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16 posts from August 2012

Syria: A (PubHub+) Reading List

August 28, 2012

The Syrian government's crackdown on the civil unrest that began in 2011 has claimed thousands of lives and displaced 1.5 million people. With the violence intensifying -- 4,000 people have been killed in the fighting in August alone -- and the United Nations Security Council announcing that it will not renew its observer mission to the war-torn country, the prospect of a negotiated settlement to the conflict is looking ever more remote. Below are several reports from PubHub and other sources that provide some context for understanding the religious, political, and geopolitical divides behind the unrest.

What do we know about the composition of Syria's population? According to Mapping the Global Muslim Population: A Report on the Size and Distribution of the World's Muslim Population, a report from the Pew Forum on Religion & Public Life, approximately 20.2 million Syrians, or 92.2 percent of the population, are Muslim, with Sunnis comprising the majority (74 percent) and Shia and Alawites (the sect President Bashar al-Assad's family belongs to) comprising between 15 percent and 20 percent of the population.

Opposition to the Assad regime is concentrated among the Sunni, and many Sunni Islamists abroad are vocally encouraging their co-religionists inside Syria to "rise up and fight." In their article "UK Islamists and the Arab Uprisings" in Current Trends in Islamist Ideology (Vol. 13, August 2012), a publication of the Hudson Institute's Center on Islam, Democracy, and the Future of the Muslim World, James Brandon and Raffaello Pantucci examine how Islamists living in the West helped shape the Arab Spring movements that set the stage for the uprising in Syria. Brandon and Pantucci note that a wave of Islamist exiles arrived in the United Kingdom from Syria after the Muslim Brotherhood tried to overthrow the regime of Hafez al-Assad (Bashar's father) -- a revolt brutally suppressed by Assad -- in 1982. Two UK-based Islamists, Anjem Choudhary and Omar Bakri Mohammed, have clearly expressed a desire to see the current Assad regime toppled. "For them, the ongoing strife in Syria is a clear-cut example of how the West is conspiring against Muslim warriors who are fighting for the oppressed masses," Brandon and Pantucci write. "They believe this despite the fact that strongest support for intervention comes from the West."

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Weekend Link Roundup (August 25-26, 2012)

August 26, 2012

Ts-issac-satelliteOur (slightly delayed) weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Environment

On NCRP's Keeping a Close Eye blog, Niki Jagpal commends the Kresge Foundation for a recent grant of $500,000 to Princeton-based Climate Central in support of efforts to provide decision makers and the public with information about future coastal flood exposure and sea level rise. "Kresge," writes Jagpal, "is leading the way by example: focusing specifically on socially vulnerable populations is precisely what environment and climate philanthropy expert Sarah Hansen recommends for environment and climate funders in Cultivating the Grassroots: A Winning Approach for Environment and Climate Funders."

Leadership

Philanthropy 411's Kris Putnam-Walkerly shares a post from Trista Harris, executive director of the Headwaters Foundation for Justice, in which Harris explains what an informational interview is for those "too embarrassed to ask."

Social Entrepreneurship

In a post on his Harvard Business Review blog, Uncharitable author Dan Pallotta discusses how he went from building Pallotta TeamWorks, one of the most successful charity event businesses in the country, to losing everything -- including four hundred full-time employees and sixteen U.S. offices -- after his biggest client jumped ship.

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NPO Job Openings (July 2012)

August 23, 2012

It’s been three weeks since the Bureau of Labor Statistics released the July job numbers, and the muted optimism that greeted news of a modest uptick in nonfarm payrolls seems to have dissipated as the presidential campaign has turned relentlessly negative.

According to the BLS, total nonfarm employment rose by 163,000 in July -- an increase of 99,000 from the 64,000 jobs added in June and significantly better than the 96,000 jobs added in July 2011. While the unemployment rate remained stuck at 8.3 percent (12.8 million people) -- a fact Republicans are likely to beat like a drum at their convention -- the average number of jobs added on a monthly basis rose above 151,000 for the first time in 2012.

July_2012_cnn_money

(Chart courtesy CNNMoney)

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The Case for Using a Social Justice Lens in Grantmaking

August 21, 2012

(Over the course of his career, Michael Seltzer, a frequent contributor to PhilanTopic, has served as a program officer at the Ford Foundation, as president of the New York Regional Association of Grantmakers, and as founding executive director of Funders Concerned About AIDS. A version of this post appears in the summer issue of GMNsight, a new journal written for and by members of the Grants Managers Network.)

