The management of donor expectations can be tricky when the needs and objectives of a nonprofit changes. Roewen Wishart highlights some of the issues and how to find a path through. Donor revolt – the tale of MBS

The prestigious Melbourne Business School (MBS) considered a merger with the University of Melbourne Faculty of Economics and Commerce in 2009. A media release in July of that year said the proposed merger was intended to bring together “the university’s considerable teaching and research strengths in economics and business with the industry connections and the unique teaching model of MBS”.

The merger was discontinued after consultation with some donors (individuals, companies and foundations) who had donated in the 1980’s when the school was created. Some donors feared the distinctive character of the school might be diminished. Unusually, the donors had a formal vote, in proportion to the size of their original donations.

Few Australian nonprofits have donors with legally expressed rights continuing from more than twenty years in the past. But our professional standards broadly create similar obligations – obligations for fundraisers, rather than legal rights vested in donors.

We have the obligation to use donations for the intended purpose (and arguably not to change that purpose without a well-founded reason). In the case of Melbourne Business School, a group of committed donors held strongly to their original understanding of the fundamental mission of an organisation they helped to create – even 20 years on.

Build in flexibility

Nonprofits respond to changes in the external environment. Boards make conscientious best decisions when they acknowledge that an organisation’s fundamental structure or the strategies to realise its mission should change. Explaining to donors early why a board is resolving to change direction may pre-empt any dissatisfaction from donors. If fundraisers are doing their jobs well, our organisations will still be in contact with important donors from 20 or 30 years ago. Hopefully, they are still donors.

There’s also a less fundamental level of change. Universities, hospitals and schools face circumstances where buildings have reached the end of their useful life, have outlived their purpose, or where bigger and better facilities can be built on a site which requires demolition of the old. Fundraisers’ and organisations’ obligations to those who donated to support the original buildings are twofold: sometimes specific obligations in contracts, such as naming rights; or sometimes just good stewardship of these past donors, which might include courtesy advance notification, or continued recognition of the donors for the original buildings in the replacements.

When circumstances change

The same issue arises (perhaps at a lesser scale) for many other nonprofits, anytime we accept donations for assets which donors expect are ‘intended to last’. We should take care that we don’t over-state the longevity of what will be built or done. Particularly for larger gifts, we should consider whether we need to put in writing or explicitly talk with donors about what might happen when circumstances change.

As a matter of common-sense, donors will understand when buildings or equipment have “worn out”, become too expensive to maintain or are technologically out-dated. They’ll likely understand that they must be replaced.

Things become harder, however, when boards consider that purposes and needs have changed – but donors’ perceptions have not. Many donors trust the boards of nonprofits to decide when things need to change. As fundraisers, we need to pay special attention to the rights of donors who expect that some things will not change, while doing what we can to ensure the board’s capacity to bring about change, on behalf of the organisation’s mission. This is especially important where donors may have a strong emotional association with a gift, such as a named recognition of deceased family member.

Managing expectations

Zoos Victoria Foundation faces some interesting issues as the zoo alters the composition of its animal collection, and the physical and graphic design of the exhibits and animals’ living spaces. Executive director of the foundation, Pamela Sutton-Legaud says conservation priorities, prevailing social standards about acceptable design of exhibits, consumer preferences, and the zoo’s own plans for the composition of its animal collections at its three main locations, all change over the decades.

In recent years, the foundation has made sure it communicates to donors that the expected ‘life’ of an exhibit is around 10 or 15 years. This happens by way of a written ‘benefits schedule’ which donors receive. The limited life of an exhibit means that recognition of donors will only last for that time. The foundation has gradually dealt with a past problem of many recognition plaques and acknowledgements which were so old, no-one knew who the donors were or when they donated.

Happily, some animals are of such enduring interest and importance that they remain part of the collection for much longer. Sutton-Legaud says this leads to the opposite challenge. “We are in the pleasant position where we are negotiating with a potential new company sponsor for the ongoing operating costs of care of these animals and maintenance of their exhibit. The original facility for the animals remains of good quality, and the foundation which originally supported the building will continue to be recognised, as well as the new sponsor of the program.”

Lessons well learned

There is a contrasting situation which also gives a guide to communicating with donors when things may change. In fast-changing emergency situations, donors’ understanding of what is required may be very much ‘in the moment’, whereas nonprofits consider both immediate and longer-term needs. The Red Cross Victorian bushfire appeal 2009 was and remains the largest single purpose appeal in Australia. The Red Cross and Victorian Government established a bushfire appeal fund, with an advisory panel which oversees the guiding principles, and the specific amounts and eligibility criteria, for allocating the funds.

Much has been learned since appeals which followed the September 11, 2001 terrorist attacks in the US, when some donors were disappointed at how funds were used and the time it took to disperse them.

Robert Tickner, chief executive officer of the Australian Red Cross says, “We know about the critical importance of communicating to donors, beneficiaries and the wider public about the purpose of the appeal and intended use of funds. The Victorian bushfire appeal intent was communicated from the moment the appeal was launched and all decisions about allocations are referenced back to that intent.”

The bushfire appeal fund advisory panel identified principles to reflect what they considered to be donors’ expectations and has made detailed, public reports on spending the funds (www.dhs.vic.gov.au/bushfireappeal). There has been some understandable discontent among a few people affected by the bushfires, but it’s notable that there has been very little reported concern among donors, given the size and complexity of the projects supported. The range of individual needs and community projects is extensive, probably more than many donors would have foreseen, but the fund seems to have succeeded in encompassing both donor expectations and actual need.

We deal with issues which on the surface might seem to be about the ‘inconvenience’ of past naming recognition or the evolution of a nonprofit’s programs. We need to put ourselves in our donors’ shoes, and consider their long-term trust or heartfelt connection to their original gift.

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