For several years, a philanthropist had given money to a San Francisco- based AIDS prevention organization. When it became clear that the nonprofit needed to expand, he gave a $50,000 grant so that the nonprofit could hire its first paid secretary and rent office space. Although academics and foundations might say that the donor contributed to “capacity building,” neither he nor the recipient ever used this term.

Our interviews with 34 individual donors and their advisers across the United...

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