Social Justice -- A New Phenomenon?

Social_justiceNo. As early as 1972, in an internal memo to John H. Knowles, the president of the Rockefeller Foundation, one of his officers suggested that the foundation use the phrase "Towards Social Justice in an Interdependent World" as a 'unifying theme' to describe its work.

Also, in the 1970s, select small- to medium-sized public, family, independent, and public foundations embraced the practice, language, and ethos of social justice, as evidenced by their early support of the U.S. civil rights movement. Their ranks included such private foundations as Norman, Field, Stern, New World, Taconic, and the John Hay Whitney. Subsequently, the public foundations that comprised the Funding Exchange Network -- the Tides Foundation; women's and LGBT funders such as the Astraea Lesbian Foundation for Justice; and the Black United Fund movement -- joined their ranks. David Hunter, Stern's long-term executive director, served as a mentor and guide for many of these funds. The word justice also appeared in the literature of religiously affiliated grantmakers such as the Catholic Campaign for Human Development of the U.S. Catholic Bishops and the Jewish Fund for Justice. This was not surprising, since the precepts of justice are evident in the world's major religions and sacred texts.

Subsequently, this diverse set of donors, in terms of their structure and sources of revenues, began to meet annually under the aegis of the National Network of Change-Oriented Foundations. In 1981, the network's successor organization, the National Network of Foundations (NNG), asserted the following two purposes in its mandate:

To be a voice for issues of social and economic justice within the philanthropic community and externally in sectors of the broad community including government, business, labor and education, and to expand the resource base (human and financial) for social and economic justice activities.

As one indicator of the size of this community of funders, also in 1981 the National Network of Grantmakers and the Interreligious Foundation for Community Organization (IFCO) in their publication, The Grantseekers Guide, A Directory for Social and Economic Justice Projects, listed more than one hundred foundations and corporate-giving programs.

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Weekend Link Roundup (August 18-19, 2012)

August 19, 2012

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Corn_on_cobCommunications/Marketing

On the Communications Network blog, Courtney Williamson talks to Allyson Burns, vice president for communications at the Case Foundation, about the foundation's Be Fearless Campaign. The initiative, which aims to "[encourage] all organizations trying to improve people’s lives 'to take risks' in how they approach their work," was inspired by a request from Case Foundation CEO and co-founder Jean Case for "a new messaging strategy that reflected how the foundation’s work has evolved since its inception." With the help of branding firm BBMG, Burns says, the foundation identified two themes, experimentation and partnership, that became the linchpin of the new strategy. "It doesn't mean we're always fearless," says Burns, "but I'm trying to do better every day."

On her Non-Profit Marketing Blog, Katya Andresen introduces a mini-guide created by her organization, Network for Good, that walks readers through the basics of e-mail engagement.

Evaluation

On the GiveWell Blog, Holden Karnofsky explains how GiveWell differentiates between strong and weak evidence when it evaluates charities. "By 'evidence,'" writes Karnofsky, "we generally mean observations that are more easily reconciled with the charity's claims about the world and its impact than with our skeptical default/'prior' assumption." General properties that make for strong evidence, Karnofsky adds, include relevant reported effects, attribution, representativeness, and consonance with other observations.

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Romney, Ryan, and Charity

August 16, 2012

(Mark Rosenman, a Washington-based scholar-activist and director of Caring to Change, a D.C.-based effort to promote foundation grantmaking for the common good, is a frequent contributor to PhilanTopic. In his last post, he argued that nonprofits are missing from critical policy debates.)

Rosenman_headshotWith the selection of Rep. Paul Ryan (R-WI) as his running mate, Mitt Romney has changed the stakes of the 2012 presidential race. Well beyond Republican versus Democrat, the question now before Americans is who we are as a nation and a people. Over the next four years, we must make decisions about public responsibility for the common good, about what we expect of government, and of what we expect of one another. The nonprofit and philanthropic sectors cannot afford to ignore this debate.

Developed by the presumptive Republican vice presidential nominee and already passed by the House of Representatives, the so-called "Ryan Plan" would have an immediate impact on many nonprofits, especially those serving low- and moderate-income people. Ultimately, however, it would affect each and every area of government support for charitable causes.

