Philanthropy Like Nobody's Business

I.

Over at the Center for Effective Philanthropy blog, my colleague Phil Buchanan is tilting at the windmill of “business thinking” in foundations and other not-for-profit organizations.  “You would think,” he writes, “after what we have witnessed in the past several years, that the word ‘business’ would not be used as a synonym for ‘effective.’”  Since most businesses, like most nonprofits, fall somewhere in the range between mediocre and good, he argues, charities should not be so quick to embrace the practices of the for-profit world.

Why should this argument matter to you?

There are tens of thousands of foundations in the United States controlling over half a trillion dollars in assets. One of their most extraordinary characteristics is the degree of freedom they have to pursue the Common Good.  Working within the strictures of the law, they can spend as much as they want, however they want.  In partnership with civil society organizations, they can marshal armies of volunteers.  They can pool their funds and coordinate their actions to magnify the impact of their work.  They even have license to criticize and bankroll the reform of government, and indeed change just about any aspect of our social, economic, and political lives.

And yet the headlines generated by this extraordinary sector typically look like this:

• Foundation Giving Lost Ground to Inflation in 2011, Report Finds
• Corporate Giving Up in 2011
• Arts Spending Fueled National Economy, Report Finds*

… rather than this:

• Foundation-Led Initiative Eliminates Racial Disparities in Cincinnatti
• Coalition of Organizations Convened and Funded by Foundations Ends Homelessness in Alabama
• Foundation Leaders Speak Out on Income Inequality in the United States

There’s often a big gap between foundations’ stated intentions and what they actually manage to accomplish.  It’s no wonder that those of us in the grantmaking profession—myself included—turn to “business thinking” for inspiration.  Given the modest outcomes we generally produce, just about any new kind of thinking would do.

II.

From a certain perspective, organized philanthropy is an interstitial field.  Wealth is created by individuals who, in the holiest moments of the charitable act, dedicate their good fortune to others rather than to themselves.  It’s then our job to direct this wealth to the people who will do the most good with it—not us, but the individuals in nonprofit and other civil society organizations who feed the hungry and house the homeless.

From the earliest days of organized philanthropy, those of us who work at foundations have chafed at the notion that we are mere middle men in the philanthropic enterprise.  We’ve gone so far as to pay consultants to create a kind of mythos for philanthropy in which foundations hold their own in the troika of Donor-Grantmaker-Grantee.  The standards for our field in fact require that we move beyond the transactional, the interstitial, and “add value” to the funds we steward.  We do this, for example, by using our convening power to address community problems; by sharing our knowledge; by encouraging citizens to give; and by other means that enable us to sleep with our highly compensated selves at night.  Our insistent—I would say febrile—grasping at business models partly reflects our attempts to be good stewards, to add value in the ways I’ve indicated.

But if the business world is our primary source of inspiration for the conduct of philanthropy, then, I would argue, we betray a profound misconception of the charitable enterprise.  A playwright needs to publish her plays and have them produced, and she too can benefit by importing lessons from the for-profit world.  But her primary muse must remain Melpomene rather than Sam Walton or she ceases to be a good playwright.  Is the philanthropoid more a businessman than a humanist? more a technocrat than an activist?

It’s easy to see why we look to the for-profit world for our models.  The work of philanthropy is often framed as a social mini-max problem: We are in situation X facing social problem Y.  We are given $Z to (a) solve this problem in the least amount of time, using the fewest resources; or (b) maximize the benefit to low-income communities; or perhaps (c) most fully satisfy the ego-needs of our CEO.  This framing leads us to conclude that philanthropy is essentially about spending money to create a product or service.  So we run into the arms of the nearest MBA, and while in that tender embrace are bidden to “allocate resources on a dynamic basis,” “foster partnerships,” “develop innovative approaches to evaluation,” and do other things couched in toothless bromides we tearfully accept because we have it on good authority that this splooge will finally fill the Great Gnawing Void in our professional lives.

III. 

Because we lack firm moorings in this very young and still evolving field, we’re easily distracted.  In at least one alternative interpretation of our work, philanthropy is about a higher kind of consciousness; about self-awareness; about work that implicates us in some of the deepest questions we can ask ourselves and our fellow men and women.  If it doesn’t implicate us in this way, then we’re playing a parlor game with other people’s money.  We’re not taking seriously enough the deepest yearnings that moved an individual to forego spending huge sums of cash on herself in order to better serve Humankind.

The contest between the technocratic and so-called “values approaches” to philanthropy is typically played to a draw: we need both, we are told at the end of what often reads like a shaggy dog story.  And of course we need both, but this conceals the fact, in my view, that our effectiveness is much more profoundly compromised by our disregard for the latter than for the former.  No amount of business acumen in the world can compensate for our failure to understand how deeply implicated we are in a system that keeps so many of our fellow men and women in abject misery.

