4 Talent Pitfalls in Philanthropy

4 Talent Pitfalls in Philanthropy

Talent for Giving: 4 Common Pitfalls When Building Your Team & How to Avoid Them

In interviews, focus groups, and a review of relevant literature, our team found common misconceptions related to the talent for giving. Those misperceptions fly in the face of best practices in other sectors and prevent donors from doing more good. Below, we have synthesized these observations into the top four major talent pitfalls in philanthropy. With each one, we distinguish the myth from the reality and preview the talent practices donors can adopt to avoid the particular pitfall. Those practices are covered in more detail in the remaining sections of this guide.

Pitfall 1. The donor is always right

In many ways, this is a perversion of the old adage “the customer is always right.” It stems, in part, from the fact that in the nonprofit world, the beneficiaries of nonprofit services are often unable to pay the cost for those services. Instead, donors become the “customer” who nonprofits need to satisfy in order to have the financial resources for the nonprofit’s work. As a result, nonprofits may defer to the donor, even when the donor’s ideas are misguided.

Many high net worth donors reinforce this dynamic. When donors are relatively new to philanthropy and have generated wealth through a successful, entrepreneurial venture, they might assume that their capabilities and insights from their business success can simply transfer to philanthropic success. Effective donors recognize the need to incorporate the knowledge and insights of those working on the front lines and the perspectives of those most directly affected. Why is this so crucial? Because by the time donors have amassed significant wealth for philanthropy, it’s likely that they have less exposure and current shared experiences with the individuals and communities they hope to help.

Pitfall 2. A large staff is unnecessary, wasteful overhead

“I want to work lean.” For decades, the conventional wisdom in the nonprofit world has been that “overhead” — the ratio of administrative costs to program costs — is bad. In the for-profit world, particularly in new ventures, lean, small-staffed teams are valued because they allow start-ups to be nimble; are easier for a visionary leader and investor to manage; and keep expenses low. Especially earlier on, while you are still setting goals and exploring different strategies, it makes sense to keep your team small.

But an overemphasis on staying lean and avoiding overhead can quickly result in starving your efforts of the talent necessary to achieve philanthropic goals. In the nonprofit world, there have been increasing calls to abandon the overhead myth, precisely because it leads to a “starvation cycle” in which nonprofit leaders skimp on resources to reduce costs but in reality end up stripping the fundamental resources — human and otherwise — that all organizations need to operate effectively. Some funders and intermediaries have instead embraced a “pay-what-it- takes” philanthropy, trusting an organization by funding its needs instead of instituting the typical 15% cap on overhead reimbursement adopted by some foundations.”

Pitfall 3. "I can rely on family and my personal network alone"

At the beginning of their giving journeys, many donors reach out to the networks they know best and who know them best: family, friends, and social and professional acquaintances. Your shared history makes these people easy and comfortable to approach regarding your hopes and aspirations for your philanthropic activity. You trust them, and they understand you.

However, relying too heavily only on those who share your perspectives and background often leads to critical gaps in knowledge. Even a large personal network may not include those with the specific skills, community experience, or issue expertise required to create positive, social impact. According to research, most Americans’ core social networks are relatively homogeneous, especially for white people.

Unless your family and friends are a very diverse group and include experienced professionals in the nonprofit and philanthropic sector, it can require a significant investment in training, support, and time before family and friends can help you make progress toward your social impact goals. There is also the risk that if you decide to discontinue their involvement in your philanthropy, your personal relationships may be affected, as well.

A more open search for talent gives you a chance to expand your perspective and increase your knowledge, rather than echoing them.

Pitfall 4. Philanthropy is a personal pursuit, not work

Philanthropy operates at the intersection of personal values, private funding, and public interest. Personal values often motivate a major commitment to philanthropy, one that many high net worth donors make after having achieved considerable professional success. Experienced donors consider their philanthropic pursuits among their most satisfying endeavors, and scholars have noted the “warm glow” effect that giving has on the brain.

While personal values and good feelings have long been associated with charitable giving, making real progress toward greater social impact is hard. Ensuring a more sustainable planet, dismantling structural inequality, improving early childhood outcomes, reducing homelessness and other forms of human suffering — these are knotty issues that many donors before and after you will continue to work to address. To succeed takes grit, which psychologist Angela Duckworth defines as the combination of passion and perseverance. In philanthropy, as in other pursuits, ongoing learning requires taking into account both the criticism and the inspiration of others engaged in the hard work of creating a better world.

Philanthropy’s Unique Challenge

While a version of these pitfalls exists in other sectors, high net worth donors are particularly susceptible to falling into pitfalls during their philanthropy, for two reasons.

First, wealth brings power, and powerful people have the luxury to choose whose perspectives to consider and whose to exclude. The problem is further exacerbated by the lack of mechanisms for holding donors accountable. As described in Pitfall 1, in the nonprofit sector (unlike the business sector), the providers of the money are not the same as the beneficiaries of the programs and services paid for. Unlike in a democratically elected government, there is no systematic way to vote donors out.

Second, while philanthropy has the potential to catalyze tremendous, positive social change, the failure to better integrate considerations of diversity, equity, and inclusion (DEI) continues to prevent philanthropy from achieving that potential. In the United States, a well-documented and perpetually stable wealth disparity along racial and gender lines means that many DEI efforts prioritize race and gender.

The philanthropic sector in the United States is predominantly white-led and staffed and 75% of white Americans report that the core network of people with whom they discuss important matters is entirely white. In contrast, the communities with the greatest documented need are non-white.