Are Donors Misleading Themselves?

Highlighting the importance of Twitter adding social entrepreneurs/philanthropists to their suggested user list, Acumen Fund (who now has 50,000 twitter followers after being added to the list; more followers than the subscriber base of the Chronicle of Philanthropy) tweeted about my Is Kiva Misleading the Public post from earlier today. By pushing the story out to 50,000 people, many of who have little philanthropy experience, Acumen Fund is helping to reshape the narrative as I wrote about in my last post.

The thread also prompted reader Ian David Moss to suggest a better title for the post (an example of reframing the debate and changing the narrative):

This post might be better titled, “Are donors misleading themselves?” And I think the answer would, all too often, have to be YES. It’s not just individual donors, either. This is why people like Grantmakers for Effective Organizations and Center for Effective Philanthropy put so much emphasis on LISTENING to the grantee (to say nothing of prospective grantees). Yes, the donor or the foundation may have a broader perspective that the recipient lacks — but recipients usually know best what their needs (or the needs of the population they serve) are.

This goes straight to one of the central bugaboos of giving: the unequal power relationships in philanthropy. One has to remember that people who are in a position to give money away, whether it’s their own or others’, are used to calling the shots. They are used to being told that they are smart and they are right, because the people telling them such things want their money and don’t want to risk offending them. It’s very hard to get out of a bubble like that, because people who both a) know enough about your cause or field to critique your giving intelligently and b) don’t care about your opinion of them are hard to find. And you have to push yourself to seek out those opinions. After all, most of us like being told that we are smart and right, the more often the better. It’s all to easy to start to believe one’s own hype…and after that, it’s toast.

Ultimately, donors will need to decide who they’re really trying to please with their donations. If they actually do want to help other people, then sometimes they’re going to have to put aside the ego and the emotion and perform a selfless act of giving.

Ian is right. Yes, Kiva appears to be misleading in how they describe their process. But that’s just the battle. The war we must win is getting donors to stop misleading themselves. However, I disagree with Ian when he says that the switch means donors have to become selfless. Instead, I would argue it is simply a process of changing the narrative. Personally, I can think of nothing so satisfying as investing in an outstanding nonprofit and vesting them with the power to make tough decisions. I don’t need them to reinforce my misperceptions to gain joy from the gift, instead the joy in my giving comes from becoming a part of the community that gives rise to an outstanding organization that actually has an impact on the world.

This is the joy of being an investor in a nonprofit. It is a far more deeply satisfying joy than the flash of pride a donor might get from directing a nonprofit to behave the way the donor thinks is best.


  1. Saundra says:

    The aid world has to take responsibility for educating donors. There is very little clear and usable information available for donors to use to evaluate an aid project. In the absence of clear information donors make decisions based on their guts and their hearts.

    Until the aid world steps up and really provide clear and accurate information then donors will continue to place unreasonable and harmful expectations on aid agencies.
    Aid agencies that purposefully mislead donors are even more culpable for creating and sustaining bad donor practices.

    I have blogged about this at:

  2. Fair enough. There is probably an interesting conversation to be had about what role the “self” plays in altruistic acts. I imagine that it’s probably different for different people. The joy you describe from thoughtful social investing is real, I have no doubt–for those who choose to think about it in that way (and certainly, there is a process of education that can help more people to think about it that way – changing the narrative, as you say). However, there is a particular kind of selfishness that first has to go by the wayside in order for a donor to even consider thinking about the process differently: namely, the comfortable thought that what’s best for the donor (in the context of giving) is best for the recipient. Declaring that that is not (always) true is not the same thing as declaring that there is no benefit to the giver in giving–I agree with that. But I would argue that, satisfaction or no, putting the recipient’s needs first requires a certain degree of selflessness–in the sense of putting ego aside–that we don’t always currently see.