There are better and worse ways of doing grantmaking and I’ve had the great privilege of working with many inspired grantmakers over the years.  What made them inspired, in my eyes, was their ability to work in creative partnership with grantees and others to get big results for the communities they served.  (The jargon du jour for this is “high impact philanthropy.”)  And yet their success had little if anything to do with the tonics prescribed in journals like the Stanford Social Innovation Review and other torch bearers of the new technocracy.  As I read these publications, I find that what’s most remarkable to me about organized philanthropy are the things that organized philanthropy finds most remarkable.

IV.

I love this field for a thousand reasons.  In the conduct of my work, I turn for inspiration not to the MBA but to the donor who feels some obligation to her fellow men, to the nonprofit or comunity leader who clings to her vision of a world re-made, and, at times, to the foundation executive or program officer whose work displays wisdom and humility.

I rue the fact that I work in a field untried by bracing debate, a field fond of trotting out old half-truths tarted up in fresh Business-Speak to persuade newcomers (and those of us with short memories) that we’re finally on to something new.  Borrowing an image from Martin Luther, we make of philanthropy a whore who sits rouged and powdered by the window, waiting to be swept up in the arms of any John who will promise her an honorary MBA, or support her habit of self-denial on matters of social change.

We’re a field searching for its subject, unaware that that subject is ultimately us.

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* Actual headlines from the Foundation Center’s Philanthropy News Digest, June 2012

Comments

[Melanie Audette]

Let's step back a moment and realize that there is a tremendous gap between what foundations achieve and what is reported in the news. We have a serious issue with lack of reporting on the tremendous things that those working in philanthropy DO accomplish.

[Albert]

What you say is true. Working in partnership with grantees and others, foundations accomplish a great many things we never hear about. Despite my criticism of the sector, I think it would be a great shame if foundations and other not-for-profits lost their (largely) tax-exempt status because they were not perceived to be producing enough value for the communities they serve. On the other hand, I've been closely following the work of foundations for over twenty years, and if they had managed to collaborate in some city, say, to reduce that city's racial disparities to zero, I would have heard of it. The sector would have hired troubadours to travel throughout the world and spread the news. The Council on Foundations would have produced a major motion picture about this extraordinary coup, starring Morgan Freeman as the visionary foundation CEO.

What keeps our accomplishments modest has less to do with our timid communications or our limited resources (which is what some people argue) and much more to do with our moral failings. These include our desire for bragging rights; our unwillingness to collaborate; our lack of courage, leading to our unwillingness to speak the truth about the root causes of some of our problems; our lack of urgency about society’s problems because these do not affect us directly; our wanting to lord it over grantees … I can go on. It is now 2012 and we are still pretending we don’t understand the causes of intergenerational poverty.

[Grace]

Thankfully, many nonprofits and foundations have continued to resist the ethos of the business world, although that seems to be getting harder to do.

I don't think there's anything very controversial about the idea that "business" is essentially about taking as much as possible, and giving as little as possible in return. Many of the biggest and most successful nonprofits follow this model: They see the world as an arena for competition and expansion, and they push against whatever legal or ethical limitations may stand in their way. As they compete with one another, they produce some "results" that they can use to create the impression that they exist in order to produce those results, and that they are effective at doing so. But beyond the spin, their central motivations are to enrich themselves, their executives, and their cronies at the expense of competitors.

People who make decisions at foundations are better positioned than just about anyone else to resist the expansion of this business ethos into the nonprofit world. They don't need to approve grant applications from organizations that cynically pursue their own aggrandizement under the guise of making the world a better place. But too often they turn a blind eye to all of that. And too often, foundation money is funneled towards organizations that are already well resourced, and produce little of social value. Not coincidentally, the leaders of those financially successful nonprofits are often allies of foundation leaders, and can be counted on to return favors at some point in time.

The systems that determine how wealth is distributed in our society are rigged in favor of those who already have much, and against those who have little. This is just as true in the foundation and nonprofit worlds as it is anywhere else.

Crowing about how foundations and nonprofits need to be more like businesses just takes us farther down the wrong path. We need to starting talking about how businesses should be more like the foundations and nonprofits that genuinely strive for the public good.

[solicitor blanchardstown]

The systems that determine how wealth is distributed in our society are rigged in favor of those who already have much,

[Laguerre Rooks]

I agree. And that kind of system is not new to us because that is rampant anywhere in the world. As the saying goes THE RICH BECOMES RICHER AND THE POOR BECOMES POORER and that kind of system is one cause why this reality happened.

[Mizelle Comeaux]

I concur to that idea too. It's very evident even here in our locality. Because some of the business people are just looking at the benefit of their business to have profit regardless of the customers' benefit.

[Sampley Jasper]

Philanthropy has gained utmost respect from the public. These philanthropic institutions aren't easy to be built and sustained as it seems. There are also a lot of challenges along the way. But in spite of that, heads up high philanthropists because your missions and visions differ from those of the business industries.