Indeed, after announcing Ryan as his running mate, candidate Romney issued a statement trying to distance himself from the plan, even though previously he had described it as "marvelous" and said he was "on the same page" as Ryan in terms of budget priorities. Charities are prohibited involvement in electoral politics, but helping to shape a public discussion about policy and our values as a nation is essential; nonprofit and foundation leaders must declare which page they are on.

Before we take a closer look at the unfolding debate, let me point out that Mitt Romney has himself already proposed similar policies. The nonpartisan Tax Policy Center concludes, for example, that Romney's detail-deprived proposal for tax reform would give the wealthiest Americans a significant tax cut while imposing tax increases on the remaining 95 percent of Americans.

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Libraries and Latinos: Return to Adams County

August 14, 2012

(Kathryn Pyle recently marked her fourth anniversary as a PhilanTopic contributor. In her last post, she wrote about the Justice Matters series at Filmfest DC.)

Children_with_booksFour years ago, in my first post for PhilanTopic, I described how the Adams County Library system in a rural part of south central Pennsylvania used a modest donation to try out some new ideas and improve its services for the growing Latino population in the area, mainly families and seasonal workers from Mexico.

Since then, thanks to PhilanTopic's broad and inclusive vision of civic life, I've written about a presidential inauguration, a "City of Trees," the first moon landing, transitional justice, a memorial park in Argentina, and -- most frequently -- social issue documentaries and the organizations that support them. Over that time, I've really enjoyed the opportunity the PND team has given me to refine my vision of the nexus of philanthropy and social justice. But today, because this is my thirtieth (!) post for PhilanTopic, I thought it would be interesting to revisit Adams County to see what, if anything, has changed.

I caught up with library director Rob Lesher on his way to the annual library book sale, which was organized by the Friends of the Library at the main branch in Gettysburg; Lesher told me they hoped to raise at least $25,000. That's a lot of used books and a big shot in the arm for any library in an era of government cuts.

"It's been a challenge financially," says Lesher. "But the big news is that this summer we've seen the highest circulation months in our history. Seventy-five thousand items circulated in July, part of a fifteen-year pattern of growth. And 2011 was a record year, with seven hundred and fifty thousand items circulated; we'll equal that this year. Despite the cutbacks, we've managed to expand our services to Latinos. The key has been experimenting with new programs and partnering with community organizations."

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Weekend Link Roundup (August 11-12, 2012)

August 12, 2012

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

Welcome to the Fifth Estate author Geoff Livingston has a list of tips for artists and writers seeking to brand and market themselves. The list includes:

  • Focus on actions.
  • Go beyond Facebook, Twitter, and Instagram.
  • Monitor social media conversations.
  • Let your fans embrace your experience.

Disaster Relief

GiveWell's Holden Karnofsky shares findings from a recent evaluation of charities working to help people in Japan recover from the earthquake and tsunami that devastated the northeastern part of the country in 2011. After reviewing reports about their activities over the past twelve months, Karnofsky concludes that he and his partners "stand by the conclusions we reached last year: that the relief and recovery effort did not have room for more funding, that those interested in emergency relief should have donated to Doctors Without Borders, and that those determined to help Japan specifically should have donated to the Japanese Red Cross."

Continue reading »

[Infographic] Nonprofit Strategic Restructuring

August 11, 2012

How are funders supporting strategic collaboration, and how are nonprofits engaging in these kinds of partnerships with each other?

To answer those questions, our colleagues in the Foundation Center's field offices turned to the center's Nonprofit Collaboration Database to find nonprofit organization from across the country who could tell them about their experiences. They eventually contacted ten and asked them questions like:

  • Why were you collaborating?
  • What are the challenges to effective collaboration?
  • How are foundations supporting your collaboration?
  • How do you wish they would have supported you?

Then, in partnership with La Piana Consulting and the Tides Center, the center convened ten funders in a daylong session in San Francisco to talk about the way nonprofits and foundations are thinking about collaboration generally and strategic restructuring more specifically.

Based on those two sources of knowledge, our colleagues then created the infographic below for the Alliance for Nonprofit Management 2012 conference (hashtag: #anm12). Enjoy!

(Click for larger image)

Infographic_strategic_restructuring

For more information about collaboration and strategic restructuring, b sure to check out these resources:

Advocacy Capacity and Effectiveness: What Funders and Grantees Need to Know

August 09, 2012

(Susan Hoechstetter is a senior advisor to the Foundation Advocacy Initiative and Advocacy Planning & Evaluation team at the Alliance for Justice. This is her first post for PhilanTopic.)

