White Courtesy Telephone

Seat of the Pants Philanthropy: Riffing on Strategy

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1.  The Center for Effective Philanthropy recently published Beyond the Rhetoric: Foundation Strategy.  It should have made front page news, but it barely made a splash, even inside the world of foundations.  Here’s its primary finding:

We learned that even though most [foundation staff] interviewed believe that having and using a strategy increases a foundation’s ability to create impact, many do not use strategy in their own work. We asked respondents to describe the frameworks they use to guide their decisions. While some decisionmaking frameworks met our basic definition of strategy, a majority did not.

If I may be permitted to do a little translating: The majority of foundations do their grantmaking completely by the seat of their pants.  There’s no framework; no well articulated strategy for achieving desired ends.  The fate of some of our most vulnerable communities rests in the hands of grantmakers who do their work by feeling their way in the dark, as many of us do.

This sounds like a bad thing.  Is it?

2.  Keep in mind that for many people inside the foundation world, charity represents a kind of weak, emotional response to a social problem, while philanthropy, because it is strategic, attempts to get to the root of a problem and solve it once and for all.  Strategy is also what keeps our grantmaking from becoming a random walk through many bogus ideas about the mechanics of social change.

We use the word “strategy” frequently in our work.  But what is it really?

3.  Here’s the definition of “strategy” used by the Center for Effective Philanthropy:

A framework for decision-making that is 1) focused on the external context in which the foundation works and 2) includes a hypothesized causal connection between use of foundation resources and goal achievement.

What’s most striking about this definition is that it’s absurdly weak: Which foundation’s grantmaking doesn’t focus on the external context in which it does its work?  Which foundation CEO, when challenged, cannot articulate a connection between what his foundation funds and what his foundation sets out to accomplish?

Consider this example:  The Levittown Community Foundation aims to end gang violence in Levittown’s low-income neighborhoods.  Its strategy is to fund gang summits to achieve this end.  Foundation board and staff members believe that bringing members of different gangs together can help these gangs resolve their differences.

This has all the earmarks of a strategy, according to the Center for Effective Philanthropy definition: a framework for decision-making focused on the external context (Levittown’s low-income neighborhoods), positing a causal connection between what the foundation funds (gang summits) and its goals (the ending of gang violence).

And yet this strategy has almost no chance of succeeding.  It doesn’t address the issues that bring members of youth gangs into conflict; it does nothing to prevent young people from being drawn into gangs in the first place; it doesn’t incorporate what others have learned from failed attempts to sponsor gang summits; etcetera.

The Center for Effective Philanthropy definition is so broad that almost any kind of nonsense can count as a strategy.  And therein lies its strength:  Despite the fact that the definition is broad, it’s still the case that a majority of foundations fail to use any kind of strategy at all—good or bad—in their grantmaking.

The conclusion, lurking just behind the study’s primary finding, is that the foundation field is in disarray, having little effect, at best, and squandering enormous sums of money, at worst.

Is this a fair assessment?

4.  I suspect not.  We have yet to determine empirically the correlation between well articulated foundation strategies and the production of social goods.  I’m not yet convinced that business wonks armed with strategies and metrics will consistently outperform grantmakers who work opportunistically, without a rigid plan, constantly adjusting their tactics to a landscape that presents new opportunities and challenges.  Napoleon, for example, never developed a theory of change before going into battle.  Yet very able was he ere he saw Elba.

Keep in mind also that a strategy only makes sense when the path to your goal isn’t direct, when there’s some significant uncertainty about whether your efforts will achieve your ends.  You don’t need a strategy for driving to the grocery store, but you might need a strategy for getting your school-aged child out of bed in the morning.  Likewise, a grantmaker who sets out simply to “improve the lives of children in our region” doesn’t need anything as complicated as what the word  strategy would suggest.  Just about any kindly act toward a child would achieve his desired end.

