Category Archives: philanthropy

Whom do you trust to lead community improvement?

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Whom do you trust to lead community improvement?

This question keeps rolling through my head as I’m participating in the Growing Social Impact for a Networked World conference.

It’s not an easy question. It gets to the heart of a person’s values, upbringing, work history, own sense of self-control, and more. And, it’s a tough conversation for a group, whether that group is a philanthropic family or a foundation board.

But I’m convinced it’s an essential question for self-reflection by foundations and philanthropists, especially now as people, communities, and nations struggle to find the best paths out of the recession.

I think when you boil everything down, a foundation or donor ends up with three choices as answers:

  • Citizens – philanthropy that strengthens citizen engagement and leadership and even helps them exercise their voice in and lead community progress. It’s philanthropy that puts its trust in everyday people, consumers, start-up social entrepreneurs, and unincorporated networks.
  • Frontline delivery mechanisms – philanthropy that strengthens nonprofits, schools, and congregations. It’s philanthropy that puts its trust in the professionals who have studied the issues and had experience in delivering effective solutions.
  • Strengthening institutions – philanthropy that strengthens the ability of government agencies or the corporate community to move our communities and nation forward.  I know that most people will hate that I’ve lumped these together.  But I see them both as expressions of supporting the existing aggregations of power (market and elected).  And the philanthropy that puts its trust in them looks similar – support of public policy, public will-building, multi-sector partnerships, etc.

The easy answer is to support all three, and it can be sometimes be smart to do. But “all 3″ is also the weak way out.  It disconnects giving from fundamental core values and beliefs – of the real answer to where you see power* and authority should be placed.

As one example, the community foundation field especially struggles with this question because they try to serve all three audiences simultaneously. Their answers show through how they design their strategic philanthropy and community leadership initiatives. Some answer “We’re about empowering donors and/or neighborhood residents to lead change” (trust the people).  Others answer “We’re about building strong nonprofits and social entrepreneurs through grants and capacity building services” (trust the delivery system).  And others answer “We’re about building community assets for the long run and hiring smart staff to run initiatives” (trust us as the institution to lead change).

As another example, funders in my adopted hometown of Pittsburgh are paying for an assessment of the community development system. Though the essential question above hasn’t been explicitly asked in discussions so far, funders, intermediaries, and government officials are revealing their biases. Some see the community development system at its roots as being about supporting citizen-led change; others as about robust delivery of units, jobs, and saved lives; and others about catalyzing and increasing the investments of government and financial institutions.

So, what’s your answer – where do you place your philanthropic bets?  And, do you have other answers?

 

Caveat:  I’m a white Midwestern guy, child of two generations of entrepreneurs, with an employment history in state government and endowed foundations. Many will say I have no standing or legitimacy to discuss power dynamics. I’m ok with that.

Creating Shared Value Between Grantmakers and Grantees

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I just read the Harvard Business Review article “Creating Shared Value” by Michael Porter and Mark Kramer (also here) and highly recommend it.  (Thanks to Paul Shoemaker at Social Venture Partners for the tip.)

The article makes the case for businesses to create shared value – “policies and practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it participates.” In short, reconnect the success of a company with the success of its community in a way that goes beyond charitable giving and social responsibility.  One of their example corporations, Nestle, has even snagged www.creatingsharedvalue.org for its own work.

The article focuses on how businesses and social enterprises are doing this, and touches on how government agencies and nonprofits need to re-think creating shared value with businesses.  Porter and Kramer describe five characteristics of government regulations that encourage companies to pursue shared value.  I think their list also applies to grantmakers and donors as they pursue more strategic and effective philanthropy.  Here are Porter and Kramer’s recommendations with my quick takes:

1. Set clear and measurable social goals

Clear and measurable goals are watchwords for smart philanthropy. My experience is that most donors and foundations can do well on this point without creating complex theories of change, but most could be better at being clear to the public and potential partners.

2. Set performance standards but don’t prescribe the methods (leave the methods to the innovation within companies)

How refreshing is it when a funder focuses on the ends rather than the means, encouraging grantees and community partners to develop solutions based on their own assets and experiences?  I have found this method of giving builds the most durable working relationships with grantees and can provide the most welcoming invitation for other funders and partners to co-invest.

3. Provide phase-in periods for meeting the new standards, allowing the companies time to develop and introduce new processes and products

Again, how refreshing is it when funders give nonprofits time to learn, adapt, and test new ideas?  There’s no question that there are circumstances when a funder may want and need to incentivize quicker action in a nonprofit or a community.  But I’ve found, as Kramer and Porter suggest, that the new standards and ideas will stick longer when nonprofits can adopt them in a timeframe that is consistent with their business cycles.

