As a result of these unique challenges, many nonprofits struggle to survive, putter along doing good but never excelling, or fold altogether.  But there are other charities-- and I have worked for and with many of them-- that absolutely nail their mission and values. Their staffs are motivated.  Their mission and activities are aligned.   Their marketing is descriptive, clear, and compelling.

High-performing charity leaders know that nonprofits simply have to work harder and smarter at every turn.  And for-profit business leaders should recognize that there is much that businesses can learn from nonprofits.  

In "Profiting from non-profits," the author notes that nonprofits are particularly good at motivating workers and marketing.  "The marketing prowess of many leading non-profits tends to derive from the fact that, unlike most for-profits, they have to persuade people to part with money for goods or services that are used by others. A lot of effort goes into convincing these donors that they are getting value for their money."

When we see charities that are thriving and serving others well, they deserve our admiration, thanks and support.  Leaders of those charities start with big hearts, but they won't succeed unless they also have great business minds.

He said major donors should give more money for general operating support.  This is necessary to help charities hire and maintain quality staff, and build organizational capacity.  Special-project funding, he claimed, simply gives foundation more control over the agendas of their grantees, "responsibilities that should be vested in the boards and staff of nonprofits."

He wrote that major donors should make more multiple-year grants, which allow nonprofit organizations sufficient  time and stability to achieve long-range goals.  Helpfully, he does concede that "not all nonprofits merit this kind of financing."  He also argues against only giving out grants two or four times per year.  That kind of schedule may suit donors but puts organizations at an enormous disadvantage, so he recommends a "rolling grantmaking" process.

He observed that only 3-5% of foundation money goes to the poor and truly needy, and he recommended giving to those pressing needs rather than universities and colleges, hospitals, and museums. Citing the Mississippi delta, he also observes that there are large parts of the country that are underserved by philanthropy.  

Dr. Eisenberg is a philanthropy insider, but his article challenges the philanthropic status quo.  These times of economic distress present an opportunity for donors to evaluate their effectiveness, and this article is a good prompt.  

There are many reasons that America's Christians should dig deep and give big. Let's begin, of course, with Jesus. He constantly pointed us toward service, compassion, servanthood, humility, and love...not to mention sacrificial generosity.

We Americans also have another reason: our country's high value for human dignity. Borrowing from philosopher John Locke, Thomas Jefferson enshrined in the Declaration of Independence a bedrock commitment to human rights and individual dignity. That value, so pervasive in Jesus' teachings and in America's founding and also in Jesus' teachings, impels us to intervene on behalf of the least, the last, and the lost around the world.

I thought of this when I recently read The Reason for God by Manhattan pastor Dr. Tim Keller. Keller cited a Singaporean official's reaction to the caning of an American citizen caught vandalizing cars in Singapore: "To us in Asia, the individual is an ant. To you, he is a child of God. It is an amazing concept." I was further reminded of my double mandate --as a Christian and as an American-- when I read an excerpt in a report by World Vision, a Christian relief organization that is the largest private non-government organization in the world. It said, "Chldren are being exploited every day. We cannot look the other way while millions are robbed of their childhood innocence. Our faith--our conviction that all people are made in God's image and that children in particular are precious in His sight -- compels us to create a safer world for the next generation."  

Many individual philanthropists want to use their money to tackle huge global problems. A recent report by the University of Pennsylvania, Lifting the Burden of Malaria: An Investment Guide for Impact-Driven Philanthropy, used malaria to illustrate three "entry points" available to globally minded donors: treating and preventing now, building systems for the long term, and innovating for the future.

In the case of malaria, an example of the "treat and prevent now" approach is providing insecticide-treated bed nets, which immediately save lives. In countries without strong health institutions or personnel, though, the impact of that approach is not sustainable. That is why some donors choose the second approach -- long-term investing in systems like data collection, management, or logistics. Finally, some funders pursue the third way -- making "game changing" grants, like helping researchers develop new technologies (e.g., vaccines). The article concludes, "All three entry points are critical to the long-term success of the global malaria-control strategy, and are interdependent. In fact, some of the most effective program models use all three approaches at once.

"So, how is a donor to decide how to give? The answer, of course, is individual and personal, dependent on each donor's preferences. Donors should ask themselves questions like: How comfortable am I making "risky" gifts to newer, unproven approaches? Do I wish to be personally involved? How patient am I in waiting to see the results of my gifts? Do I wish to make charitable gifts to projects that I can touch and feel? Do I wish to see concrete, quantifiable results from my gifts?

The old joke asked, "How do you eat an elephant?" The answer, of course, is "One bite at a time." That's also how you tackle malaria and other global issues, all which require many generous and enlightened patrons. Penn's Lifting the Burden report helps philanthropists figure out what role they can play, as they make the noble but difficult decision to get involved with the world's biggest problems.