SueH_headshot"How can you expect us to support more advocacy when we don't know how to evaluate the effectiveness of this kind of work?"

That was the question I received repeatedly eight years ago when I canvassed twenty-five funders about the support they needed to increase their nonprofit advocacy grantmaking. The Alliance for Justice was developing a new publication on foundations and advocacy, and as a result of frequent concerns about the effectiveness of foundation grantmaking we we were looking to develop a pragmatic model for advocacy evaluation.

We knew evaluation had to fit the long-term nature of advocacy work. We noted that groups should be credited for accomplishments -- such as gaining credibility with lawmakers or building an active membership -- that would make it more likely they reached their objectives the following year, or thereafter. In addition, our partner in the advocacy evaluation work, the George Gund Foundation, wanted a tool that would help them identify a baseline for grantee advocacy strengths and gaps at the beginning of a grant or advocacy campaign. Thus was born the Advocacy Capacity Tool (ACT), which recently has been revised and updated.

Basically a survey that asks about skills, knowledge, and resources in different areas, ACT is designed to help organizations determine their readiness to pursue advocacy goals and where they need to strengthen their capacity. Foundations can use it to assess potential grantees -- in the RFP process, for example -- and to recruit complementary partners. Most importantly, the insights gained by organizations into their capacity for advocacy invariably improve the effectiveness of their work.

Competing Views in the Field

There are at least two schools of thought on the relationship between organizational capacity and effectiveness. As discussed in the new publication Re-Imagining Philanthropy: The Role Of Leadership In Nonprofit Capacity Building in a Post-Recession Economy, one view is that they are separate, that "capacity-building leads to effectiveness." Another view, as articulated by Peter York and Paul Connolly of the TCC Group, "[theorizes] that effectiveness and the nature and extent of organizational capacity" as measured by CCAT, TCC's capacity assessment tool, "are one and the same concept." One of the factors in their assessment is "whether or not the organizations' knowledge, abilities and resources meet the demands present within their internal and external environment."

AFJ's approach to assessing advocacy capacity makes use of both concepts -- and recognizes that it would be unrealistic to attempt a comprehensive assessment of both an organization's skills and knowledge and the quality of how it uses all these resources at the same time. Our model is based on the following beliefs:

  • Having in place skills, knowledge, and other resources for a strong advocacy campaign make it more likely that an organization will succeed in their advocacy efforts.
  • Combining as many strong advocacy capacities as possible also leads to greater effectiveness. For example, strong legislative staff, excellent messaging capability, and a strong field operation can work together for better results.
  • Having a track record of meeting the needs for strong advocacy indicates effectiveness and capacity. However a group may have the skills and resources in place but be untested for effectiveness. In both cases, there can be strong capacity.

How Our New Tool Works

In the most recent iteration of the ACT tool, we responded to user requests by adding numeric results and comparison data as well as new capacities, including messaging and fiscal sustainability. We make a point of telling users that numeric results should be viewed as markers, not as grades or measures of effectiveness. In many cases, the survey also can be used as a conversation starter and planning tool for staff and boards that want to take a closer look at where their capacities can improve or where they might want to rely on partners in the field, as well as for foundations seeking to help build strong advocacy organizations.

One recent user commented, "This survey showed what we are lacking! We never have done a long-term advocacy plan, talked about media coverage or messaging." In the seven years since AFJ has been using the tool in the field, we've found that it helps groups to be intentional rather than reactive in their advocacy. The results give them an understanding of what it takes to develop strong advocacy programs and the capacity, in terms of advocacy, their organization has and/or needs.

AFJ's path to helping groups build strong advocacy programs has led us to develop a number of advocacy capacity tools. In the process, we have learned how capacity and effectiveness both differ and overlap. By recognizing and accepting these nuances and making greater regular use of advocacy capacity assessment tools, more funders and grantees can contribute effectively to bringing much-needed voices to the policymaking table.

-- Susan Hoechstetter

Taking Private Philanthropy Public: Eye on the Giving Pledge

August 08, 2012

(Janet Camarena is the director of the Foundation Center's San Francisco office and leads the center's Glasspockets effort.)