I suspect that many of the foundations studied by the Center for Effective Philanthropy had goals that were equally open-ended.  This fact, if it is a fact, would tend to inflate the numbers of the “unstrategic,” making the study’s conclusions appear much more dramatic than they are.  Why so many grantmakers would have such fuzzy goals must remain the subject of another post ...

The Foundation Board in 60,000 B.C.

White Courtesy Telephone reader Tidy Sum set the Way Back Machine to 60,000 B.C. to visit the Upland Neanderthal Fund’s board meeting.  Here’s his report ...

It was not much different than what you see now only it smelled real stinky and I had to eat a rat.

They spent a lot of time talking about the high and lows of their hunting. (Lots of posturing from the men on this subject.)

They funded an evaluation of their arts initiative—some cave thing. Nobody really cared about it but old Grogg.  He’s 24 and will die soon so they did not argue.

They funded a nice community program celebrating bipedalism and morphological diversity.

They funded a small stone tool-making program for youth after the stern objections of one trustee who wanted better data on spear effectiveness.

One member, Oog from Dear Clan, raised the big extinction issue in reference to news about Cro-Magnons and humans but this discussion was squelched because someone wanted to talk about the new CavePoint mapping antler that would track their donations.

I guess some things never change.

Guest Blogger “Mouse” on Rural Philanthropy

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We welcome this post from guest blogger Mouse on the vicissitudes of rural philanthropy.  Mouse is an animal lover who lives in rural Northern California.  Check out her new blog, Northern California Muse.  If you’re interested in being a guest contributor to White Courtesy Telephone, contact us by writing to courtesy_telephone (at) yahoo.com.

I just read an interesting article on the difficulties facing rural nonprofits when it comes to securing grant money.  I think they read my mind and felt my frustration.

There are no large corporations funding nonprofits in our rural location. We don’t have any large corporations. Our largest companies are the local non-chain grocery store and hardware store.

There are no large foundations in our rural location. There are no foundations either.  We are so rural most foundations can not find us on a map.  During a discussion with a potential foundation about a site visit there was a long pause when I mentioned the three-hour-plus drive down a windy two-lane road.  That road makes it difficult to develop a “meaningful” relationship. We are a great vacation spot and I have even offered a room in a local bed & breakfast; no one has accepted yet.

Those with the money in the urban environment do not grasp our world or some of our problems. I mentioned to one foundation that we had a problem in a location far from our center, and gas money for volunteers was crucial.  She apparently had a vision of ten miles or less round-trip; I was thinking fifty miles one way.  My grocery store is ten miles away.

I want to laugh when someone asks about excessive employee benefits or high salaries. What are benefits?  Do employees get benefits?  Not here!  A benefit is that they have a job. As for those high salaries: some of the foundation heads make more than our entire payroll.

One of the suggestions in the article I read was to establish a local nonprofit group. That won’t happen. The 50 local charities are trying very hard to grab every $1 donation; we could never sit in a room together and share information. We are jealous if another nonprofit gets to put its donation can beside the busiest cash register at the grocery store.  Competition is rough here.

One foundation requires a professional site video.  I did not know how to explain that I could borrow a camera or hire the local television station; but we did not have anything in-between. The professional videographer moved out of town.

Now that I know the problem, I do not know what to do with the information.

Business As Usual For The NYSE

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Where the broom does not reach, the dust will not vanish of itself.     —Mao Zedong

1.

From “An Opportunity for Wall St. in China’s Surveillance Boom” in the September 11 New York Times:

Li Runsen, the powerful technology director of China’s ministry of public security, is best known for leading Project Golden Shield, China’s intensive effort to strengthen police control over the Internet.

But last month Mr. Li took an additional title: director for China Security and Surveillance Technology, a fast-growing company that installs and sometimes operates surveillance systems for Chinese police agencies, jails and banks, among other customers. The company has just been approved for a listing on the New York Stock Exchange.

The company’s listing and Mr. Li’s membership on its board are just the latest signs of ever-closer ties among Wall Street, surveillance companies and the Chinese government’s security apparatus.

