Stewardship & donor relations: incorrect use of terms turns donors into chattel.(EDUCATION)

Stewardship is one of the most frequently discussed--and, unfortunately one of the most frequently misused and misunderstood--terms in fundraising.

At a recent national conference, fundraisers repeatedly referred to "stewarding" donors, and donors themselves even described "being stewarded" by nonprofits. Many fundraising programs now use the term stewardship to describe ways in which the organization relates to, involves, and "takes care of" the donor.

While these aspects are important elements in a fundraising program, they are components of good donor relations, rather than of stewardship.

As fundraising roles become more complex, it is important for fundraising and nonprofit professionals to remember that it matters how they talk about what they do. It affects how donors, constituents and the public view organizations and the fundraising profession. And, it affects how they think about themselves, their roles, and their donors.

Stewardship and donor relations are related concepts each nonprofit must put in place if it is to raise the philanthropic resources to fulfill its mission. But confusing the two might inadvertently cause a fundraising program to view the donor as an object and overlook the essential aspects of stewardship that any accountable institution must adopt.

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Stewardship is focused on the gift, not the giver. It is not shepherding the donor along to the next gift. You steward resources, not people. Using the term to describe the ways fundraisers relate to donors or encourage them to make additional gifts is disrespectful because it reduces donors to resources. Stewardship is an ethical responsibility, the requirement and expectation that a nonprofit is accountable for careful, effective use of contributions for the purposes for which they were given. It is an end unto itself, regardless of whether the donor ever makes another gift to the organization.

The American Heritage dictionary does not include stewardship. However, its first definition for steward is: "One who manages another's property, finances, or other affairs." Religious concepts of stewardship have to do with wise uses of resources, and sharing the resources entrusted to us. These concepts also include returning resources entrusted to us with increase, that any talents or treasures we have are returned to the greater good with amplification.

If you apply this concept to philanthropic giving, you think of gifts to nonprofits as achieving a benefit in society worth more than the gift originally given.

Stewardship is an essential element of a successful fundraising program. In the curriculum of the Center on Philanthropy at Indiana University's Fund Raising School, stewardship is defined as "the guiding principle in philanthropic fundraising. It is the philosophy and means by which an institution exercises ethical accountability in the use of contributed resources, and the philosophy and means by which a donor exercises responsibility in the voluntary use of resources."

As organizations entrusted with the honor of working for the public good, nonprofits have a responsibility to use resources wisely and to hold themselves accountable to those who provide those resources, as well as to the public which has an interest in their work. This is especially important in light of the increasing call from donors, funders, and regulators for nonprofit accountability. Holding ourselves accountable is the foundation for enhancing trust in individual nonprofits and the sector.

Responsible stewardship has many components and includes both tangible internal processes and intangible external factors. Internally, it takes two forms. One is stewardship of gifts that come in to be expended on an annual basis, which includes ensuring that the gift is used for the purpose for which it was solicited. Whether the gift is designated or undesignated, the organization's accounting system must be able to track it from the point the gift is made through its ultimate use.

The other form is stewardship of gifts for permanent endowment, which must include having a sound plan and policies that ensure the health of the funds, and the ability to demonstrate that the gift is invested prudently to generate growth over time. It must also be able to show that interest generated from the gift is used as intended.

Good stewardship, though, goes beyond managing gifts. In his book, Stewardship: Choosing Service Over Self-Interest, Peter Block wrote: "There is humility in stewardship, it evokes images of service (sic). Service is central to the idea of stewardship 7

Stewardship should be at the core of each nonprofit's activity. Henry Rosso wrote: "Organizations demonstrate that they are good stewards by being responsible for what they are doing, for their philanthropic mission." According to veteran fundraiser Daniel Conway: "Stewardship is not simply a series of management functions.... Stewardship implies an even deeper burden of trust, responsibility and accountability. It speaks to the heart of what philanthropy is, and hence it is a profound expression of the shared responsibility that individuals and organizations have to contribute to the common good." Ultimately, we do good stewardship because it is the right thing to do.

