Working for donors – raising impact, reducing risk, making a difference

An interview with Terry Smith, founder, President and CEO of Philanthropic.ca in Toronto, ON.

For nearly nine years Terry Smith has provided a unique service to Canadian donors through her company Philanthropic.ca. Terry advises donors on how to, as she describes it “reduce their risk and increase the impact of their philanthropic giving.” Her clients typically are wealthy individuals, families and foundations – people who want assistance in making strategic philanthropic decisions and /or help in administering grants and ensuring accountability from recipients.

Terry launched her business after a career in the Ontario government that culminated in her role as Ontario’s Deputy Minister of Culture. During her tenure she worked with a variety of small to very large not- for- profit and charitable organizations who received support from the government. The knowledge gained from managing a variety of government granting programs and working with numerous agencies and boards of directors provide Terry with a solid base for providing support to donors.

LM:                              How do you learn what a client wants?

Terry Smith:               I love working with a new client and helping them figure out where their passion is, what they want to do and what types of organizations they gravitate towards. I work with them to identify their values and interests, we examine what have they supported in the past, what has impacted their lives- what are their hopes and dreams- we have long discussions.

LM:                              Have you developed a technique or an instrument for that conversation?

Terry Smith:               Yes, I have a few little instruments I use- general questions about their previous giving along with some generic listings related to their values and their interests that we explore together. When we find some cohesiveness between the two, then we start narrowing down the topic areas.  

That’s when I start researching specific charities and bring back the types of organizations or programs that may fit with what the donor is thinking. That is very helpful as they can usually say by then, yes, that is exactly the type of charity or no, that is not what I was looking for and it helps to really focus the donor to a specific goal.

It takes time, especially if someone is thinking of their legacy. They may be establishing a charitable foundation and you don’t want to make decisions too quickly - you want to take time.

LM:                              How are you measuring impact? What are you judging by?

Terry Smith:               Many of the donors I work with take big risks to support new ways to address social issues or innovative research to cure cancer, heart disease or help at risk youth. It’s not always easy to measure impact. I work with each donor to determine what the end result is they are looking for in giving their gift and then we work with the charities to come up with the anticipated impacts of that particular gift.

How we measure impact differs from one gift to another and one charity to another. If it’s an expensive research program then we may look for a formal report on what the impact of this research has been; it may include what are the results to date; what are the next steps? Some of these are 10-year projects, so you might not have anything in the first couple of years and then you might have a breakthrough.

Some donors I’ve worked with have funded some very significant research. However, if it is measuring the result of an after-school arts program then the reporting will be very different and will vary depending on the capacity of the charity. Most of the donors I work with understand the limitations of the charities and will work with them to create realistic impacts.

LM:                              Is that satisfying to them to be part of that?

Terry Smith:               Oh yes. Often the reason they’re supporting a particular initiative is very personal – their father died of a heart attack, a relative had a brain tumor, they were greatly moved by a symphony or have a particular interest in helping the environment—and they have the capacity and desire to make a difference. When it comes to giving, true giving – philanthropy – there’s always a personal cause somewhere down deep inside. Donors want to be able to say “I made the difference with my support.”

LM:                              Do the charities you deal with understand the need to see an impact?      

Terry Smith:               Yes, now they do. When I first started many charities would gladly accept funds from donors but not report back on how the money was spent or even be able to articulate what the result was of the gift. Now, charities I work with are getting used to me calling and saying “So, what’s the difference?” However, donors need to be flexible in their expectations on the impact of their gifts.

A well-funded, sophisticated organization will be able to provide a detailed report and give a sense of the broader impact of how the donor’s funding has made a difference. A smaller charity though will not have such capacity and are grateful that they can even provide a direct service in their community. They do not have development officers or anyone focusing on evaluation so may only be capable of reporting on numbers such as we service 45 people in a breakfast club” and that’s it.

LM:                              There’s been a general shift from reporting activity to measuring outcome and impact. That’s really challenging in the social development sector.

