Gift Horse or Trojan Horse? (Jul 04)

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A dear colleague of mine informed me the other day that her relatively small community-based organization has won an award for more than a million dollars to be spent over the next two years to bring their programs “to scale.” Wow!

Hers is an excellent organization full of careful, thoughtful women — this includes board, staff, and constituents alike. However I have to admit that my first reaction to her glad announcement was one of alarm. After years in this work I have gotten used to the scary specter of hollowed-out nonprofit organizations that were pushed beyond their capacity or outside the bounds of their mission by a super-sized contribution. Many of them continue to this day to walk the earth as the undead among us.

Now, it is certainly not a foregone conclusion that bad things come from big donations but the syndrome in all of its variations is common enough to warrant a closer look.

The attached article by Clara Miller is entitled “Gift Horse or Trojan Horse?” and it does a wonderful job of cautioning us against some of the more common traps embedded in large gifts. It promises to be a classic in the financial management/fundraising genre, and is a must-read for board members, fundraisers, managers and funders.

We have also included links to two of Clara’s previous articles in the Nonprofit Quarterly. Together, these provide a powerful look at how capital structure affects organizational function and flexibility.

Meanwhile, my friend with the million-dollar grant has been around the block a few times. Her planning systems are broadly inclusive of the community she serves, her negotiating skills are honed and sharp and her ability to redirect headstrong funders is legendary. I shouldn’t worry but… I’m sending her Clara’s article anyway.