Donor relations is another key component of nonprofit fundraising initiatives. Donor relations is a planned program of maintaining donor interest and engagement through acknowledgement, information sharing, and personal involvement with the organization. An essential element of any donor relations program is communicating good stewardship, reporting back to donors, funders and the public that we have cared for the resources entrusted to us and spent them wisely as they were intended. Without good stewardship, you cannot have good donor relations.

There are other components to good donor relations. An effective donor relations program is timely and appropriate. Donors are thanked promptly for gifts, all gifts, regardless of size. Where recognition beyond the thank-you letter is called for, recognition should be appropriate to the size of the gift.

Effective donor relations programs need not be costly and extravagant. Rather, they should reflect the organization. That is, donor relations items and/or events should be natural to the organization. For example, a seminary in southern Indiana, known for its hospitality, sends loaves of homemade bread at Thanksgiving. They will bake the bread anyway, for residents and visitors, so they already have the bread, and therefore there is little to no additional cost for sending the bread to donors. For anyone who has spent time on the seminary grounds, the bread is highly valued because it's made by the monks at the seminary. Receiving a loaf at Thanksgiving honors the holiday while also honoring the donor.

Another example of effective donor relations is from a private university. One of its annual giving programs invites donors once a year to a special reception where student scholarship winners speak to the donors about the importance of the scholarship. This puts donors into direct contact with the beneficiaries of their gifts. It's a magical time for recipient and giver.

Donor relations programs do not need to purchase special recognition items, nor do they need to create recognition events just for donors. They can take advantage of what is already in place in the organization and tailor items or events to donors, always striving for timeliness and appropriateness.

Another vital aspect of effective donor relations is developing structures for engaging and involving donors in your work. Donors do expect to be involved commensurate with their level of support. A gift club is one way to structure engagement activities for donors at different levels. Donor involvement and donor engagement activities should be based on the organization's mission. They can range from distributing a newsletter demonstrating how funds were used, sharing an annual report, engaging people in theatrical productions, meeting over lunch with other donors and the director of a human service organization, to being the personal guest of a university president at a football game.

Donor relations, stewardship, and cultivation are similar concepts and are closely intertwined in how they are carried out. For example, in cultivating a relationship between a potential donor or a current donor and the organization, the steps are much like those of donor relations once a gift has been made.

The principle behind both cultivation and donor relations is to draw the donor into a closer, deeper relationship with the organization, increasing the understanding and strengthening the commitment of the donor to the organization's mission and demonstrating good use of the resources that have already been entrusted to the organization. It like wise enables the nonprofit to understand better the donor and her interests in further involvement.

Effective cultivation is the meaningful engagement and involvement of the donor with the organization. Good donor relations increases the trust between the donor and the organization. Effective stewardship is the cornerstone of cultivation and donor relations. Successful cultivation leads to a gift, which is an opportunity to demonstrate stewardship. Demonstrating good stewardship of one gift is the foundation for donor relations, which leads to cultivation for the next gift.

Nonprofits need to have good stewardship and donor relations programs because they are the right thing to do. Donors and the public have an ethical right to know that funds entrusted to the organization are being used wisely. Donors have an ethical right to hear back directly from the nonprofit about the use of their funds. They also have a right to be engaged with the organization at a level commensurate with their support. Well-developed stewardship and donor relations programs help build trust and confidence in the organization.

Nonprofits should review their stewardship and donor relations efforts. Stewardship focuses on care of and use of resources. Donor relations focuses on acknowledging gifts, reporting uses of funds, and engaging donors in the organization. Good donor relations programs are not possible without good stewardship programs.

Practicing both good stewardship of resources and sound donor relations (including reporting on stewardship) are both the right thing to do and are essential to a successful fundraising program.

Eugene R. Tempel is executive director and Timothy L. Seiler is director of Public Service and The Fund Raising School at the Center an Philanthropy at Indiana University in Indianapolis.