Terry Smith:               It is, it’s really hard and for many charities they do not even have the capacity to provide impact reports. Luckily, some donors are happy just to know that 45 kids are getting breakfast every morning and they’ve got more nutrition. Sometimes though, even sophisticated charities don’t always think about describing impacts when they’re reporting back – yes they can tell you how many children showed up but they do not think to tell us that these kids are healthier, they’re warmer, and their brains are a little more energized and they can function in school better.

LM:                              Some organizations simply have their heads down, doing the work – they’re serving breakfast.

Terry Smith:               Yes they are and that is what is important at that particular time. And for small charities, maybe that is ok for now until we can come up with some way to really assess the true impact of social programs that will provide an easy way for charities to report back On the other hand, when a donor has given millions of dollars to research, they want to see the research results – that the guy who’s sitting on the research bench has actually made a difference.

LM:                              What is the biggest gap between the needs and requirements of your donors and capacity of charities to meet that?  

Terry Smith:               I believe it’s the whole aspect of reporting. When I first started, some of my donors didn’t have a clue that they could even ask, “What did you do with my money?” When we started to ask, some charities were taken aback. Their stance was, “It was a gift - how dare you ask us these types of things?” Or “What do you mean you want to see a report?” There was a real disconnect.

That was over eight years ago. I’m seeing some change now. It is a two way street. Donors are learning more about how to do this the right way, what they can ask for, what they can expect and charities realize that they need to be accountable to their donors and the public so it is getting better.

LM:                              Why is this so hard for us as a sector to get a handle on?  

Terry Smith:               The challenge for charities is finding the right way of reporting that does not strap them of all their resources yet defines acceptable impact results for donors.  On the donor side, they need to be realistic with their expectations and know what they can ask for in the context of their giving. Not all donors have a Terry Smith to help them so when donors don’t know what to look for, charities will just give what they think is appropriate and the donors will accept that because they don’t know anything different. As we become more sophisticated in philanthropic giving in Canada, from both a donor and a charitable perspective, we will get better and better at this.

LM:                              How much personal engagement do your clients want to have with the charities they support?

Terry Smith:               It depends on the person. Some are really engaged, serving on the board of directors or volunteering their time with the organization while others will be happy to see that a program has been implemented or a building erected. It really depends on the donor, their time and interest in that particular initiative.  

LM:                              Do any of your clients look to negotiate upfront to help shape projects, help shape goals?

Terry Smith:               Yes, some do and some don’t. Some have a real focus – they really want to make a difference in a specific community or sector or cause and will roll up their sleeves and work with the charity to increase the chance of success

LM:                              What advice would you give to the people seeking funds about how to present themselves and what’s required to really win a donor?

Terry Smith:               Research the donor. Know what the donor supports, know the kinds of things that the donor has given to in the past and try to understand the scope of their giving.

Tell your story in a way people can relate to. If you just go in and say you need a million dollars because you are building a theater there’s no compelling story for the donor to relate to. You need to find some connection with the donor- perhaps her kids are in theatre or the donor once was a successful performer and can relate to the need- there needs to be some sort of connection.

Ultimately, they’ll support what makes sense to them and helps solve a problem somewhere. Just the fact that you’re building the theater and you’re passionate about it doesn’t mean the donor has to be. That’s where I think charities need to really do more homework.

LM:                              What makes this job satisfying for you?

Terry Smith:               What’s really satisfying for me is when a donor is happy with what they have achieved with their giving, when they can see their money is indeed making a positive difference in someone’s life. It’s most rewarding for me when I give a donor some advice about what I think about a specific charity or a specific initiative and they act on that advice and then at the end of the day, they’re happy when they see that their gifts are actually making a difference. That is what it’s all about.

Donors are taking a big risk in some instances and making an investment in our charities. If I can help give donors “peace of mind” with their giving, help them understand the charities, the initiatives and how their funds may be able to help, that this is the right charity for them, then I have done my job, and hopefully, the donor feels well served by my work.