4. Establish universal measurement and performance-reporting systems and invest in the infrastructure for collecting reliable data

I’ve seen the power of shared measures across a set of nonprofits or even a group of foundations, and I remain a true believer in the idea.  Coming to agreement on those measures and performance systems isn’t easy, but it pays off in terms of evaluation that’s easier for the nonprofits, their donors, and the public to understand.  And Porter and Kramer are right to say that it takes purposeful and proactive investment to ensure the right data is available often enough for continuous improvement.  The results-based accountability process and the software provider Social Solutions offer a couple easy ways to accomplish this idea, and I’m sure there are many others.

5. Develop efficient and timely reporting of results rather than expensive, detailed compliance processes

Again, a focus on the ends rather than the means.  The best funders and nonprofits use these results as a basis for ongoing conversations about what’s working well and what needs changed – conversations that are more productive than long performance contracts and grant reports.  I’d add the idea of “public reporting of results” by both the funder and the nonprofits, encouraging public dialogue (and even action) around issues that impede better results.

What do you think?  Does this set of ideas around creating shared value translate to your idea of effective and meaningful philanthropy?  Would this type of grantmaking be easier for nonprofits too?

The Charity Deduction and Tax Reform — Economic View – NYTimes.com

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Economist and Nudge author Richard Thaler makes an interesting argument about problems with the current system of tax deductions for charitable giving and outlines potentially fairer solutions.  I like his thinking but don’t think nonprofits will.  The Charity Deduction and Tax Reform — Economic View – NYTimes.com.

The Giving Pledge: Where Do You Stand?

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The world of philanthropy continues to buzz about the Giving Pledge and the growing number of wealthy families who are publicly committing to giving away the majority of their wealth.

The conversation is truly democracy in action.  Americans are gathering together around an idea that inspires them and freely giving of themselves. They’re choosing to express their generosity in ways that make sense to them.  Conversely, other Americans are expressing their right to freedom of speech, including publicly criticizing others’ actions and intentions.

Here’s where I stand, as if it matters to the wealthy donors or anyone else…

I stand with those taking the Pledge and the people who are cheerleading them, believing that over time:

So, I don’t stand with people who are unhappy because the Giving Pledge:

The Giving Pledge is a proactive invitation from the wealthy to others to consider their moral commitment to give, and I don’t think it needs to be anything else.  Even billionaires have the right to give just like you and I do.  We give from our hearts and spiritual callings and rely on friends and instincts more than research.  We sometimes make mistakes along the way and sometimes create legacies that are terrific.  They do too.

We have to trust that over time we’ll all continually grow through our giving.  We’ll learn more about ourselves and the world and learn to ask better questions of ourselves and of nonprofits.  And, we’ll come to a place where we’ve each created our own inspiring intersections of meaningful giving and community results.  Ultimately those paths to learning and meaning are ours to take, not for others to dictate.

Where do you stand on the Giving Pledge?

Happy National Philanthropy Day

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It’s National Philanthropy Day today.  Go out and be generous and thank others for their generosity!

And while you’re at it, thank an entrepreneur.  A recent study from Fidelity Charitable Gift Fund showed that, amongst other statistics, “companies led by entrepreneurs allocate more than twice the percentage of their profits to charity than many of America’s largest companies.”

What Donors Want, Part Umpteen

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Hi, my name is Tony Macklin.  I’m a philanthropy geek.  (Hi Tony!)  I just downloaded reports on the motivations and behaviors of donors.  I hadn’t downloaded reports for three weeks, but, I felt weak and couldn’t help myself.

From the Nonprofit Quarterly, What Do Donors Want? – Philanthropic advisors William Dietel and Cynthia Gibson caution against an uninhibited “march to metrics” in the world of philanthropy.  They join The Philanthropic Initiative’s Peter Karoff and other in arguing for keeping a balance of art and science in giving by donors and foundations.  They also cite an upcoming book by Princeton’s Danny Oppenheimer that summarizes research into giving behavior:

“no matter what objective information is available, the large majority of donors will give as a result of emotional or relational factors.”