  3. Aaron Stiner says:

    Sean, I am continuing comments I made from your prior post Is Kiva Misleading the Public because I think they fit better here.
    As we know, there are a wide variety of motivations and reasons donors give or don’t give, including the ones raised in your current series of posts: overhead costs, process considerations (i.e. how Kiva actually does what it does) and altruism.
    Based on the comments you have been getting it seems there is a desire from some to shift how the nonprofit sector communicates with donors about how money is getting spent. In my previous comment I argue we should embed most every organizational cost into a programmatic strategy which is directly linked to the impact a nonprofit organization wants to achieve. As I read some of the other comments, I started thinking about this from the donors’ perspective. Would this kind of shift in thinking really matter?
    Allow me please to generalize and put “donors” into three broad buckets:
    The first is donors who are motivated first and most by the heart or conscience. These could be small dollar donors who give because they can see the face of their impact and their heart is moved to donate in order to just do good. Or, they could be large dollar donors who are giving out of sense of loyalty to an organization or because a friend or family member asked them to give. Often, but not always of course, administrative costs are very low on the priority list of these donors. In the first case, they trust their heart, in the second case, they trust the organization or their associate who asked them to give. And perhaps in both cases they trust “nonprofits” generally. They probably do perform some cursory due diligence, but shifting how the sector thinks and talks about costs and impact will probably not have a huge impact on their decisions to give.
    The second group is donors who are motivated as much by heart and conscience as by how much things cost. These could be small or large dollar donors. They probably trust nonprofits generally and they want to help. But, more than the first group, they likely apply some selective criteria to the decisions about how they will help or who they will fund. Some of these donors will then look at overhead ratios as their determining decision between giving to either nonprofit A or nonprofit B. Some will do so without getting any further information at all. But some of them might actually engage a nonprofit fundraiser in a conversation about overhead costs; maybe they visited Guidestar and want to know why the ED or Development VP is getting paid so much or why are the direct mail costs so high. They probably won’t need an indepth analysis, but they need an explanation. In the reframing I presented above, I am suggesting the explanation can be shifted so the costs in question can be linked directly to impact. I think this group of donors would find incredible value in knowing what strategies are being employed with their money to achieve impact and will understand it takes a certain percent of the marketing department’s time, a percent of the fundraisers time, etc to achieve the impact for a specific program.
    The third group, large scale donors, boards of directors and institutional funders, is where these conversations about costs and impact could potentially matter the most. We know this group cares. But this group is likely much more focused then the other groups on how exactly a nonprofit organization spends its money. And because, in some ways, their decisions carry more weight than the first two groups, it is incredibly important they understand how every cost and every employee contributes to the impact. Instead, they see budget lines for “Programs”, “Fundraising”, “Marketing”, etc, as if all of these costs are independent from achieving the impact.
    If these donors value the impact, and are really committed to getting results, then they need to understand all the costs it takes to get to the impact, program by program, employee by employee. Then, instead of a marketer being an overhead cost, the marketer becomes an impact asset value (just made that up, hahaha) whose salary is leveraged on behalf of a specific program or strategy. Then we could clearly say, as Emily suggests in a comment at your previous post, that a marketer provides X impact for Y salary. Right now, we cannot link those two things together.
    Forgive me for this long comment, but I think this conversation is important. In these times of economic uncertainty, some donors are requiring more transparency and certainty in how their money is being used. I think a shift in conversation towards how much impact per dollar spent on every function of the organization could have real value to donors. It’s really just being real with them.
    One final note, my wife is a long time Kiva donor and I know she believes her gift goes directly to the photographed recipient. There are times when she has called friends to say, “This person only needs $25 more to get their funding, will you please go online and donate.” I’ll keep you posted on her response to see if it matters to her.

  4. I’m not sure this is a war we need to fight at all. If people want to deceive themselves and feel good about what they have done, why not let them?

    We deceive our selves everyday that clothes we wear or the car we drive really matters. At least in this case people’s deception is doing something good for the world.

  5. Nelson,
    I agree that people have the right to do give where they want to. But I believe that people will get more joy from their giving and the world will benefit more if donors give in ways that actually achieve positive outcomes rather than simply play into an illusion about how change happens.

  6. Good point. Giving a homeless person a dollar doesn’t really change their lives even if it makes us feel good.

    However, I’m not sure its fair to say Kiva is like this. To me, at this point in time, the way that Kiva functions is the way changes really happens. Because of banking systems and finical literacy in developing nations I believe we need these “middle men” for micro lending to work.

    Also I’m not sure people see themselves as donors. I know I don’t wake up in the morning and say “wow I’m a donor.” I do care about making change and giving back. I’m just not in the donor mindset.

    If people consider themselves donors then you are right they probably should care about how the money is being used. However if you are a person that just wants to give back and doesn’t have the time to invest into the donor mindset then something like Kiva works well.

    I guess my point is be careful fighting a war that most people don’t think exists. Making people more conscious of how their money is being used it great. Just be careful not to ruin it for those who aren’t in that mindset yet.

    And I’m not saying you personal are doing this at all. I mean in general. 🙂

  7. Thanks for the great feedback Nelson.

    “Making people more conscious of how their money is being used is great.”

    I think we’re on the exact same page!