Wall Street analysts now follow the growth of companies that install surveillance systems providing Chinese police stations with 24-hour video feeds from nearby Internet cafes. Hedge fund money from the United States has paid for the development of not just better video cameras, but face-recognition software and even newer behavior-recognition software designed to spot the beginnings of a street protest and notify police.

According to Terence Yap, vice chairman and chief financial officer of China Security and Surveillance Technology:

his company’s software made it possible for security cameras to count the number of people in crosswalks and alert the police if a crowd forms at an unusual hour, a possible sign of an unsanctioned protest.

2.

The New York Stock Exchange Foundation supports programs that:

help to achieve equality for all people by promoting civil rights, inclusiveness and respect for people’s differences …

It’s a good thing the Foundation only funds these programs in New York.

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Image source: The Age

Four Common Funder Misconceptions About Nonprofits

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Here they are in no particular order ...

1.  There are approximately 1.4 million nonprofit organizations registered with the IRS, and that makes for an enormous duplication of effort.  Funders should actively encourage charities to merge.

That would be a very bad idea.  Here’s one answer to the question, “Are there too many charities?”  Mergers entail significant opportunity costs for nonprofits and seldom achieve hoped-for efficiencies.

2.  “Nonprofits have to recognize that they’re businesses, not just causes. There’s a way to combine the very best of the not-for-profit, philanthropic world with the very best of the for-profit, enterprising world. This hybrid is the wave of the future for both profit and nonprofit companies,” says Bill Strickland, CEO of the Manchester Craftsmen’s Guild in this Fast Company interview.  Nonprofit leaders struggle to raise money because they’re stuck in old, non-businesslike ways of thinking about their work.

Uh, probably not, and all the nonsense that’s been written about social entrepreneurship won’t make it true.  A for-profit stays in business because there are people willing and able to pay for its goods and services.  This might work for some common nonprofit enterprises like hospitals, schools, theaters, and trade associations.  But I defy any social entrepreneur to turn a profit by going into the business of helping prisoners reintegrate with their communities, or teaching English to the poorest migrant families, or serving meals to the homeless.  She won’t be able to do these things without public or private subsidy—guaranteed.  Thus, in a sense, some nonprofits are destined forever to scramble for donors; it’s part of their design.

To fellow funders: We should either change the system by which important social services are financed, or stop complaining about the lack of “sustainability” for many charitable efforts.  (And don’t even get me started on the subject of venture philanthropy.)

3.  A grant proposal with missing attachments and numerous typos is a sign that the applicant might be unworthy of funding.

Right, a harried nonprofit ED is going to print your funding guidelines and take them home where he can share them with his children; he’s going to open a bottle of Merlot and read them by a roaring fire, studying each paragraph as he might a speech from a Beckett play; back at the office, he’ll check and re-check every last word of his proposal to make sure he hasn’t offended you with his bad spelling and grammar … I mean, let’s get real.

Do you see nonprofit staff members as supplicants who importune you with their requests? or do you see them as colleagues?  Unfortunately, the data show that funder and board member attitudes and practices are among the primary contributors to nonprofit executive director burnout.

There’s a kind of mental trap that some grantmakers fall into.  When we’re learning the ropes, we quickly realize there’s not enough money to go around for all the worthy applicants who approach us for funding.  We also realize that many of the judgments we make regarding which groups to fund have a strong subjective element: these judgments wouldn’t stand up to intense scrutiny.  So we devise many little tests of nonprofit worthiness—including a grant-seeker’s mastery of English punctuation—to help rationalize to ourselves our recommendation that funding be denied to certain groups.

To my younger funder colleagues:  Don’t fall into this trap.  There are more honest ways to rationalize a denial of funding, ways that can put your relationship with applicants on a much sounder footing.

4.  Nonprofit staff members very much appreciate the informal technical assistance I provide them on fundraising, management, board development, program design, and a host of other issues.  I know this because they consistently tell me how good and clever I am.  They even send me thank you cards.

