of all gifts given for September 11 relief were $50 or less, and two-thirds were less than $100. A reporter asked why it matters to know that. It matters because it helps fundraisers and scholars understand the dynamics of giving, but it also matters far more on a much more fundamental level. It’s important because without knowing that, and without knowing that a lot of people are giving similarly-sized gifts, a donor who can only give $10 or $25 or $50 might think “My gift doesn’t count or can’t make a difference.”

The desire to be engaged, to be involved, to make a difference might be one reason for the rise of giving circles and collective giving efforts that allow a small group of people to have a larger impact than they can individually.

Recently, young professionals in Indianapolis joined together to create Giving Sum, a giving pool, which is described as a charitable giving vehicle that pools resources raised through membership, sponsorship and fundraisers. Members collectively will make annual grants that respond to the community’s urgent needs. This dynamic group of young people is serving as an example to other young people and people of all income levels who might otherwise feel like they are unable to give or make a difference -- together they are making a difference.

Small nonprofits and small gifts also reflect and encourage pluralism, which is in part the right and ability of one person who has an idea for how to meet a need, solve a problem or enrich the community to make a contribution or create an organization to do so. Most donors give because they believe in the mission of the organization they are supporting. This is one of the great strengths of the nonprofit sector and this nation. Participation in formal and informal coalitions by like-minded individuals, whether it be in the form of professional associations, environmental groups, civil rights activists, or unions, just to name a few, expresses the needs and viewpoints of diverse Americans and their attempt to build a better future.

Nonprofit fundraisers need to call each other back from a temptation to think that only major gifts really count. There is a risk that fundraisers begin to value people differently -- to value them based on their monetary value -- when the focus is primarily on productivity and demands for “success” versus taking a more humanistic approach to engaging people in the organization’s work. Fundraisers must value all donors and volunteers for their generosity. Development officers know this, but institutions often put the emphasis on success defined by dollars raised. In that environment, small donors are left to flounder.

As a profession, fundraisers need to rethink annual giving. Annual giving programs are often less valued within development departments, despite evidence that strong annual giving programs are the foundation for future major gift success. Career paths for fundraisers often focus on moving from annual giving to higher paying, more prestigious major or capital gift positions. Fundraisers should create and support a movement within the field to develop an annual fund career track. Annual giving should be a credible career in its own right, with increasing sophistication and prestige. It must be viewed as essential to a credible development program.

This is not to say that fundraisers should be Pollyannas. All fundraisers recognize that there is tension between small and large gifts and annual vs. major giving within development operations. While it is true that most gifts tend to be small gifts, it is also true that most philanthropic dollars comes from larger gifts. But small organizations often do not receive many of those major gifts. So it is important to focus on the value and importance of small gifts to organizations, to society, and to the donors who make them.

Fundraising professionals should develop the concept of generosity. What really matters is the size of the gift in relation to the donors’ means. Everyone knows the story of the “widow’s mite.” The mayor has his oil can.
Fundraisers all have their own stories of generosity that have helped shape their work in philanthropy. These examples should be a source of constant reflection in their professional development.
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Eugene R. Tempel is executive director of the Center on Philanthropy at Indiana University and a nationally recognized expert and author on the study, teaching and practice of philanthropy, fundraising, and nonprofit management.

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This article is from NPT Instant Fundraising, a publication of The NonProfit Times.

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