The Value Proposition For Intermediary Organizations: 3 Questions Donors Ask, Answered

Created By: Amanda Nelson
November 2, 2023

Understanding how to align a donor with your organization’s mission is one of the hardest and most rewarding aspects of fundraising. Connecting to them on a personal level is critical, and communicating the need and impact of their philanthropy is a must.

With organizations that provide a direct service, mission-related conversations are relatively straightforward: how many meals were served this month, how many students benefit from this scholarship, how this program will serve this many people in the community, etc. For nonprofits that use donor dollars to fund other nonprofits (i.e., funder collaboratives), fundraisers and organizational leaders need to quickly communicate the role, value-add, and impact of an intermediary.

Below are three common questions donors have about why they should prioritize giving to intermediaries as opposed to direct service organizations. As you are engaging prospects, consider these questions and your organization’s unique value proposition. 

1. Why should I give my money to you, instead of giving directly to the organizations you fund?

This question might come off as challenging, but it makes sense if efficiency is the name of the game. Indeed, why should there be two financial transactions instead of one? The question is an invitation to discuss how donors make decisions about which charities to support. Do they tend to give only when a friend or associate asks them to? Do they conduct research to vet the organization on Guidestar or Charity Navigator (or CharityWatch or BBB Wise Giving)? If so, they are thinking of charitable gifts as investments, and they are seeking objective information to identify the best choice.

Recognizing this orientation, you can talk about the process your organization’s program officers (or other experts) go through in selecting and assessing grantees. The criteria they use can be the basis for a deeper conversation about what your organization stands for. Assuming donors care about the general issue or cause as much as they do about the specific nonprofit, it might help to point out how their support of the funding organization strengthens the entire field. Recently, Gates Philanthropy Partners shared this resource on donor collaboratives demonstrating how donors are increasingly embracing the model.

2. What value do you bring as an intermediary?

If the donor invests in the financial markets (and most do), it might be instructive to compare the role of the program officer to that of a fund manager (the person with a hedge fund or mutual fund who picks the stocks). Their full-time job is researching organizations, staying current with their specialty, and building relationships within the field. The expertise they develop over time exceeds what an ordinary investor (or donor) possesses, and they almost definitely know about a wider selection of investment opportunities. This knowledge enables them to assemble a portfolio that is diverse and, therefore, insulated against the shock of one poor performer.

This is the same approach a funding organization would take to catalyze donors’ philanthropic investments— bringing a deep issue area expertise or research capacity, understanding the broader or potentially more local networks at play as well as an awareness of emerging new issues in the space, and the agility to focus on problems that need the most attention. Most important to a donor, perhaps, is the capacity to hold the grantees accountable. If you as a gift officer can convey the value these professionals add, you can deepen the trust between you and the donor. When possible, facilitate an introduction between the donor and the program officer for a memorable encounter upon which to build your relationship toward deeper engagement.

3. Are there unique benefits of donating to a funding organization?

If donors are particularly attached to one or more of the grantee organizations, it might be counterproductive to try to dissuade them from giving directly to that grantee. Instead of treating it as an either-or situation, think of it as both-and. Their passion for the grantee presents an opportunity to discover other similar organizations and to recognize that the funding or ‘pass-through organization’ (which may have the word “foundation” in its name, even if it’s not technically a foundation; read more) plays a critical role in the philanthropic ecosystem.

While donors may be concerned about the seeming inefficiency of two organizations with two sets of infrastructure—building, staff, and other overhead—once they understand how it makes their dollars more impactful, not less, they should recognize how it helps to further their personal philanthropic goals.

Orr Group has experience working with several organizations that do this effectively, including Co-Impact, Convergence Partnership, Ms. Foundation for Women, and Proteus Fund, to name a few. Each excels at answering these questions and highlighting the work of their grantee partners.

Donors might initially be skeptical about opening their checkbooks to an intermediary organization, but opening the opportunity to foster a productive and informative dialogue will highlight your organization’s unique value add and ultimately help you build a meaningful, long-term relationship around shared values.

Orr Group has extensive experience designing and executing effective strategies for a diverse range of nonprofits. To learn more about how we can partner with your organization to elevate impact, get in touch today.

Amanda Nelson is a Vice President at Orr Group. Amanda has 15 years of professional fundraising experience with a background in higher education and provides nonprofits with expertise in development and strategy implementation to drive growth.