Pledge_wordleTwo years have passed since Warren Buffett and Bill and Melinda Gates launched the Giving Pledge, an effort to convince the world's wealthiest families and individuals to commit more than half their assets to philanthropy. Initially, four families signed the Pledge, and after two months thirty-six more had joined them. Since then, the size of the list has more than doubled, with eighty-one families or individuals having now signed on.

Given the high profile and net worth of those involved, the launch of the Giving Pledge was accompanied by much fanfare and enthusiasm. Indeed, because philanthropy is often viewed as a private, family affair by those who engage in it, one could view participation in the Giving Pledge as a sort of Public Philanthropic Offering. So now that the bell has been rung, what's next?

Because the Foundation Center's Glasspockets site focuses on philanthropic transparency, we decided earlier this year to create a new feature, Eye on the Giving Pledge, to help track the charitable activities of Giving Pledgers and highlight some of the demographic trends and giving interests of pledge participants. Things like: Who has signed the Pledge? In which industries did they make their fortunes? Where are they based? What causes do they support? "Eye on the Giving Pledge" provides a way to follow how those who have made commitments are fulfilling their pledges.

The decision by Warren Buffett and Bill and Melinda Gates to use their influence and networks to drive more dollars to philanthropy should be celebrated. In addition to the leadership they've demonstrated with the Giving Pledge itself, the Gateses also are providing an excellent example for other Pledge participants by making their family foundation the principle vehicle for their philanthropy. At the Bill & Melinda Gates Foundation Web site, the public can readily access a complete record of the foundation's grantmaking via its 990-PFs, determine whether its grantmaking is limited to pre-selected organizations, read press releases about noteworthy new grants, check out Bill Gates' annual letter detailing many of the foundation's successes (and some of its failures), and listen to a regular podcast featuring staff members sharing insights about the foundation's evolving grantmaking strategies.

Of course, many Pledgers will opt or continue to use other vehicles for their giving, vehicles that do not have the same reporting requirements as foundations. In those cases, we've done our best to capture examples of that giving from public information sources. Since we expect there will be gaps in our coverage due to the challenges inherent in tracking individual giving, we invite you to help us surface additional knowledge through an online form provided for that purpose.

With a combined net worth of roughly $400 billion, the eighty-one signatories to the Giving Pledge could end up contributing an additional $200 billion or more to charity over time. In addition to the tangible benefits of all that giving, we think it's refreshing to see some of the world's wealthiest people celebrated not just for the next deal but for their next gift -- and for publicly committing to use their wealth for the public good. Or, to put it another way, shouldn't actual giving be as celebrated as the intention to give?

-- Janet Camarena

Funder Tools for a More Efficient Marketplace

August 06, 2012

(Lisa Philp is vice president for strategic philanthropy and director of GrantCraft at the Foundation Center.)

I3-groupTwo years ago, the Foundation Registry i3 was a lifesaver for me.

I was working as a philanthropic advisor and was looking for an opportunity to lead a group of emerging philanthropists interested in education reform from talking about collaboration to taking action. The U.S. Department of Education's Investing in Innovation (i3) competitive grants program seemed tailor-made for my crowd: a marketplace of ideas, evidence-based approaches, and five-to-one leverage. I informed several dozen high-net-worth donors about the i3 program and vetted the highest-rated applicants based on the quality of their project designs, evidence and evaluation, capacity, financial review, and need for a match. My clients pooled over $5 million in flexible new funds to provide matches for i3 projects working in sixteen states and D.C. and, along with other private funders, leveraged $145 million in public funds.

The vetting and matching all happened within a few short weeks. How did I have access to i3 applicants for review? How did I know which ones needed matching funds? How did I benefit from the knowledge of other foundations? Simple. The Foundation Registry i3.

The registry was started by a group of presidents from the largest U.S. foundations focused on education who recognized that the i3 program created new opportunities to use technology to enhance collaboration and improve efficiency. After conversations with U.S. Secretary of Education Arne Duncan, their staff members, and other funders, the Foundation Registry i3 was born. Starting with a founding group of a dozen funders, the registry now includes sixty foundations and corporations.

The registry combines an easy-to-use online platform with responsive people behind the scenes -- an example of technology augmenting relationships and networks. It simplifies the discovery phase of connecting groups of like-minded applicants and funders during time-sensitive, matching grant competitions and helps to create a more efficient marketplace. Applicants are encouraged to upload their materials to the registry to increase the awareness and reach of their proposals to participating foundations. Registered funders can sort applicants by tag and category, view other foundations' interest levels and match considerations for proposals, and collaborate by sharing notes and comments on proposals in a password-protected area. During the 2010 and 2011 i3 grant cycles, forty of the sixty-six highest-rated applicants were matched by one or more registry funders, to the tune of over $68 million.

