Transformational Philanthropy

By Lisa M. Dietlin, President and CEO, Lisa M. Dietlin and Associates

9/11 changed the world and I would argue, the nonprofit sector. On that day, Americans watched in horror as planes flew into buildings and were ultimately grounded for days. On that day as we watched the clouds billow out of lower Manhattan, Washington, DC and Shanksville, Pennsylvania, Americans did what we have always done… we sprang into action. We began thinking of ways we could help. We stood in lines to donate blood. We showed up to help with the rescue and recovery work. We brought food to the firemen, steelworkers, policemen and others who worked tirelessly to initially search for survivors then recover remains. And we donated money.

America has had a long tradition of being charitable, especially in times of trouble or disaster, but 9/11 has had a lasting impact.

If you recall, before 9/11, Americans were anxious about making charitable donations via online methodologies, often wondering if they would be safe and secure. We wondered who would be receiving our credit card information and if it was the best way to donate. 9/11 and its impact changed all that and money began to be donated directly and online via our credit cards. We realized the method of giving was not as important as the difference we wanted to make or the cause we wanted to support.

In the days following, we also realized that in addition to the money we were donating, we wanted to ensure our actions were making a difference and thus catalyzing a change or transformation to occur. We wanted our lives to mean something and many took the opportunity to incorporate philanthropy into the plans for their lives.

Experiencing the aftermath of this and my work with entrepreneurs, which began in the mid to late 1990s, forced me to pause and question how I could work with prospective donors to ensure their donation caused the change, or transformation, they desired to occur consistently.

As we live and work in a world that is a dozen years past 9/11, many entrepreneurs still struggle to make wise decisions about their charitable contributions, but are still committed to making a difference in their community and world by giving back. I believe this is the best place to practice the art of transformational philanthropy.

I have been asked often what is the difference between a transformational gift and a major gift? To me the answer is simple…a transformational gift causes a change in both the giver and the receiver, whereas a major gift is often an arbitrary number determined by the nonprofit organization to which donors are encouraged to aspire. It is as if being listed at a higher level on a donor wall is a motivational factor when actually what individuals want, especially entrepreneurs, is to be able to make a difference. And there are many entrepreneurs, after having built a successful business and selling it, who are looking for an ‘encore’ career. This situation is a prime opportunity for entrepreneurs to explore the nonprofit world and for the leadership of nonprofit organizations to engage these very talented individuals.

Transformational philanthropy is an approach to development that enables both nonprofit leaders and entrepreneurs to develop meaningful and effective ways to work together in order to solve 21st century challenges. It starts with a clear understanding by both parties in what is hoped to be achieved. Listening would be the key to success at this point… listening on both sides, but especially the nonprofit team. Through this understanding evolves a strategy, and ultimately a relationship, that exists far beyond the “transaction” that is going to occur when a donation is made.

As shared in my book, Transformational Philanthropy: Entrepreneurs and Nonprofits, “Entrepreneurs are individuals most likely to make a transformational donation. By transformational, I mean a philanthropic donation that changes the course of or has a tremendous impact on a nonprofit organization. However, most entrepreneurs do not have a plan of action or strategy for their philanthropic activities.”

In interviewing 23 entrepreneurs for my book and working with hundreds of others, I discovered they all had the same four (4) themes running through their philanthropic work and thoughts around it. First, all entrepreneurs saw a difference between philanthropy and charity and all wanted to do philanthropy. This makes sense because to them philanthropy is a long term investment and charity is a short term venture. In other words, while they see the value of charity (i.e., giving someone a fish to eat today), they were much more interested in doing philanthropy (teaching them how to fish or solving the problem of hunger). The second common theme is that they wished they had started sooner… and to that I say, “Shame on us in the nonprofit sector for not asking them sooner.” Most of the time those of us working for a nonprofit are so busy focusing on corporation and foundation grants/gifts as well as the philanthropic families in our community (or even securing government dollars) that we overlook that small business owner in our midst who is employing hundreds of employees and doing good. Third, most of the entrepreneurs I have encountered share that the more money they give away the more money they make! This is not why they are charitable but an unintended outcome. The last thing they almost all tell me is that they did not come from a home that had philanthropy at its core or focus, but most remember their moms (although some said families) doing something around food and giving back during the holidays. This memory seems to have made a lasting impression and the foundation of their philanthropic journey.

What was most interesting to me in working with this group is what all the women entrepreneurs offered when having this discussion with me. Each of them shared that philanthropy was more than just money. To these women, philanthropy was that smile on a street from a stranger, a person holding a door open for someone else, sharing their lunch with someone who had forgotten or didn’t have any food, etc. The women entrepreneurs clearly saw philanthropy in a holistic manner.

Transformational gifts can be given by anyone but in my experience they are usually given by entrepreneurs. One only has to think of the names we hear when a large donation is shared – Buffet, Gates, Bloomberg, Trump, Dell, etc. The list of entrepreneurs making transformational gifts – whether on a national level or within a local community – is always dominated by names of people who started or acquired businesses.

I suppose that this phenomenon occurs because of how entrepreneurs are wired. An entrepreneur by definition is someone who sees a niche in the marketplace that is not filled and decides to fill it by creating a business. This same view is what they bring to the nonprofit sector. They see a problem and want to fix it; they will use the same skillset that allowed them to build a business from an observation and an idea. And the fascinating, as well as exhilarating, part of working with entrepreneurs is that they are not deterred by problems. As luck and experience would have it, they are great problem solvers and often thrive on finding alternative solutions to what often appears to be an insurmountable situation or problem that is plaguing the nonprofit organization.

So, where does one begin is a question often posed to me. I say begin in your community. Look to identify those businesses that are employing others. Have you ever thought about going to a McDonald’s owner/operator for anything else besides donating the orange drink and gift coupons? What about credit card collection agencies and bankruptcy attorneys? The storage unit business is one of the fastest growing industries in our society today – who owns them in your community? Have you thought of approaching them? With the rise of diabetes, who is the provider of medical equipment needed by diabetics? I once had dinner with a man who had created a business of medical waste disposal (think of those little red plastic boxes in all medical offices). He was a multimillionaire who had just built a 26,000 square foot home for he and his wife – they had no children. I wonder if anyone in his community ever thinks about approaching him for a charitable donation. Another entrepreneurial woman I know has a scrap metal company that routinely does $200 million annually and she wears a pink hard hat! Another female entrepreneur has a trucking company and buys everyone a pair of slippers for the office; another entrepreneur runs an electric motor corporation that during the economic downturn was doing very well as everyone fixed their motors instead of buying new. The list of industries and the entrepreneurs who own them goes on and on.

The real question is are you tuned in, aware and ready to take on the challenge of building a transformational philanthropic program?

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