You probably have a magic cloak that makes you invulnerable to flattery and enables you to read with perfect accuracy the mental states of the nonprofit executive directors and board members you meet.

Look here, even if you know what you’re talking about—which, judging from grantee reports, you probably don’t—an applicant might not be ready to hear it.  And no matter how sensitive a soul you are, you won’t be able to eliminate the distorting power differences that exist between you and your grantees.  Many will listen politely and nod because they don’t believe they have any other choice.

Do your work in fear and trembling for your soul.

Coming up (can’t say when): The Three Most Common Funder Misconceptions About Their Roles As Funders

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Addendum

Savvy reader Tidy Sum shares these funder misconceptions in the comments section:

Small nonprofit organizations lack capacity to be effective. There is such a thing as being “too grassroots” you know.

Large organizations cannot benefit as much from smaller grants. Besides, they don’t “need” them.

Three is the magic number in years that allow a nonprofit the time to get a project off the ground and make it “sustainable.”

All nonprofit administrative costs are suspect. No need to check the battery in your super-duper foundation issue calculator on this one.

Nonprofit directors have hours and hours of time to waste on a long meandering site visit for a $4,000 grant and never tire of your “curbside consulting.”

A nonprofit with reserves or a surplus on the balance sheet does not really need the money.

All nonprofits will become dependent on your funding if you continue to fund them.  Be considerate and help them by cutting support.

Nonprofit organizations can easily address the concerns of a wise foundation staffer with a timely but not overly generous capacity building grant.  Pat yourself on the back you clever dog.

Nonprofits never tire of foundation advice on collaboration.  Maybe we should write a song about it.

Thank you, T.S.

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Image source: Singapore Government

Ford Foundation Announces New President

The Ford Foundation has announced its new president.  Luis Antonio Ubiñas, a director at McKinsey & Company and former South Bronx resident, will become the ninth president in Ford’s 70-year history, succeeding Susan Berresford who served in the post for 12 years.  The Ford Foundation is the second largest foundation on the planet, with assets of over $12 billion and an annual grantmaking budget of $550 million.  Read all about it here.

How will this choice affect Ford’s traditional championing of social justice causes?  How will the new president answer the four fundamental questions of philanthropy?

Stay tuned.

The Five Ps: Philanthropy, Persistent Poverty, Politics, and Power

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Our blogger colleague Holden Karnofsky over at GiveWell has invited us to write about the charitable causes we’re most passionate about.  Here’s one contribution to the latest Blogging Carnival …

I.   Sorting It All Out

Many years ago, some foundation colleagues and I sat down to better understand the problem of persistent poverty.  Many of us had worked in nonprofit organizations in various capacities—as executive directors, community organizers, and advocates of one kind or another in education, health, housing, job training, community development, and other domains.  A number of us had served in government, and a few had worked in the for-profit sector.  Some of us had grown up poor; others had not.

In the best use of flipchart paper I had ever seen, we struggled to map the forces that drive people into poverty and keep them there generation after generation.  Our collective knowledge of the region was fairly extensive, so we were able to discuss demographic shifts, local governments, service delivery systems, and the like.

I left this meeting with three abiding convictions:

First, most philanthropy—“organized” or otherwise—does a kind of triage on the poor, the infirm, the imprisoned.  We intervene in the life of one person here, one family there, and (rightly) congratulate ourselves for having accomplished some good in the world.  We might even succeed in helping to transform a neighborhood, or improve systems that were designed to help low-income people make it through especially hard times.

But as a society we continue to produce, in growing numbers, individuals who are only one paycheck away from the streets, and families whose real incomes are shrinking.  Black and brown children continue to drop out of school in record numbers.  In philanthropy, we focus far too much on the downstream effects of upstream problems.

Second, if we want to tackle the root causes of poverty, our notion of a “root cause” needs to broaden and deepen considerably.  I’ve discussed this issue elsewhere.

Third, and most importantly in my view, we will condemn ourselves to the hamster wheel of half-measures until we name, examine, understand, and address the issue of power.