The Foundation Registry i3 template has been adapted for use by the 100Kin10 initiative, a multi-sector mobilization focused on training one hundred thousand science, technology, engineering, and math teachers over the next ten years. It also inspired the SIF Registry, which is designed to simplify the process for eligible Social Innovation Fund intermediaries and sub-grantees to obtain matching funds from foundations.

Fast forward to the 2012 i3 grant cycle, now under way. I'm pleased to report that the Foundation Center is administering the Foundation Registry i3 for this year's grant cycle. We're encouraging i3 scale-up, validation, and development applicants to upload their U.S. Department of Education proposals and are reaching out to education funders to register for the site. Right now -- well before the matching period begins in the fall -- is a great time to become part of the registry. There's no cost to applicants to showcase their applications to a group of motivated funders, and no funding commitment required of foundations to sign up -- just potential interest in providing support for i3 applicants.

If you are a 2012 applicant to the i3 program or a funder interested in U.S. student achievement, please contact us so we can add you to this online community.

-- Lisa Philp

Weekend Link Roundup (August 4-5, 2012)

August 05, 2012

London2012_goldOur weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

In a guest post on the Communications Network blog, Dan Cohen and Edit Ruano offer five ideas for livening up your summer communications efforts.

  1. Brainstorm with staff on how to engage your audience/community, and then delegate the implementation of those ideas to tap into staff creativity.
  2. Program e-blasts; content could include previews of the work planned for the fall or reflections on your organization's previous accomplishments.
  3. Write (or coordinate with grantees to write) op-eds about your organization's work before heading out on vacation.
  4. Develop a schedule of pre-programmed social media content: at least one Facebook post and two or three tweets per week recommended.
  5. Host a get-together with potential partner organizations and individuals to strengthen your networks and bring a fresh perspective to the work you do.

Kivi Leroux Miller highlights the evolution of one nonprofit's annual reports -- from more than twenty pages of financial details to four pages of accomplishments. In 2009 "[i]t was a lot more 'here's all the stuff we've done' vs 'here's what we accomplished,'" Katie Bryan, of Iowa Citizens for Community Improvement, told Miller. In contrast, in 2011 "[w]e started out with the top accomplishments we had to share, then filled in images...and then worked the theme and letter around those."

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[Infographic] 'America's Nonprofit Sector'

August 04, 2012

Nice infographic from the folks at the Center for Civil Studies at the Johns Hopkins Institute for Policy Studies based on the new, fully revised third edition of America's Nonprofit Sector: A Primer (Foundation Center), by Lester R. Salamon.

Americas-NPO-Sector

To order America's Nonprofit Sector, click here.

Why 'Risk' Is An Unloved Word in Philanthropy

August 02, 2012

(Derrick Feldmann is the CEO of Achieve, an Indianapolis-based consulting firm that works with nonprofits. In his previous post, he cautioned organizations to think twice about flying the "innovation" flag.)

"There are risks and costs to a program of action, but they are far less than the long-range risks and costs of comfortable inaction."

 -- John F. Kennedy

Risk_aversionWhenever I visit my financial advisor, he almost always gets around to talking about risk. The subject usually comes up when I ask him how I can increase the value of my portfolio. His response is almost always the same. "What's your tolerance for losing money?" He always has ideas for new investments, but he's quick to point out that many aren't "sure bets." Anyone seeking bigger investment returns in this environment -- and lucky enough to have discretionary resources to invest in the first place -- has played this game at one point or another.

So why are risky investments something most of us are willing to tolerate in our personal financial lives, but something we avoid like the plague in our philanthropic work?

The answer is simple: We're afraid to make risky philanthropic investments because we don't want to "lose" money.

As funders and donors, we've grown accustomed to making investments in organizations we know will succeed. They have a history, proven track records, and staff and leadership that can execute. Pressure from boards and other stakeholders who view philanthropic investments only through the lens of success contributes to this predictability. Typically, these stakeholders are most concerned about protecting the corpus and in signing off on decisions that won't get them into trouble. This isn't all bad. It ensures, among other things, that people in need will be helped, especially during times when they need it most. But as an investment approach, it does little to encourage innovation.

