Tag Archives: Mo Lidsky

Recognizing the reality of recognition

This post originally appeared on Hilborn’s Charity ENews

SpotlightDuring a coffee meeting last week a colleague of mine proclaimed that most philanthropists were raving egomaniacs who donated money either for their own self-aggrandizement or to further business interests. “All they really want is their name on something,” she said. It’s an opinion that’s widely held. It’s also largely unfounded.

A recent article by David Callahan in Inside Philanthropy focuses on the humility factor in major gift philanthropy. Interestingly, he reveals that a U.S. database of gifts of at least $1M made since 2000 lists over 1,000 donations that were given anonymously including 100 gifts of $20M or more. While those gifts may represent a small percentage of the total, it’s still a very significant number of donors who want their name left out of it.

Callahan speculates that the reason for the humility is two-fold. Many donors espouse anonymity as a matter of principle while others are simply trying to avoid the additional solicitations that notoriety brings. He correctly points out that this humility is not in the best interest of the organizations being supported. It starves them of the awareness that comes with major gift announcements and eliminates the potential for motivating other donors.

But what do philanthropists really think about recognition? Why do they or don’t they want their names attached to a gift? Our interviews with dozens of Canada’s top philanthropists revealed very sophisticated and, for the most part, very principled approaches to recognition.

Many donors downplayed the role of recognition in their philanthropic decisions. Carlo Fidani clearly felt that the impact of the gift was paramount when he posed and answered his rhetorical question.  “Is it about the name or is it about the reason for giving? It is always about the reason for giving. The name is a nice gesture, but it’s not a reason for giving.”

Hal Jackman ascribed respect to donors who remain anonymous when he told us, “I would say that it is more noble.”

The primary motivation for those donors who were open to receiving recognition was a combination of legacy and wanting to inspire their children. Issy Sharp, as a veteran in the philanthropic arena, was able to step back and sum it up astutely. “Probably one of the best ways to get big money is name recognition. Because that’s what people want. They want legacy and family tradition.” As if to confirm Sharp’s insight, David Cynammon said, “I will tell you that recognition is very important and I will give you the absolute honest reason for me and the only reason is for my kids to see it.”

Philanthropists are certainly cognizant of the benefits that recognition brings to the organizations they support. In talking about gifts made by her father and their family foundation, Julianna Sprott displayed a deep understanding of motivation. “It is not the ego-stroke, it is the ripple-effect outward. Someone might see the Sprott name on something and say, ‘I didn’t know Eric did that, and he doesn’t make bad investments, so maybe we should too.’ I think there is power in that.”

Does it really work that way? Are others ever incented to give because of the generosity of someone they know? According to Eddie Sonshine it does. In talking about a major gift made to and prominently recognized by a museum in Israel, he recounted, “To this day, there doesn’t seem to be a month that doesn’t go by that we don’t get a call or an email from someone who says, we walked through the museum, and we saw your name and we were so inspired.”

David Cynammon took a more cynical, and perhaps more realistic, approach to the way in which one gift can lead to others. “It might even create competition. You know somebody else who says ‘hey I don’t have my name on a hospital and I better get it up there.” That certainly sounds like the kind of celebrity in philanthropy that people find offensive. But Cynammon finishes his point with a no-nonsense reality check. “The bottom line is that money is going to worthwhile causes and is inevitably helping people. And if that means a game amongst rich people, so what?”

While anonymity is often a way of avoiding attention – either for practical or principled reasons, Jay Hennick presented no-name giving as a form of protest. He was forced to reconcile what he saw as the disconcerting fundraising behavior of an organization with his affinity for the cause and many of its board members. Characteristically he forged the path less traveled. “I have given a gift because one of the organization’s board members is one of our corporate board members and I love him. And there’s a big plaque that says Anonymous there. My wife thinks I’m crazy, but I say that I don’t want [them] to know the money is from me. Because somebody has to protest the way that they deal with their donors.”

Not surprisingly, our conversations with philanthropists provided a more nuanced understanding of the many facets of recognition. Their perspectives belie my colleague’s presumption of complete self-involvement but also deny the existence of totally altruistic humility.

There is no question that the issues surrounding gift recognition necessitate finding the balance between the needs of the donor and those of the organization. Organizations that get to know more about the philanthropists who support them and understand more about their personal motivation will have a better chance of overcoming the hurdle of humility.


