Charities mimic Wall Street to woo wealthy donors

Thu Jul 1, 2010 1:21pm EDT
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By Michelle Nichols

NEW YORK (Reuters) - Charities are learning to mimic for-profit companies as a way to woo wealthy donors who see philanthropy as more than just a tax break and demand social returns on their investments, experts say.

Just speaking the language of Wall Street can make all the difference, said Cheryl Dorsey, president of non-profit Echoing Green, which awards start-up capital to social entrepreneurs.

"I marvel at what these Wall Street guys are giving us money to do," Dorsey told a panel discussion at the National Conference on Volunteering and Service. "If we framed it in traditional social justice terms, they would run from us."

But using traditional business terms to frame the goals, describe the impact of a nonprofit group and convince donors to fund their cause "really works," Dorsey said.

With a push toward so-called "giving while living" -- led by Bill Gates and Warren Buffett, who are asking fellow U.S. billionaires to give away at least half of their wealth -- rich donors are asking tough questions of charities before giving to ensure their investment will provide a social return.

Individual Americans gave more than $227 billion to charity in 2009, according to a the Giving USA report by the Center on Philanthropy at Indiana University, while another $24 billion was bequeathed.

Philanthropists need to assess where to put their money, in a similar way to a private sector venture capitalist, said Jerry Hauser, chief executive The Management Center, which provides management advice to non-profit groups.

"Just asking the questions for the funders can be very powerful," he said. "It will ultimately help money flow to the right places.   Continued...

<p>A flag flies on outside of the New York Stock Exchange building in New York May 6, 2010. REUTERS/Lucas Jackson</p>