Nonprofits operate very differently than companies--a point of frustration for many donors.  When for profit companies meet a consumer need, they generate revenue; when charities meet a societal need, they generate more demand for their services...but no money.   Nonprofits are actually two businesses- one that delivers the product or service, and one that generates revenue.  Nonprofits which are successful in one of those undertakings are not necessarily adept in the other.

It has always been difficult for donors to find worthy causes.  Aristotle said, “To give away money is an easy matter and in any man’s power.  But to decide to whom to give it, and how much and when, and for what purpose and how, is neither in every man’s power nor an easy matter.” People who are successful making money often find it difficult to adjust to nonprofit settings.  In a modern example, I read about James Unruh, former chief executive of Unisys, who has decided he will not volunteer at his local church any more. Like many businesspeople, he became frustrated by inefficient church meetings and by leadership he viewed as unproductive and focused on the wrong things.  Sociologist Michael Lindsay identified a triple toll caused by such blue-chip defections: churches lose bright volunteer leaders, churchgoers lose any connection with people of power, and the wealthy believers lose out on spiritual fellowship. 

The charitable world dearly needs for captains of industry find ways to bring their business experience and expertise to bear on charitable matters. Bill Gates compared his experiences at Microsoft and the Gates Foundation: “My job at Microsoft had 3 magical things.  First there was an opportunity for big breakthroughs.  Second, I thought my skills would let me help create a special company that would be part of a whole new industry.  Finally, the work let me engage with people who were smart and knew things I didn’t. (My) work at the (Gates) Foundation… also has the 3 magical elements.  The commonsense of the business world, with its urgency and focus, has strong application in the philanthropic world.”

It is important for people with means to do the hard work to become great givers. The nonprofit world, while very different from the business world, does involve Gates’ “3 magical things.”   As a foundation executive and a philanthropic consultant, I have seen many projects that made big breakthroughs in society.  The philanthropic world is filled with innovative organizations that are designed to be thought leaders in important new fields.  And always, the brilliant entrepreneurs in the nonprofit sector continue to inspire and humble me. 

Which brings me to Leona Helmsley. Never a sweetheart, when she ran a hotel chain the tabloids nicknamed her “The Queen of Mean.”  During a tax evasion case, she once snarled, “Only little people pay taxes.”  Nice or not, she died wealthy. 

In 2007, she left around $5 billion to the Helmsley Charitable Trust, setting it up to be one of the wealthiest grant makers in the country.  But consistent with her eccentric life, Ms. Helmsley also made eccentric trust provisions: she dictated that all of her estate should go to the care and welfare of dogs.  To put the Helmsley Trust in perspective, a New York Times analysis estimated that the estate was worth almost ten times the amount of assets of all 7,381 animal-related nonprofit groups that reported to the IRS in 2005. 

Now, I love dogs as much as the next person.  My golden retriever Duke is one of my best jogging companions, often fitter and always cheerier than my human companions Don, Vernon and Dave.  But I have seen enough needs in the US and around the world to conclude that the wellbeing of domesticated animals is a poor way to spend $5 billion. 

Most everybody else, including the courts, thought that was a bad idea.  There is a legal principle that allows courts to ignore illegal trust provisions, such as when money was left to build a nursing home for white patients only.  The judge handling the Helmsley estate, however, never had to resort to that.  Instead, he cited ambiguous Trust language in overruling Ms. Helmsley’s Trust and allowing the Trustees to distribute the money “in their sole discretion.”   In the first round of distributions, the estate gave out $136 million, with only $1 million divided between ten animal and dog charities. 

I admit to being conflicted, because I believe so strongly in donor intent--that a person should be able to give away money for legal means, as his or her heart leads.  Even if the gift is controversial and has lots of zeroes after it. 

In this case, I am contented because the courts have overruled a ridiculous estate plan made by The Queen of Mean.  But next time, money might be diverted from a cause that is vital to me...albeit out of step with society.  This especially concerns me as I see declining societal tolerance with some values I hold sacred.  In the Helmsley case, I believe that the court laid waste to donor intent, and their decision is for the dogs.

1. Donors are insufficiently selective.
2. Donors support projects that do not sufficiently reflect local priorities.
3. Donors set up grant application processes that are too bureaucratic and time consuming for charities.
4. Donors support projects with multiple preferred results in mind, forcing recipients to be fragmented and counterproductive in their programming.
5. Donors do not collaborate with other donors, leading to inefficient proliferation of various programs.
6. Donors rarely measure results, and make gifts regardless of recipients’ performance.
7. Donors make gifts in amounts that are too small to make a significant difference, and without plans for future sustainability.

If you have ever found yourself frustrated with these challenges to effective giving, it may give you comfort to know that Yale economists share your pain.