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In philanthropy, a deal is not always a deal

DealPhilanthropic gifts are not like business deals. That’s despite the fact they often involve tens of millions of dollars and some of the world’s most successful business people. When the terms of a business deal change and are at odds with the original agreement, no one disputes the right of either party to pull out. But when it comes to philanthropy, the rules, behaviour and attitudes are different.

A great example is a story that appeared in the New York Times last December. It details the saga of the beleaguered Paul Smith’s College that successfully solicited a $20 million naming gift from prominent philanthropists Joan and Sanford Weill. There was however a small problem. It seems that the school’s founder and original benefactor had, as part of his testamentary gift to school, stipulated that it forever be known as Paul Smith’s College of Arts and Sciences. The school’s creative solution was that it would change its name to Joan Weill-Paul Smith’s College.

It seemed like a win-win. The terms of the Smith beneficiary gift were maintained while providing the Weills with the recognition they sought. Not so fast. It seems that although the college was operating at a deficit, there were many who objected to the agreement and the whole matter was forced into the courts. A judge eventually ruled that the evidence of financial hardship was insufficient to allow the name change.

With the deal no longer viable, the Weills withdrew their gift. That seems not only fair but also unquestionable. Apparently, not everyone agreed. A lawyer representing the alumni association said it was unfortunate that the Weills were not going ahead with the gift and vilified them by saying, “If they really wanted to give a gift to the school, it shouldn’t be contingent on something as self-glorifying as naming the school after Mrs. Weill.”

Hang on a minute. The terms of a multi-million dollar deal can’t be met but when the agreement falls apart, one of the parties is subject to harsh criticism. That would never happen in a business deal.

Interestingly, in our interviews with Canada’s top philanthropists, we discovered that the Weills may be an exception in the world of philanthropy. Numerous top donors told us about gifts that had gone wrong but amazingly, in almost every instance, the philanthropist had continued to support the organization. We’re not talking about small oversights. These are cases where the terms of the donor agreement were not met, where funds were not used as stipulated and in one case, where a donation had been used to build a library instead of a gym. And yet, in almost every instance, the philanthropist remained a supporter of the organization.

Jay Hennick’s comment likely resonates with many donors. “What I really should have done is said, ‘Give me back my money.’ But I didn’t think it was the right thing to do.”

Whether it was the right thing or not, it’s clear that the rules for philanthropic deals are definitely not the same as those for business deals.

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Should philanthropy be risky business?

risky-businessMany of the world’s most prolific philanthropists made their money by taking risks. But do they have the same appetite for risk when it comes to their philanthropic endeavours?

Certainly, many of the projects funded by the philanthropists we interviewed were groundbreaking and inherently risky. The joint JD/MBA programs that Jay Hennick wanted to create at both the Universities of Ottawa and Toronto were one-of-a- kind in Canada. Through his insistence on collaboration, Carlo Fidani frequently brings together individuals and institutions that have no prior experience working together, creating situations in which results are far from guaranteed. In his advocacy work on behalf of the charitable sector, Donald Johnson has staked his personal reputation on many initiatives with no promise of success.

Many of those we interviewed spoke directly about risk. In analyzing the risk versus the results of the medical research projects he funds, Mark Krembil told us, “…. but I am looking at getting results. So if I spend $100,000, I understand the risk. It’s like an investment. It may be worth nothing …. And if I’m lucky, more than skilled perhaps, I’ll hit a home run and that’s kind of what we’re after at the end of the day.” In describing his support for a new genre of educational institution, Gil Palter said, “So we are one of the handful of founders, people who effectively put up venture capital, the risk capital to open the doors …”

That’s a great segue to a very thought provoking item that recently appeared in the Stanford Social Innovation Review. The article, titled, Philanthropy: The New Risk Capital?, links the need for early stage research capital with the philanthropist’s “growing demand for more impact from their charitable dollars.” Author Christian Braemer draws this conclusion. “Providing donors with open access to research funding, increased giving efficiency, and facilitating greater engagement through a modern marketplace will boost innovation funding and increase overall giving, if for no other reason than by creating an experience that simultaneously appeals to both the heartstrings and fiscal sensibilities.”

What’s really intriguing is that this new approach to philanthropy “… allows savvy entrepreneurs-turned-philanthropists to incorporate the strategies, wise investments, and risk-taking that anchored their own successes in business, and at the same time solve major problems in the innovation life cycle.”

We’re not sure that all of the top Canadian philanthropists we interviewed are ready for this new giving paradigm. For many, however, the ability to use the risk-taking profile by which they earned their wealth as a means of maximizing its philanthropic impact will prove very attractive. For them, philanthropy as risky business may, in fact, be good business.

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