The Golden Rule: Those with the gold make the rules. I first heard this saying about 15 years ago. I was participating in a sales pitch with my previous boss. He had already been consulting with nonprofits for 20 years. He said it, the group we were presenting to laughed nervously, and I thought to myself, “No way, no one can tell our nonprofit clients what to do!”
 
Well, the truth is that some donors do tell nonprofits how to spend their money. 

I’m not referring to restricted gifts, every nonprofit gets those. I’m talking about gifts with less-than-altruistic demands. One example I experienced was with a $5 million donor who wanted a bust of his late wife put in the nonprofit’s foyer. We did that, no problem. I also came across a $2 million donor who wanted to approve the nonprofit’s final construction plans. That was worrisome at the start, but her expectations for the design of our client’s new building matched their vision, so no problem. Our company has also had clients that said, “No, thank you” to gifts that came at too high a cost – literally – like the donor who wanted a 10-foot tall fountain placed inside the lobby of a new building. The gift was $500,000. The fountain would have cost over $200,000 to construct, been an ongoing maintenance challenge, and eaten-up almost 200-square-feet of needed floor space.
 
If your organization is considering raising substantial capital to build or renovate something, be prepared to encounter donors who place demands upon their gifts. Most demands will be reasonable, but the ones that are not need careful consideration by you and your leadership. Here’s a quick test that we share with clients who are facing this challenge:

Is the donor a respected philanthropist in the community?

• If not, then turning down their unreasonable demand won’t hurt your nonprofit’s image. If he or she is well respected, then you should try and negotiate their demands.

Does the demand help or hinder our nonprofit’s mission?

• Some nonprofit leaders get irritated by donor demands: “How dare he ask for something in return for his gift – that’s not philanthropy!” In truth, his demand may move your mission forward. Look at the demand objectively before deciding to accept or refuse the gift.

Don’t be afraid to negotiate.

• Your nonprofit should be comfortable negotiating with donor demands. Some are so ludicrous that the only and best answer is no. But in most instances, there is wiggle room. Remember, you have the high ground because you are negotiating on behalf of a population that needs assistance.

The donor who wanted the 10-foot fountain, once our client told her why we couldn’t accept the terms of the gift, she still gave them the $500,000 with no strings. This occurred because our client stood high upon the principles of her nonprofit. She clearly defined the reasons the gift would not move the nonprofit’s mission forward. The donor agreed, thanked her and wrote a check!