Giving back is a major responsibility that businesspeople have to the communities that helped make them successful. I owe a lot of my success to my parents for the opportunities and access to technology they provided me as a child, to Dakota State University which provided me with a world-class computer science education and the best mentors anyone could ask for, and to the community of Sioux Falls which provided me with great employees and a friendly business environment.
Recognizing that no one is successful in a vacuum, I have tried to take my responsibility to give back to others seriously through both our personal giving and my volunteer work in the community. Giving back effectively is not a straightforward pursuit. How do you determine which organizations that you should support? How do you determine if the organizations you are supporting are effectively pursuing their mission and stewarding donor dollars? Can you use your giving to spur on others to give or create awareness for a cause that you support? How do you manage the constant drumbeat of asks from non-profits? How much of your time should you invest in the non-profits you support? These are all important questions, but none of them have obvious answers.
I have been thinking a lot about how philanthropy works in our community in the last year, the challenges that non-profits face, and the challenges that donors face as well. Here are four observations that I have made about Sioux Falls’ non-profit community, as well as opportunities for improvement.
- Donors and businesses are overwhelmed by asks from non-profits.
Ask any local restauranteur, coffee shop owner, or retailer how often they get asked to donate products or services to non-profits and they will likely sigh and shake their head in exhaustion. With approximately 1,750 non-profits in the Sioux Falls community, it is not a huge surprise that a lot of people are asking for money. Non-profit employees do not always understand or appreciate the sheer number of other people asking any given donor or business for a donation.
Frequent solicitation can create a bad giving experience for donors, which can cause them to limit their donations, only give anonymously, or only give indirectly through foundations and grant funds.
As a benchmark, I have been asked for donations by 24 different non-profits, missionaries, and community events in the first six months of 2021. I am not complaining about this given that I write publicly about philanthropy, but it seems like there should be a better way to facilitate relationships between donors and non-profits. One solution is to exclusively support funds, such as United Way and the Sioux Falls Area Community Foundation’s Community Grant fund, which evaluate and make grants to multiple non-profits. When a non-profit asks for you a gift, you then tell them that you give exclusively through XYZ fund and encourage them to apply to the fund for a grant.
One possible solution I am considering is having a third-party person or committee evaluate giving requests against our pre-defined list of giving priorities. When an organization approaches me for a gift, I would send them to my philanthropy manager who would then meet with the non-profit, evaluate the request, investigate their effectiveness, and determine if a gift should be made. This person would be responsible for managing our family’s philanthropic efforts and spending down our annual giving budget each year. We are probably a couple years away from seriously trying to implement this idea, but I think it has some merit.
- Non-profits need more accountability from board members and donors.
When a business consistently fails to offer a quality product or service, eventually it will shut down because it loses too many customers. This should also be the case with non-profits that fail to make a meaningful impact toward achieving their mission. Donors should recognize that the non-profit is not making an impact and should redirect their dollars toward other more effective non-profits, but this does not always happen.
Donors should verify effort and results from the non-profits they give to in the same way that they would when buying any commercial service. If you are paying someone to paint your house, you will make sure hey do a good job and ask them to fix any spots they missed. If you are paying someone to feed hungry people or house the homeless, you should also verify that they are providing these services efficiently, effectively, and with love to those that they are serving. While I do not want to name any names, there are definitely non-profits in our community that only continue to exist because donors who are not paying close attention to their effectiveness keep writing checks.
In the same vein, non-profit board members need to do more than just attend board meetings and annual events. They should use their expertise to advance their non-profit’s mission and support their work financially. They should have a good understanding of how their organization spends money and how their budget compares to similar non-profits. They should help establish key performance indicators to monitor the effectiveness of their non-profit and monitor them each month. When issues or opportunities for improvement arise, they should work with the organization’s staff to find and execute solutions.
- Collaboration and consolidation is the future.
Duplication of services among non-profits is a long-standing issue among non-profits in the Sioux Falls community. For example, there are 34 non-profits that deal with mental health issues in the Sioux Falls area and 31 non-profits that are animal welfare organizations and rescue groups (according to Cause IQ). When multiple non-profits are providing the same or similar services to the same communities, it creates unnecessary overhead and other inefficiencies. I encourage people that want to make a difference through a non-profit to find an existing non-profit to work with rather than starting a new non-profit of their own. I also encourage donors to be hesitant about giving to new non-profits that do the same or similar work as existing non-profits, because that perpetuates fragmentation of charitable work in our community.
Collaboration among non-profits to achieve a common goal is the necessary future of philanthropy in our community. In some cases, it may make sense for two or more existing non-profits to consolidate into a single organization to better accomplish their shared mission. The American Legion, VFW and other military service organizations set a great example of collaboration for Sioux Falls a couple of years back. Recognizing that they all had aging facilities, they pooled their resource to purchase a modern facility to serve veterans (the South Dakota Military Heritage Alliance).
Likewise, Forward Sioux Falls 2026 was chaired by Dave Flicek (CEO of Avera McKennan Hospital) and Paul Hanson (CEO of Sanford Health Sioux Falls). While Flicek and Hanson are industry competitors, they recognized that the entire community would be better off if they worked together to fund economic development projects through Forward Sioux Falls. The Sioux Falls business community has a long history of collaboration among competitors for the common good and we can thank Forward Sioux Falls for this in large part.
- We need new ways to demonstrate and model philanthropy.
How does a donor learn the importance of giving and find joy in generosity? Often times, it is modeled for them either at work through employee giving programs such as United Way or through a church setting. Sometimes people find a particular cause they care about and discover the joy and importance of generosity by supporting their favorite cause. While young people are more passionate about making a difference than ever, my sense is that systematic generosity seems to be modeled less and less. With fewer people attending church each Sunday and workplace giving programs feeling like a chore to some, generosity is not being modeled for the next generation like it used to be.
This matter is compounded by non-profits that put much of their efforts on soliciting gifts from major donors rather than encouraging first-time gifts and relationship building with small-dollar donors that may not have a strong history of charitable giving. While some non-profits do a great job at getting lots of small dollar gifts, there are many organizations that are primarily concerned about meeting this year’s budget over developing a long-term base of support.
My thought is that we need new ways to model the importance of giving to non-profits. One way to do that is through collaborative projects between businesses and non-profits, which generate awareness and interest in non-profits while also contributing to a business’s branding and marketing efforts. We have experimented with this model through the MarketBeat Burger and MarketBrew projects but have not yet landed on a way to turn these short-term projects into long-term support for an organization. There’s still more work to be done there, and we will probably try more iterations of these community partnerships in the future.
Mentorship provides another opportunity to model philanthropy. What if there were an opportunity for young leaders to be matched with seasoned business and non-profit leaders that have a history of giving back to community? Hard-learned lessons about effective giving and serving on non-profit boards could be passed down from one generation of leaders to the next. One route would be for non-profits to match new board members with seasoned board members. Another opportunity would be for organizations like the community foundation to match young community leaders with established community leaders.
Finally, it is worth considering how we can make existing ways to model giving more effective. How can we encourage pastors to periodically preach about stewardship and giving, even though it may be an uncomfortable topic for them? How do we increase participation in workplace giving programs like United Way without making it feel like a chore or an obligation? What can we do so that every employee at every organization in Sioux Falls is exposed to the opportunity to give? These are all important questions, but again, no easy answers.
Wrap Up
Philanthropy is a serious responsibility, and it is hard to do well. It requires the same level of due diligence that someone making an investment in a private company would require. It requires donors to ask difficult questions that do not have obvious answers. Hopefully asking some of these questions out loud will encourage others to ask the same questions and help identify community-wide solutions to some of these longstanding challenges.