It was 1973. The paper of record had a photograph of a titan in business and philanthropy handing over a $1m check to a worthy charity. The scion of this family was an undergraduate at Brown, where I was working at the time. Everyone congratulated this young heir - whose response was "my father always says, 'no one gives 'til it hurts."

For many years, I saw that story as an example of the greater potential of wealthy Americans to use their affluence for good. Lately though, as I advise more and more families and foundations, I have concluded that there is a corollary: "very few give 'til it helps."

In business, one always tries to maximize income while reducing expenses. Shouldn't the same be true for one's philanthropic investments? Why give more than necessary? Shouldn't one negotiate a gift down to a more reasonable level? Surely the beseeching organization has inflated its need and costs to encourage greater generosity - and just as surely they expect you to bargain.

But, isn't that the wrong question? When we invest in a business venture, we examine the financials to make sure that there is a likelihood of a healthy return. Adequate capitalization is one of the measures. We typically don't ask how little they need, but how much capital is necessary to succeed.

The same is true in the not for profit world. A shrewd donor may persuade an organization that they can get by with less of his or her philanthropic dollars. But if the organization cannot accomplish all of its potential because of undercapitalization, we have not invested well. Due diligence should investigate potential as well as legitimacy. Philanthropists need to fund for success, not simply efficiency.

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