I’ll probably even pick up Oppenheimer’s book, though I’ll probably need the new book Proofiness to make sure I understand the data…

From the National Center for Family Philanthropy, The Power to Produce Wonders:  The Value of Family in Philanthropy – NCFP interviewed 300 family philanthropy leaders to learn more about how giving adds value to their lives, how their personal participation adds value to the giving process and its results, and the value family philanthropy provides to America’s democracy.  Families cited family giving as helping them, among other things, express their passions, continue their entrepreneurial spirit, and provide a means of sustaining values and legacy.  The hope of the family having a specific measurable, data-driven impact doesn’t appear on the list, though I suspect that could have more to do with the line of questioning rather than a lack of any interest.

And, from Russ Reid, Heart of the Donor – The firm’s telephone sample of 2000+ adults confirmed trends in giving by other studies.  It also re-affirmed that donors use online research to check up on nonprofits, but human factors overwhelmingly keep a donor coming back to give again:  the organization’s fit with the donor’s interests (e.g. dance or dogs or dancing dogs) and the organization’s trustworthiness and integrity.

Maybe it’s time to set up a national referendum on the donor motivation parties, allowing the “philanthropy is art” vs. “philanthropy is science” parties to argue their cases in heated debates, high-paid ads, and shadowy viral videos.  Those of us “it’s both” moderates – as in today’s electoral politics – probably need not apply…

Creating a Trusted Community Giving Center pt. 4

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Recent conversations and readings have inspired my thinking about a hypothetical Community Giving Center – a physical and virtual network of and for generous people.

What’s a Community Giving Center about?  In my last three posts, it was about the right physical environment, a culture of reciprocity, low-level affiliation, open architecture operations, employing network weavers, and mobilizing resources around resonance.  In addition…

It’s about “meaningful giving,” not “effective giving” – the recent research report, Money for Good, showed that wealthy donors say they care about the effectiveness of nonprofits and their own gifts.  However, few donors do intensive research into effectiveness before they give.  What’s more, donors are incredibly loyal, with 86% of donations going to the same organizations as last year.

This shouldn’t come as a surprise.  People naturally want to be right – we naturally feel we’re smart donors or investors.  It’s called confirmation bias, “a tendency for people to favor information that confirms their preconceptions or hypotheses, independently of whether they are true.”  Behavioral economics and communications research confirms that our emotions and beliefs will outfox facts and rationality every day.  Two recent great reads on this include Network for Good’s Homer Simpson for Nonprofits (doh!) and the Boston Globe’s article, How Facts Backfire.

There will never be universal demand for nonprofit effectiveness ratings, outcomes data, and program logic charts.  (Sorry friends in the evaluation world.)  But what is universal is our search for meaning and for connections to community and something bigger.

Our hypothetical Community Giving Center is ultimately focused on helping people get their generous stuff done, whether that is donating, volunteering, advocating, or investing.  I think this will mean more time helping people define and act on what is meaningful for each of them.  More time helping them connect with others who share their hopes and concerns for the world, and even taking action together.  Questions about impact and effectiveness may naturally flow from the network of generous people and the Center would help them explore options that make sense for them.  But the Center would lose donors’ trust if it tried operating with a culture that “impact-based giving is better than emotion-based giving” (e.g. “we professional staff or long-time donors are smarter than you”).

What if nonprofit CEOs, foundation staff, and philanthropy advisors (including me) and philanthropy critics gave up their addiction to telling donors what to do and how to give? (And, who will create the drugs and 12-step groups necessary to support that process?)  What if a traditional philanthropic institution was truly generous and gave away the concepts of “good giving” and “right solutions to community problems” to generous community members?

Conclusion (for now)

Consultants more experienced than I am say the world of philanthropy is going through big changes.  The Monitor Institute’s What’s Next for Philanthropy and Duke University’s Disrupting Philanthropy are just two of the important current analyses of philanthropic trends and changes.

The world is working in more networked and transparent ways.  Boundaries between private, philanthropic, government, and citizen sectors are blurring.  Individual donors and entrepreneurs have more options to express their generosity, attract others’ generosity, and drive community change.  Existing institutions that work in community philanthropy – United Ways, giving circles, community foundations, churches, youth service initiatives, and others – are facing tough culture changes to survive these changes and more.

My hope is that the hypothetical Community Giving Center I’ve described may offer some clues on new ways for those existing institutions to do business.  At the core, the idea of the Center is about helping people get their generous stuff done, however they define that along the way.  It would attract people through a setting and culture that create a trusted, authentic, fun, and useful experience – one that meets the changing ways the world works and changing options people have to express their generosity.  Done right, I think the result would be increased giving, volunteering, advocating, and socially-conscious investing.

What do you think?  Is the Community Giving Center idea worth pursuing?  Is it even feasible?