A Fool’s Fool Wonders About the Future of Philanthropy

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For nothing happens in this world which isn’t full of folly, performed by fools among fools.  If any individual wants to take a stand against the rest, I’d recommend him to ... move off to some wilderness where he can enjoy his own wisdom in solitude. —Erasmus, In Praise of Folly

Will philanthropy’s future be driven primarily by capital, marked by innovations in aggregated giving, philanthropic investing (the flowering of venture philanthropy), and other devices developed by and for the donor community?

Or will there be a tumult in the public square to which the donor community will be compelled to respond?  Will new civil society activists and leaders shift the conversation about the future of our country from the boardrooms to the streets?

*          *          *

Will the function of YNPN, FLiP, and other associations of young people be to help new generations of office-dwellers learn the good manners of the Third Sector?

Or will these organizations teach our younger colleagues to question old assumptions and challenge the field to be more diverse?

*          *          *

Will the foundation as an institution, weighed down by insularity, feeble ambition, and a lack of transparency, go the way of the Dodo?

Or will it use its relative independence from government and corporate interests to help wake an American polity that is currently dead asleep, has its head bent over its chest, and is drooling into its lap?

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Image source: English Heritage

Foundation Boards Should Demand Failure, Expert Claims

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Joel Orosz, founder of the The Grantmaking School,* the first university-based training program for grantmaking professionals, has come out with an extraordinary new book titled, Effective Foundation Management: 14 Challenges of Philanthropic Leadership—And How to Outfox Them. What makes it extraordinary is the willingness of Dr. Orosz to speak with candor about the challenges, both ethical and practical, of working in a profession that “lacks a salutary external discipline.”  Even those who don’t work in philanthropy will benefit from his honest portrayals of foundation CEOs and program officers struggling against flattery and other forces to do good and meaningful work.

I found what Dr. Orosz wrote on the subject of foundation risk-taking especially revealing.  If foundations have the freedom to try pretty much anything to address society’s problems, he asserts, “if they are indeed boldly exercising [their freedom] to correct the failures of the market, the government, and the fundraisers, it would be virtually impossible to open a newspaper without reading of a groundbreaking social experiment fueled by their funding.”  Unfortunately, the newspapers are more likely to be filled with stories of foundation scandals than of foundations successes.

It’s true that a good scandal sells newspapers, and foundations as a class are not very good at communicating their good work.  But according to Dr. Orosz, there’s a hidden, perhaps more important, reason for the inability of many foundations to move the needle on some of our most pressing social problems.  That reason is embarrassment.  According to Orosz:

Since foundations are undisciplined by the market, electorate, or funders, their only impetus for improvement comes from their (generally) self-perpetuating board of trustees. If you are a foundation leader, your imperative thus is a simple one: keep the board happy, and you will keep your job. So, what makes a board happy? The answer is easy: pride-inducing success. What makes a board unhappy? The answer is equally easy: embarrassing failure. What does this mean for the CEO? As a practical matter, the answer to this question is also very simple: since any kind of success is preferable to any kind of failure, since embarrassing the board members is to be avoided at all costs, it is critically important that every project be a success. What is the best way to ensure that every project will be a success? The key to perpetual success is to keep every project uncomplicated and modest in its ambition. Thus, inexorably, in order to keep their boards happy, in order to assure that embarrassment never darkens the trustees’ doorsteps, CEOs tend to seek the cautious and incremental success. Paradoxically, the societal organization given the most freedom to act hobbles itself; it is as if a superb French chef, capable of creating any gastronomic delight, insisted on making nothing except the blandest of oatmeal.