Think about your own work for a minute and ask yourself the following questions:

  • What is the riskiest grant we ever made?
  • What was our motivation for making that grant?
  • How many times have we given a grant to an organization that didn't have a track record of success?
  • How much money are we willing to set aside to fund riskier initiatives?

If you're like a lot of program officers, it may not be easy to think of a grant you made that could be classified as "risky." But you need look no further than your own personal giving for examples of risky philanthropic investments. Indeed, we make these kinds of investments every time we support a friend, colleague, or family member in a run/walk/race for a medical cause or cure. As a country, we invest more than $20 billion a year to find cures for diseases such as cancer, Alzheimer's, and stroke. And those investments are "risky" because there's very little measurable return on our donations short of a cure or significant new discovery. But we choose to fund this type of research anyway, knowing that most failures in the lab bring us closer to the ultimate goal.

Unfortunately, many problems today -- whether social, environmental, or economic -- are every bit as large and complicated as finding the cure for cancer. And the only way we're going to solve them is to take our approach to medical research and apply it to other areas. In other words, we need funders and individual donors who are truly willing to embrace risk and invest significant dollars in potential solutions that may not yield immediate results but get us closer to our ultimate objective, even if it's only by demonstrating what doesn't work.

Here are four things I believe philanthropy can and should do in order to embrace more risk.

Emulate the founders. On the road to building great fortunes, the founders of some of the biggest foundations in the country took risk almost every day of their professional and business lives. Whether they played a leading role in forging the modern steel or oil industry, made it easy for people to use a computer or reap the benefits of globalized supply chains, or created online social networks that connected the world, our greatest entrepreneurs and philanthropists were great risk-takers who never lost sight of their objective: To deliver the most value to the greatest number of consumers. That's precisely the kind of entrepreneurial spirit we need today as we look to provide and fund solutions to the most intractable problems affecting our communities.

Set aside funds for riskier ventures. If foundations were for-profit companies and had to compete in the marketplace, they almost certainly would rush to set up research and development arms with a mandate to innovate, develop new programs and initiatives, and evaluate how existing programs and initiatives were performing. But as endowed tax-exempt entities, foundations rarely have to compete and so have little incentive to set aside funds to invest in anything other than proven organizations and concepts. Now, I get that foundations and donors can't fund every risky investment and innovation that comes along. But I'm convinced that they can and should begin to pool and earmark funds for investments in organizations and concepts that don't have a track record of success but do have potential to bring about dramatic change in our communities.

Ask new questions. Donors and foundations need to start asking new questions when a risky investment presents itself. Instead of the historical "proven impact" questions typically posed during the proposal and due-diligence stages, funders should focus on questions designed to help them understand the level of risk involved in the proposed idea or solution. Questions like:

  • Why is this a risky concept/approach?
  • Why is your approach to the problem better than existing approaches?
  • What's the worst that could happen if you fail?
  • Even if you fail, what do you hope to learn from the approach you're proposing?
  • Who are the experts/mentors you look to for guidance in your work and what do they have to say about the approach/concept?
  • If the approach/concept demonstrates success, how do you plan to sustain it?

Foster new learning environments. As a funder, you have a tremendous opportunity to be transparent about grants and programs that worked -- as well as those that didn't. Here's your chance to create a learning opportunity -- indeed, a learning community -- for social entrepreneurs and innovators. Share your knowledge about the grants you made, the internal reports that tracked the progress of those grants, and why the investments you made did, or did not, succeed. Take it a step further and create a forum on your Web site where grantees can come together and learn from each other about what worked and didn't. At a minimum, it will help them think about new approaches to their existing work and perhaps lead to new ideas that you may want to support in the future.

There you have it. Let's create a philanthropic marketplace where risk is celebrated, not avoided, and serves to bring us closer to solving some of the biggest challenges we face. History invariably shows that if we give good ideas a platform and a chance to succeed, they will. The sooner we get over our aversion to risk and instead support those individuals and organizations willing to think outside the box, the sooner we'll prove history right.

-- Derrick Feldmann

 

Contributors

Quote of the Week

  • "Just because something is statistically significant does not mean it is meaningfully significant...."

    Ashley Merryman, author, Nurture Shock: New Thinking About Children

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Contributors

Guest Contributors

  • Laura Cronin
  • Derrick Feldmann
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