By Kathleen McCarthy
Managing Editor
Be Inkandescent Magazine

Before Lisa Anne Thompson Taylor began bringing together philanthropists and nonprofit associations, she spent more than 15 years working for nonprofit organizations of all kinds, raising money and working with members of the nonprofits’ board of directors.

Then, she switched sides.

Now, the founder of Taylor Strategic Partnerships is a philanthropic donor advocate, meaning she advises philanthropists who donate to nonprofits.

Why did she make the switch?

“Frustration,” Taylor concedes. “Most nonprofits lack focus on creating measurable results that can be communicated with investors and philanthropists.”

The problem has been exacerbated by the ease of starting up a nonprofit organization. “What we have now is competing nonprofits in communities that do similar sorts of activities,” she says. “When a donor looks to evaluate which nonprofit performs well, there’s a confusing array of info. Sometimes it requires organizational knowledge of nonprofits to figure out how many people at the nonprofit are dedicated to helping people versus working on special events.”

Taylor decided to become a donor advocate once she realized that well-intentioned donors who didn’t have help navigating the nonprofit world could end up with very few results to show for their efforts.

Her goal now through TSP, which she founded in 2009, is to help philanthropists shift from the role of donor to investor. In fact TSP’s mission statement is to strive “to guide and support clients in making sound philanthropic investments in exceptional nonprofits.”

“Being a donor has a one-way feel to it. You’re a donor, you give money, it stops,” she observes. “But for a philanthropist who considers himself or herself an investor, there’s an expectation of regular and frequent investigation of results. That serves the purpose of fixing the problem the nonprofit was established to address rather than just hoping for the best.”

Be Inkandescent talked to Taylor about her philosophy of philanthropy and why she thinks nine out of 10 nonprofits “ought to be shut down.”

Scroll down for our conversation with Taylor.

Be Inkandescent: How can a donor-investor tell whether a nonprofit is up to snuff?

Lisa Anne Thompson Taylor: A lot of nonprofit income is spent on staffing. If staff are asked to quantify their time, they may be asked whether they’re in program activities. But a lot of times, even when nonprofit staff members do information-awareness activities that are not mission-specific, that gets counted as helping, resulting in inflated numbers.

I have also found that too many board members don’t get the training they need to fulfill the tremendous responsibility they have. Folks sitting on a board need to have access to information and results and numbers that the nonprofit collects. Board members need to know how the nonprofit is helping its target population, and how the budget is related to helping.

For every nonprofit that has been doing a completely terrific job getting the work done, there are probably 10 that ought to be shut down.

Board members should think, “I’m sitting on this nonprofit board, but I’ve never seen a financial statement.” They need to know it’s okay to ask for data on the programs they funded last year. Philanthropists might note that, “We get asked by a lot of organizations to do the same thing; why aren’t they working together?”

Be Inkandescent: What kind of response do you get from nonprofits faced with donor-investors rather than just money-dispensers?

Lisa Anne Thompson Taylor: Some nonprofits embrace the future better than others. They are more forward thinking, more current, they see the reason for the requirements. Their response is, “We would love to have you as a partner, and it’s about the solution and what the partnership means to the solution.”

Others would balk at that conversation. What they’re looking for is simply a lot of donations.

A lot of nonprofits reach out to me and say, in effect, “I understand you work with donors. We’re doing good work. How do we get access to the donors?” I ask them who the competition is for their nonprofit. If they say that they don’t have any competition, they’re either unaware or don’t know what they’re talking about.

I explain, “You do have competition. Who else is in your landscape? Boy Scouts and Girl Scouts have a program for this; why aren’t you partnering with them?”

I have also found that a lot of smaller nonprofits don’t give out accurate information about their 501c(3) status. If a nonprofit mistakenly says it’s a 501c(3) when it isn’t, and donors claim they are giving to a 501c(3) that isn’t actually a nonprofit, the donor is liable for an IRS audit.

Be Inkandescent: Does this mistake happen by oversight, or do you think it’s intentional?

Lisa Anne Thompson Taylor: Both.

Be Inkandescent: Some philanthropists choose a cause and support it through donations every year to the same nonprofit. What happens when donors discover that their donations haven’t been well-spent?

Lisa Anne Thompson Taylor: It’s tough observing firsthand the disappointment of those who have donated a good deal of resources and time only to discover that an organization was meeting only minimum standards, if any, and making poor spending decisions. These disappointed philanthropists often pull back and are less likely to be generous again.

I hate to see that potential wasted. I like to help philanthropists get squared away and serve on the right boards. A board of directors is ultimately responsible for fulfilling the mission of the nonprofit. Yes, the board sets policy and hires the executive director, but the board responsibility is broader than that, encompassing legal, advocacy, and policy issues — and a role as donor-advocate.

Ultimately, nonprofits will get more money from informed donor-investors than from “checkbook philanthropists” because it will be a mutually rewarding relationship.

Be Inkandescent: What do you see as the future of charitable giving, social entrepreneurship, and change?

Lisa Anne Thompson Taylor: I see a contraction of nonprofits over time, because I think that there will continue to be some crises that will undermine public confidence. Nonprofits that are not functioning well will go out of business. Even large behemoths that are basically special-events machines with a little bit of charitable purpose will likely diminish over time.

I think the future of philanthropy will also be for nonprofits to see themselves as equal partners, not as entitled recipients. The younger the group of donors — those who are in their 20s and 30s now — the more they have an expectation of lots of data, and lots of results and transparency. They believe there is no excuse for saying, “We’re not making our information public,” or, “We don’t have that data.” Well, why don’t you?

I think that the standards the IRS applies to nonprofits will only continue to increase, with the result that fewer and fewer nonprofits will be admitted each year, and more and more will be shut down. But I have a feeling that nonprofits will ultimately benefit because they will be more closely followed.

Be Inkandescent: You mention “crises that undermine public confidence.” What’s your perspective on the 2013 IRS scandal—its apparently lopsided scrutiny of organizations seeking tax-exempt status?

Lisa Anne Thompson Taylor: Perversely, were it not that the IRS was specifically targeting particular groups, I would have celebrated that they were applying more rigor to the applications. That celebration is mitigated by the absolutely awful way that they targeted people to do that. In theory, however, I would strongly favor the IRS applying more rigorous standards across the board.

Nonprofits are responsible for so much money and so much staffing and resources, but they have had incredibly little oversight. Sometimes it takes something pretty egregious to snap people out of their trance, and this certainly does that. There will be more scrutiny of the IRS, but there will be more scrutiny of nonprofits, and I think that will prompt an escalating, valuable conversation for both sides.

About Lisa Anne Thompson Taylor

Taylor Strategic Partnerships President Lisa Anne Thompson Taylor founded TSP in late 2009 near Washington, DC, after working in the nonprofit sector for more than 15 years. The purpose is simple: Help clients be generous while also being smart about their philanthropic investments.

TSP is committed to serving those whose work and passion it is to serve the world by attempting to solve serious social, environmental, humanitarian, and development issues. The organization helps philanthropists and nonprofits achieve the gold standard in nonprofit partnerships and governance. It’s guiding tenet? “Be generous. Be smart.”