It was Longfellow who said that “Most people would succeed in small things if they were not troubled with great ambitions.” Dr. Orosz appears to claim that our ambitions in philanthropy are almost criminally modest.  If the responsibility for this faintness of heart ultimately rests with a foundation’s leadership, i.e., its board of directors, how should it modify its practices?  Should boards, for example, demand failure?  Yes, answers Dr. Orosz:

Not sloppy failure, of course, for no one wants that. Boards, however, must demand a certain level of experimental failure, for that is the price of doing business in the nonprofit sector, the cost of true innovation, the payment for clearing the kudzu of modest, incremental, “so what?” success. By demanding occasional experimental failure, boards free foundation leaders from their self-imposed play-it-safe shackles. If not every meal has to be perfect, the French chefs can abandon oatmeal and experiment with exotic new dishes.

Compare Dr. Orosz’s call for “experimental failure” with the tried and true of supporting direct services.  Where should foundations place their bets?

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* Pause for disclosure: I will become a member of The Grantmaking School faculty starting this fall.  Apart from a small honorarium, I will receive no compensation for my services.  Nobody at The Grantmaking School has in any way censored what I write on this blog, nor have they suggested topics for my consideration.

Image source: magnamags.com

The Argument Against (and For) Root Causes Philanthropy

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William Schambra’s views on “root causes philanthropy” have generated an entire industry of blogospehric commentary.  What’s  up with that?  Why has there been such a strong reaction from bloggers and other Netizens?  What’s the real value of root causes philanthropy?  Please read on, and give us your views  ...

I. The Argument

In his June 25, 2007, op-ed in The Chronicle of Philanthropy, Bill Schambra, director of the Bradley Center for Philanthropy & Civic Renewal, argues that foundations and other donors should stop doing what he calls “root causes philanthropy.”  His argument, to use the technical language given to us by philosophy and rhetoric, is a big pile of baloney.

What is “root causes philanthropy”?  According to Schambra, it’s philanthropy that gets to “problems’ root causes, thereby solving them once and for all.”  Thus instead of paying for frequent visits to the emergency room, we simply forbid junior to light his own hair on fire—what doctors of jurisprudence call “addressing the proximate cause of an unwanted effect.”

Foundations should stop doing root causes philanthropy because—and I swear on a copy of Andrew Carnegie’s The Gospel of Wealth* that this is essentially Schambra’s entire argument—“after a century of trying one approach after another, it would be difficult to identify a single significant social problem to the roots of which philanthropy has penetrated, thereby finally resolving it.”

Difficult, but not impossible, apparently.  And how hard has Mr. Schambra worked at identifying successful cases of root causes philanthropy?

I urge the reader to note how soft and formless Schambra’s claims are, like the sagging pectorals of an effete professor of antiquities: “a single significant social problem”—meaning that if I provide a counterexample, Schambra will tell me the social problem in question is not “significant” enough; “to the roots of which philanthropy has penetrated”— meaning that we might never penetrate deeply enough, since every cause is itself the effect of another cause, and so on down to the Prime Mover. Rhetorical piffle, all of it.

What Schambra does in his op-ed is present the same tired examples of failed “root causes philanthropy” that he always presents (Rockefeller and Carnegie on eugenics, Russell Sage on the evils of industrial capitalism).  He then uses these to imply that all past attempts at root causes philanthropy have failed, and that, furthermore, all future attempts will likely fail as well.

And yet he presents not one shred of evidence that these allegedly failed attempts at root causes philanthropy are in any way representative of all past attempts at root causes philanthropy, or that, on balance, more bad than good came from these efforts.  For as we all know, we might miss our intended target with some intervention and still manage to produce some good outcomes.

There’s no survey, there’s no comprehensive study, there’s nothing that enables us to judge the soundness of his claims.  Let me pause while the reader confirms this for him- or herself: here’s a link to his op-ed.

Consider how Schambra’s suggestion that we forego root causes philanthropy would play out in a real-world example.  The high school dropout rate for young people of color in some urban public school districts can be as high as 50 percent.  We can choose to ignore the root causes of this problem, and invest more of our philanthropic dollars in homeless shelters and jails.  Or we can attempt to understand and address the various forces that lead to poor outcomes for young people of color—as they’ve done in Philadelphia, for example, where foundations and their partners have invested in a city-wide effort called Project U-Turn, an initiative that has already met with some success.