By standard measures, the Arizona Community Foundation (ACF) had been quite successful. Over nearly 10 years, our assets under management grew from $400 million to over $1 billion. We all knew there was more to understand and communicate about our contribution to community impact. In my interactions with donors, I heard story after story about the transformation they, personally, had experienced by giving. In conversations with nonprofit leaders, I heard stories of the impact that grants from our donors had made, especially larger grants.
Yet assets under management – the standard measure of a community foundation’s performance – completely failed to capture the nuance of our impact on donors, partner nonprofits, and our community. Making matters worse, conventional evaluation research and impact assessment did not lend itself to the kind of grantmaking we did. We needed a way to measure and share social metrics, among other performance indicators, so we could tell a more nuanced story of impact, and we needed to find methods aligned to what we actually did and who we actually served. This was especially important given the wide variation of our grantmaking, much of it advised. For instance, conventional measurement did not address the impact of a donor who granted $1,000 annually to a single nonprofit year after year for 25 years, much less 25 other donors who did the same with their favorite nonprofit. But clearly something had to be happening in that sustained interplay. Was that being measured in any way? Could it be measured? Was it even worthy of formal impact assessment?
At the same time, ACF, like other community foundations, was feeling increasing pressure from critics of donor-advised funds (DAFs) on one side, and commercial financial institutions building a massive DAF business on the other. It was evident that we needed to tell our story of why our DAFs and the resources that flow from them are essential for supporting our communities. But we also needed to make a clearer case about our direct impact on donors themselves. We believed that with us, our donors had qualitatively better experiences and created greater impact, and we wanted to determine if we could measure it.
A New Impact Model
We engaged Community Wealth Partners, a social impact consulting firm, to help us create a new model for articulating our impact. That new model shows our vision for building a culture of philanthropy, which is how we describe the ways donors, grantees, and community foundations interact, causing each party to grow and transform. Through interactions with grantees, donors deepen their understanding of social issues. Through interactions with donors, grantees gain financial resources and social capital to further their missions. ACF facilitates these relationships by connecting donors and grantees, advising donors on how to leverage their giving for greater impact, and managing the grants that are essential to a nonprofit’s operations. Over time, we believe these relationships lead donors to contribute more funds and deepen their engagement with nonprofits, allowing grantees to offer more and better services and contribute to a stronger Arizona over longer periods of time.
Community Wealth Partners set out to test whether there was evidence of this culture of philanthropy among our donors and grantees. They interviewed a small sample of donors (50) and probed for changes in their knowledge, mindsets, or giving behaviors since starting their philanthropy with ACF. With grantees, Community Wealth Partners sought to understand how ACF donors’ support, both financial and non-financial, helped further their missions. The goal of this work was to identify any initial evidence of a culture of philanthropy and provide guidance on how our foundation could advance it. We knew that measuring transformation in donors and grantees is an imperfect science. Donors are complex individuals influenced by a myriad of factors; grantees are supported by many funders and donors, not just those who give through ACF. Community Wealth Partners approached this research determined to avoid oversimplified models suggesting donor and grantee behavior could be fully explained or predicted.
Early Indications of a Culture of Philanthropy
The early results from this research have far exceeded our initial expectations. The study of donors revealed important insights about the ways in which their knowledge, mindsets, and behaviors were changing. We learned that through giving, most donors increased their knowledge of social issues (70%), while a smaller group changed their understanding of a problem (36%) or shifted their giving behavior (45%). One donor described how his experience with an organization serving first-generation college students shifted his perspective as he grew to better understand the challenges and motivations of those students. Because of the experience, he said, there are “lots of issues I [now] see from a wholly different perspective.” Other donors described changes to their giving behavior, having learned how they can deepen their impact by giving differently. For example, one donor consciously decided to give only unrestricted gifts after seeing the flexibility that these gifts afford nonprofits.
Through donor interviews, Community Wealth Partners identified important ways ACF could better support donors in their giving. These insights led us to renovate our office space so that we can break down silos and collaborate better, create a team of senior leaders to streamline our processes, and segment our donors to ensure we provide tailored support to meet their needs. By studying grantees, we learned how donors can better leverage their dollars to support nonprofits’ missions. This includes giving responsively to a nonprofit’s needs, rather than restricting funds according to an idiosyncratic or narrow priority; giving reliably year after year to provide an income stream that nonprofits can count on; and offering social capital in the form of connections, board service, or specialized skills. These are behaviors ACF can encourage any donor – regardless of resources – to adopt.
The Value of Community Foundations
Community foundations’ greatest value, and unique value proposition, is that they are deeply rooted in the community. They support donors in deepening their connection and impact in the community, and they are far more in-touch with community needs and assets than commercial providers. Using this framework can deepen a community foundation’s understanding of why its donors give and uncover ways to better support donors in their philanthropy and in their evolution as philanthropists